A First Year’s Impact of the Pandemic on the Czech Entrepreneurial Activity

Abstract

Every crisis affects entrepreneurial activity; for some entrepreneurs, it is an opportunity for a new start; others are forced to shut down their businesses. This study aimed to analyze the effect of the global coronavirus (so-called COVID-19) pandemic on Czech entrepreneurial activity. The article exploits the administrative data covering business demographics of seventy-seven Local Administrative Units (LAU1) regions over the years 2008-2020. Data were obtained from the Czech Statistical Office. The study provides insights into the short term effects of the pandemic, i.e. one year after. The results from the panel regression models and placebo tests comparing forecasted values of new businesses registrations and closures with actual values obtained after the end of 2020 do not show that there would be a significant drop in the Czech entrepreneurial activity. On the opposite, the data indicate that the Czech entrepreneurial activity grew and even increased compared with 2019. However, the obtained results need to be interpreted with caution, as many factors influenced Czech businesses’ development. Specifically, we mention the past economic growth, the introduction of public entrepreneurship and SME policy instruments and financial back-ups of the business owners. There are several implications of the conducted research. For instance, there is a need to observe the long-term effects of the pandemic on business demography and its structure. We propose to study changes in bankruptcy rates in the most harmed sectors such as tourism, hospitality, culture or sport and compare them with sectors that could easier transfer their business activities online.

Unravelling trends, patterns and intellectual structure of research on bankruptcy in SMEs: A bibliometric assessment and visualisation

“…For example, Dörr et al [ 110 ] reported that the COVID-19 policy response in Germany has resulted in a backlog of insolvencies, especially prominent among financially fragile small businesses, potentially having long-term ramifications for entrepreneurship and economic recovery. Similar research was explored by Dvouletý [ 111 ] in the context of Czech entrepreneurial activity. In line with this, Giunipero et al [ 112 ] employed a case study approach to examine the effects of COVID-19 on the supply chain for small enterprises in the trucking sector.…”

Who is brave enough to start a new business during the Covid-19 pandemic?

“…This research work contributed to the current body of knowledge on entrepreneurship during times of crisis, particularly during the Covid-19 global pandemic, which has been addressed by several authors providing evidence from different countries and continents (Fritsch et al ., 2021; Dvouletý, 2021; Zemtsov et al ., 2022; Belitski et al ., 2022). Every crisis represents a challenge for individuals considering entrepreneurship as a career choice and those who already run a business activity.…”

“…At the firm level, it focussed on maintaining employment and jobs (Vilaseca et al ., 2021) and cash-flow delivery for coverage of operational costs such as rent or energy costs (Kuckertz et al ., 2020). Also, it contributed to the purchases of protective equipment and new technologies (Dvouletý, 2021; Zemtsov et al ., 2022). Some countries even imposed temporary insolvency moratoriums or suspension claims acts to prevent businesses from official bankruptcy (Fritsch et al ., 2021; MacGregor Pelikanova et al ., 2021; Lim et al ., 2021).…”

“…However, even the opposite scenario is possible when the new business opportunities resulting from the challenging times motivate even more individuals to start a business than those quitting, resulting in even higher engagements in entrepreneurship. Furthermore, we also need to consider nascent entrepreneurs and persons who have not registered their activities officially but were testing entrepreneurial waters, in training to become entrepreneurs or thinking about starting a business, and the adverse times discouraged them from proceeding with their business plans (Santos et al ., 2017; Liguori and Winkler, 2020; Ratten, 2020; Dvouletý, 2021; Fritsch et al ., 2021). Several theoretical approaches explain these shifts, including lenses of entrepreneurial resilience (Purnomo et al ., 2021), entrepreneurial bricolage (Tsilika et al ., 2020), black swan events (Cowling et al ., 2020), push and pull entrepreneurship (Dawson and Henley, 2012), and of course, crisis management theories (Cortez and Johnston, 2020).…”

Corporate entrepreneurship in public sector: A systematic literature review and research agenda

“…External factors, such as crises and economic shocks, have traditionally been topics of focus in academic discourse due to their complexities and multifaceted far-reaching effects, including their power to influence the intensity and organization of entrepreneurial activity (Dvoulet y, 2021). An empirical study on the quantification of the results of worldwide crises upon entrepreneurial development has been conducted with regards to the context of the Czech Republic (Dvoulet y, 2021).…”