Businesses continue to experience consequences from the covid-19 pandemic even now, nearly two and a half years after the pandemic began. There is long-standing research on business recovery from natural hazards and economic disasters. How has business recovery during the pandemic been similar to and different from recovery from disasters?
A recent paper published in the International Journal of Disaster Risk Reduction draws on prior research in business recovery from disasters to contextualize business recovery during the pandemic. It also highlights how business recovery during the pandemic has deviated from the precedents set by other disasters.
The pandemic is similar to sudden-onset natural disasters in that businesses felt its impacts immediately through lockdowns and layoffs. However, it differs because new variants’ emergence introduced waves of virus cases long after the pandemic began. In addition, the pandemic’s global footprint is bigger than that of any natural hazard.
Smaller businesses have more difficulty recovering from a disaster and are more susceptible to financial shocks. In sectors that were hit hard by the pandemic like restaurants, smaller businesses make up a larger percentage of the whole than in sectors that were less affected. However, there was a surge in new small businesses. In the U.S., 2.8 million more microbusinesses opened in 2020 than in 2019.
Businesses that have trouble bouncing back from supply chain disruptions also tend to have more difficulty recovering from disasters. Though the pandemic did not cause physical damage to production facilities, it caused supply chain disruptions. Compared to other disasters, the pandemic caused supply chain disruptions of much longer duration. They also occurred simultaneously worldwide.
Disasters literature mostly focuses on supply impacts, but demand impacts were a dominant factor in businesses’ recovery from the pandemic. During the pandemic, consumers focused on discretionary goods like home improvement materials rather than discretionary services like travel.
The authors of the paper state that it is important for policymakers to learn from prior disasters when making decisions that affect business recovery. Examining business recovery during the pandemic also allows researchers to refine their understanding of how disasters affect businesses.
Further research on business recovery in the pandemic could focus on how businesses have adapted to constantly changing case counts and policy, the global scale of the pandemic and its effects on international trade, and the effectiveness of various assistance efforts to businesses.
This further research could support policymaking efforts and efforts to understand business recovery from future disasters.
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