The Impact of the Covid-19 Pandemic on Small Businesses: A Case Study of the Entrepreneurial Coping Strategies in the hardest hit industries in Finland

Abstract

The COVID-19 pandemic has hit small businesses especially hard with lockdown measures and limitations to operating models. As a response, businesses have cut back on costs, attempted to op- erate per usual and some have found new revenue streams. These can be categorized as entrepreneurial coping strategies. However, what factors influencing the adoption of these strategies and understanding of the most successful coping strategy in the short term is unclear. Finding the answer to this provides practical benefits for other small businesses going through a pandemic crisis. This qualitative study explores the impact of COVID-19 pandemic on Finnish small business in some of the hardest hit industries, including services such as restaurants and hospitality. Through the investigation of relevant literature and the application of multiple case studies aiming to understand the adverse effects of the pandemic on these industries, the businesses entrepreneurial coping strategies, and resources available for survival and ideally thriving, the “what”, “how”, and by “what means” can be explored. The study aims to answer the research questions: (1) “What entrepreneurial coping strategies have SMEs in Finland adopted during the Coronavirus pandemic?”, (2.1) “What adverse effects has the Coronavirus pandemic cause for SMEs in Finland?”, and (2.2) “What policy measures enable and constrain the implementation of entrepreneurial coping strategies during the Coronavirus pandemic?” The qualitative case study approach includes seven semi-structured interviews, which were conducted among the top executives or management of the various organizations. The interviewees were identified with purposeful and convenience sampling strategy through a personal network and LinkedIn. Additionally, secondary data was utilized to find further information on interviewees. The results and analysis of the results indicate that a combination of entrepreneurial coping strategies is often adopted after the initial shock of the crisis. The strategies include the combination of retrenchment, perseverance, and innovation, where those that adopted an innovation strategy tend to survive and succeed better at the time. Even so, retrenchment was often visible at the start, whereas perseverance was more fluid. The businesses saw major adverse effects through furloughs, decline in customers, liquidity issues, for example. The actions by the government clearly provided an ease of mind for the struggling businesses and, in fact, enabled innovation. However, the lockdown measures clearly forced businesses to change operational practices. Further, this research mostly agrees with and adds to existing research on 1) strategic and crisis management 2) SME (crisis) research and 3) COVID-19 crisis and policy research. The study provides practical measures companies can take to survive the pandemic.