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International Entrepreneurship in The Post Covid World

The article explores the impact of Covid-19 on international entrepreneurship, highlighting significant changes in the global economy and the operational landscape for international new ventures (INVs). It discusses the challenges posed by damaged institutions, disrupted supply chains, and the politicization of international relations, which complicate the strategic choices for INVs. The article concludes by suggesting future research areas to better understand these transformations and their implications for international entrepreneurship scholarship.

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12 views5 pages

International Entrepreneurship in The Post Covid World

The article explores the impact of Covid-19 on international entrepreneurship, highlighting significant changes in the global economy and the operational landscape for international new ventures (INVs). It discusses the challenges posed by damaged institutions, disrupted supply chains, and the politicization of international relations, which complicate the strategic choices for INVs. The article concludes by suggesting future research areas to better understand these transformations and their implications for international entrepreneurship scholarship.

Uploaded by

shujjameer11
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© © All Rights Reserved
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International entrepreneurship in the post Covid world

ABSTRACT

How will the world look post Covid-19? What is the role of international
entrepreneurship (IE) in this new world? This article attempts to answer these two
questions. It highlights the changes caused by Covid and how they might affect the
scope and types of international entrepreneurial activities in years to come. It also
discusses how international entrepreneurs are likely to operate and shape the
emerging world order. The article concludes by outlining the implications of these
changes for IE scholarship, offering an agenda for future research.

1. Introduction Well before the arrival of Covid-19 (Covid), a debate waged on


the future of globalization and the place of new firms in the emerging world
order. Populist, nationalist and anti-globalization movements—with varying
ideological agendas—have raised serious questions about the role of
international institutions as well as who benefits from internationalization
(Devinney & Hartwell, 2020; Rodrik, 2018). Against this backdrop of
political turmoil, the arrival of Covid has only made things worse, fueling
concerns about the future of world business and the role of multinational
firms, large and small. Given that innovation and entrepreneurship is what
sparks and sustains companies’ international business activities, it is
common to ask: How will the world look after Covid? How will this impact
international business and, especially, international entrepreneurship (IE)?
While the reasons that motivate these questions are understandable, no one
knows the answer. What is now obvious is that Covid has been a profoundly
devastating global pandemic that has spread wide and fast with horrible
effects on economies, businesses and people. Predictions about its effects
abound, but what appears to be certain is that it will not go away quickly,
and if it does, its destructive legacy will continue for years to come. Covid
has already affected our way of life, views of our governments and
connections to other peoples. It has also affected our well-being. This article
will highlight key changes Covid has introduced into the global economy. It
will then discuss how these changes are likely to affect international new
ventures (INVs), which could be independently owned or corporate
sponsored, such as those created by MNEs (Cumming, Sapienza, Siegel, &
Wright, 2009; Zahra, 2020). Whether corporate or independent, some INVs
pursue profit making while others adopt social missions. Still, other INVs
have hybrid missions that focus on profit making while having social
impact. INVs originate and operate from developed and emerging
economies, pursuing opportunities across international borders. Some of
these companies internationalize their operations from inception, actively
moving people, ideas, innovative technologies, business models and money
around the globe (Keupp & Gassmann, 2009; Reuber & Fischer, 2011). The
article will also outline several research areas and related questions worthy
of research. Covid’s effects have been extensive, and it would be hard to
discuss them in detail in a single article. It is even much harder to predict its
long term consequences; these consequences are also likely to vary from one
country to another. Therefore, my presentation in this article is selective,
focusing on key trends I consider especially pertinent to international
entrepreneurship. These effects are likely to affect a large portion of the
globe. Hence, by necessity, my presentation is not exhaustive.
Understandably, other researchers may view other issues not discussed here
as especially salient. 2. Covid and the change in the global business
environment Examining the vast literature on major crises (e.g., natural
disasters and epidemics) and how organizations survive offers some useful
insights (Danielsson, Valenzuela, & Zer, 2018; Jorda, Singh, & Taylor,
2020; Rerup, 2009; Wolf, 2014; Wright, 2020). To be sure, financial crises
(e.g., global financial crisis of 2008) and epidemics (e.g., the plague,
Spanish flu and SARS) have engulfed many countries and affected millions
of people, destroying many businesses small and large. Their effects touched
every part of the global economy. It took years for some economies to
recover but others never did. However, unlike some recent crises, Covid is a
chronic health crisis that has multiple dimensions. As a global public health
crisis, it has led to the closure of businesses and people staying home for
months. Estimates of the effect of Covid on the global economy are sketchy
and vary widely (for reviews, Congressional Research Service, 2020). The
Congressional Research Service (2020) estimates that Covid “has affected
the $90 trillion global economy beyond anything experienced in nearly a
century”. Covid’s cost in terms of human lives has been staggering.
According to data by the World Health Organization (World Health
Organization, 2020), 12,750,275 people around the world have contracted
Covid, leading to 566,355 deaths; the numbers continue to rise by the hour.
Further, the International Labor Organization (2020) data suggest that
uncertainties created by Covid could cause half of the labor force around the
world to lose their jobs. They also estimate that 1.6 billion persons operating
in the “informal economy” have suffered massive damage to their capacity
to earn a living. Millions of others have lost their jobs, have been laid off or
furloughed without a clear prospect of returning to work. These changes
have made Covid a national security crisis that many countries also need to
address to protect their people’s wealth and well-being. As such, when and
how to restart national economies has stirred debate across the globe as
predictions about Covid’s resilience and persistence vary. When thinking
about the global business environment and how it affects international
ventures, it is clear that Covid has already brought about major changes that
will profoundly impact these businesses for years to come. Epidemics have
this effect (Wright, 2020): they do change how people live, think, and
transact and organize their societies. Most important of these changes
brought about by Covid to date are: damaging long standing institutions,
reshaping the global supply chains, disrupting existing businesses and
personal networks, and undermining the flow of knowledge, technology
capital, ideas and people across international borders. While each of these
changes can cripple international ventures’ business activities, their joint
effect is likely to be even more devastating because these changes are
interconnected, as discussed below.

2.1. Damaged institutions

Internationalization has grown rapidly over the past three decades because of
the emergence of stable international institutions that provided safeguards
against opportunism. International treaties governing intellectual property rights
are a prime example. Institutions and treaties provided guidance on fair trade
and mechanisms to resolve disputes as they arise (Lin, Zheng, Lu, Liu, &
Wright, 2019; Ashlstrom & Bruton, 2010; Chandra & Coviello, 2010; Li, Liu et
al., 2019, Li, Hernandez, & Gwon, 2019; Marquis & Raynard, 2015). These
institutions have also encouraged the liberalization of national economies and
opening them to foreign companies, enabling companies from developed and
emerging economies alike to participate in international business. However,
these institutions have come under attack as favoring more advanced countries,
allowing them to grow richer at the expense of the poor. Some populist leaders
have also come to see these institutions as a means of hegemony that undermine
national sovereignty, calling for their reform or abandonment (Devinney &
Hartwell, 2020; Zahra, 2020). Covid has taken hold globally at a time of great
political turmoil, further highlighting the vulnerabilities of international
institutions as countries have closed their borders and competed with each other
to procure medical supplies needed to take care of their citizens. This
competition has raised questions about the relevance, stability, compatibility
and effectiveness of international institutions. Changes in the institutional
context are likely to induce major changes in international ventures’ goals,
decision rules and strategic behavior (Odlin, 2019). The growing politicization
of international institutions is likely to further weaken their powers, making it
hard for them to function effectively in tomorrow’s turbulent environment. For
example, with weak international institutions, countries may also erect barriers
to protect their industries and citizens, which can reduce the entry of INVs and
limit the scope of their operations. This is likely to complicate these ventures’
decisions as to where to operate internationally and how to conduct their
businesses (e.g., which mode of entry to use to enter particular markets). With
the fate of some institutions in question and the rise of protective barriers, the
complexity of international ventures’, strategic choices rises. In particular, in
this environment, INVs from emerging economies might find it increasingly
harder to sustain their presence in international markets as they face
institutional voids at home and complex and unstable institutions in foreign
markets. It also becomes harder for INVs to raise funds from cross-border
investors such as angels and venture capitalists. The changes just described
make it critical for INVs to become active institutional entrepreneurs; i.e., they
need to devote considerable time, resources and energy to help address the
limitations of existing institutions or participate in the development of new
viable institutions, a task that takes considerable time to achieve. While crucial
for success in the new business environment, institutional entrepreneurship also
requires considerable political skills to connect with interested others around
the globe. Not only do these activities raise costs but also international
entrepreneurs may lack the resources, time and political skill to do this. They
also may divert attention away from building international ventures’ capabilities
and their pursuit of opportunities.

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