Researchers Dig Into How the Pandemic Is Impacting Business
During the 2020 pandemic lockdown, many high school students embraced innovation. For Caleb A., a senior at Sandy Creek High School in Tyrone, Georgia, that took the form of Up Next Finance, a website to help high school students understand investing, economics and personal finance. “My mission is to help people learn about finance and create a better life for themselves,” says Caleb, who has also turned to TikTok to share finance tips.
Like any good researcher, Caleb couldn’t help but observe the shifting financial scene during COVID, initially with a plummeting stock market that was 30% off its high. That volatile landscape prompted him to also write Teenage CFO, a book on finance that includes a case study about how the pandemic is affecting business.
“My overarching point is that certain industries benefited from the pandemic, while others saw catastrophic effects happen to them,” notes Caleb. “You look at the airlines, cruise operators, hotel, travel and lodging. They saw their businesses being crippled by the pandemic and revenues fell off a cliff…On the other side, we look at technology: Amazon, Apple, HP, all these companies have benefited from remote work and work outside of the office. They saw huge gains in their revenues and huge gains in usage and traffic to their websites.”
Caleb is not alone in his pursuit of understanding the pandemic effect. The advance of the Coronavirus, quarantine, vaccination and the slow emergence from the crisis have given researchers the opportunity to study issues they’ve been interested in for years. It has, in many ways, been an experiment rich with opportunities for data collection and observation.
Needless to say, it has been keeping academics at the Wharton School busy. For example, Dr. Guy David, Wharton’s Gilbert and Shelley Harrison Professor of Health Care Management, has been studying how resources are allocated during the global health crisis. “The pandemic has disproportionately affected disadvantaged people, it has disproportionately affected people who lost their jobs, it has disproportionately affected people who needed care and had to get it virtually. It gave us the opportunity to shed some light on these issues and get some very important variation that we didn’t have before,” says Guy David, Wharton’s Gilbert and Shelley Harrison Professor of Health Care Management.
As we think about the pandemic’s effect on business, here are some of the latest investigations in which researchers are digging into the data:
Productivity and Innovation. Michael Parke, a Wharton professor of management, supervised a survey-based study on productivity and innovation that was commissioned by Microsoft and conducted by Boston Consulting Group and KRC Research. The study polled about 9,000 managers and employees in large firms in 15 markets across Europe, with about 600 respondents per country. Productivity and innovation are two factors that drive business success. The study found that productivity – how effectively employees work and produce goods and services — has remained stable or even increased for many companies that shifted to remote work during the coronavirus pandemic. However, innovation has taken a hit as both leaders and employees feel more distant from each other.
One of the bigger lessons in the study, Parke said during an interview on Wharton Business Daily on SiriusXM Ch. 132, is the “learning opportunity” that the pandemic is providing for companies. ”This experiment that was forced upon us is showing that employees are able to be productive, and there are some things they really enjoy about that autonomy, so that trust is something organizations should really increase,” he said. “At the same time, [they should be] developing the capabilities to maintain good collaboration in this remote working environment, because flexibility for individuals obviously can create some collaboration challenges as well.”
“When you make decisions laser-focused on efficiency, you might be missing on resilience.” — Santiago Gallino, Wharton Professor
Economic Impact. The Penn Wharton Budget Model has been hard at work during the COVID-19 pandemic, providing research and economic analysis that help explain the fiscal impact of public policy. These numbers can help policymakers arrive at better decisions about new laws and regulations that are based on solid data. The Penn Wharton Budget Model’s economists and data scientists have studied everything from pandemic job losses to how the economic recovery hinges on the vaccine rollout.
One of PWBM’s most recent studies updates its research on the long-run effects of learning loss on the economy – in other words, how will the pandemic school closures (all those hours in Zoom class!) and resulting levels of learning loss ultimately impact the labor market and how productive workers can be? Studies have found that remote education reduces learning outcomes for students and that current students are likely to earn less in future wages.
The good news: the Budget Model’s latest findings after digging into the numbers suggest that student learning loss was not as great as previously reported. Still, there will be some effects on future productivity. Would a proposal to extend the school year and the learning make things better? The summary: “Using recently available data on learning loss from pandemic school closures, PWBM estimates that projected 2051 GDP (Gross Domestic Product) is 1.4 percent lower than it would have been without the learning loss. Extending the 2021-22 school year for all public schools by one month would cost $78 billion and limit the reduction in 2051 GDP to 1.0 percent.”
Broken Supply Chain. The supply chain crisis is among the greatest pandemic lessons learned for businesses. It began with empty store shelves and supply shortages (toilet paper!) way back in March 2020 and has continued to plague companies. The COVID-19 pandemic caused product shortages in the second quarter of 2020 as factories closed and people who were stuck at home didn’t buy as much. The supply chain woes continue, with fewer parts to make products (like computer chips) and a labor shortage. Cargo ships are circling ports, containers filled with merchandise sit undelivered in giant containers, and stores just don’t have as much product to sell during their busiest season of the year.
Supply chain disruptions rippling through wholesale, retail, transportation and labor, said Wharton’s Santiago Gallino, a professor of operations, information and decisions, present an opportunity for companies to rethink the resiliency of their supply chains. Supply chain efficiency – making sure products are created, shipped and sold in the best way possible – is always a priority for companies. But now, suggested Gallino during an interview on Wharton Business Daily on SiriusXM Ch. 132, companies also need to be thinking about resiliency, or how quickly they can adapt to disruptions and maintain normal business operations. “When you make decisions laser-focused on efficiency, you might be missing on resilience,” he said. “Companies have discovered if it’s one shock that lasts a relatively short time, you can manage and take the pain and the hit. But when this has been going on for several months, now the issue of thinking very carefully about how you can be more resilient going forward is an interesting conversation.”
And it’s an even better topic for research. As businesses are assessing their existing supply chain from end-to-end and identifying gaps and vulnerabilities, the researchers are watching, surveying, gathering data and generating insights. Stay tuned for the findings.
Conversation Starters
Caleb A. worked on an innovative project throughout the pandemic. Did you also embrace innovation? Share your story in the comment section of this article.
What are some of the learning opportunities mentioned in the article or implied here that will help businesses work better and smarter? What are other business-related observations from the pandemic?
Why is the Penn Wharton Budget Model’s research and economic analysis so important to the future of business?
I think that the core idea of how the pandemic can be a learning opportunity for all of us, in any scenario, is a really powerful thing. Life always gives us challenges, but it is the way that humans adapt that truly defines how great we can be. By making the most out of situations, we allow ourselves a chance to grow as a person and develop new skills, and by thinking about problems in a positive way like this, we ourselves become happier and more productive.
We all know about the disruption and decline that the Covid – 19 Pandemic has led to in terms of the growth of innovations and existing businesses. However, the fact that the pandemic has actually influenced certain innovations positively is also a point to consider. This is evident through Caleb A’s innovative project that he executed throughout the pandemic and also many other startups founded by other people all around the world. As a 13 year old, I have personally evolved in terms of my knowledge of technology. During these hard times, I tried to use my time wisely and productively in order to gain more knowledge. I spent most of my time experimenting with electrical components which has made me more aware of programming chips and solving problems through the use of technology. I tried to solve daily life problems by building small robots. One such instance where we can see this is when I created one of my first automatic sanitiser dispensers. Slowly and gradually, when I actually created a working prototype with sensors and relay modules, I realised that by creating this product, I was solving a problem. Sanitising regularly during lockdown was a must for each and every one of us and the fact that I had created a product that helps us sanitise our hands without any physical contact with the sanitiser bottle directly felt like an achievement. This product already existed before and was being produced by various companies, but knowing that I had created one by myself at home was an accomplishment. The prototype that I had created was made simply for my personal use and not for startup purposes. From this, we can infer that the pandemic actually led to learning opportunities form people of all age groups and also helped people embrace innovations. Although, in my case, I utilised these hard times by messing around with electrical components at the age of 13 to further gain more knowledge so that I have all the information that I need about diverse aspects for executing my first innovation in the future.
Brilliant work, Caleb and the Wharton Global Youth team! I think this is an extremely pertinent issue due to the times we are in currently – particularly one that strikes close to home.
My city, Mumbai, is home to numerous small businesses, especially small book vendors who sell their wares on footpaths throughout the city. These vendors, through whom I had grown from reading Geronimo Stilton to John Keynes, were struggling to sell a single book during the pandemic, given how heavily reliant their business models were on physical sales, and how averse they were to the internet and technology.
I didn’t blame them. Amazon and Flipkart have wiped out a majority of them with predatory pricing and heavy discounts via cash burning. Caleb is bang on the money when he describes the growing rift between traditional business models and technological ones. The latter didn’t just win due to the pandemic. COVID-19 was just the crushing, final blow to physical revenue models.
With broken supply chains and consumer demand reaching new lows, these book vendors were struggling to survive. Thus, using the synchrony of the skills and entrepreneurial spirit I had, I launched The RoadSide Bookstore, a dropshipping start-up to help these vendors sell their books online.
Reaching 40 countries and over 50,000 people, I’ve realized the indisputable and ever-growing power of technology. As very correctly stated by Prof Guy David, the pandemic has disproportionately impacted the lower strata of society, one that was already disadvantaged, and has aggravated their suffering, while tech companies have minted money throughout the pandemic.
I believe that the most important thing this pandemic has taught us is that technology is a great tool to achieve equity. With the Internet being as widespread and accessible as it is today, it brings endless opportunities to almost anyone, anywhere on the planet. It’s the one way that traditional businesses and even those working from home can remain strong in the face of their respective adversities. Even though we work and study from home, technology connects us as if we’re right next door. Prof Gallino espouses the right mindset perfectly – “When you make decisions laser-focused on efficiency, you might be missing out on resilience.”
I believe that’s exactly what we need for all those impacted by the pandemic to get through it and emerge stronger, bolder, and more confident. Mind you, the economic and educational impacts of COVID-19 can’t be reversed. The pandemic will be a part of our history. However, it’s up to us to decide whether this is a crushing, last blow or a minor blip in our history of innovation. Technology is truly the great equalizer.
Hi Kush! I would first like to thank you for employing drop-shipping in a productive, positive, and genuinely beneficial way. For too long has drop-shipping been associated with fake social media “entrepreneurs”, and I am glad to see someone use it not as a means to profit but to help their community.
That being said, I am very curious about the e-commerce sphere in India. Of course, global shopping has moved increasingly virtual in the past decade, but is it the same for a population-dense city like Mumbai? When I lived in Qingdao, China (a city with over 10 million inhabitants), I noticed that there were also a lot of local bookstores. Because of the city’s emphasis on public transport, increased foot traffic led to more customers for these bookstores. In fact, bookstores became so popular, that they became common hangout spots for students after school. I am not sure how badly COVID-19 has damaged bookstore operations in China but I imagine it’s quite significant given China’s strong Zero-COVID policy. The Indian response to COVID was less extreme than China but you mentioned that Mumbai stores struggled to sell any books during the pandemic which is very unfortunate. Aside from drop-shipping do you think there are outlets for these vendors to expand their consumer base? While online shopping is no doubt more efficient and sometimes cheaper, the novelty of being surrounded by books and flipping through them cannot be replaced. With COVID settling down, perhaps vendors could leverage the nostalgia factor of bookstores and create more business opportunities.
Finally, you mentioned that “technology is truly the great equalizer.” Given your earlier statements about the pandemic disproportionately affecting the lower strata of society and how tech companies are pushing predatory practices on local businesses, I believe that your final sentiment is not entirely correct. It is precisely because technology is not equal that businesses who are not with the times can still have paths to success. I hope Mumbai, its many local vendors, and your start-up may all fight through the pandemic and be prosperous.
Wow Kush, I am beyond impressed with your startup and how far you’ve extended your hands to others around the globe! I respect that you took initiative to resolve real-world issues affecting your community and I am positive that there are many others out there like you. It is definitely not an easy endeavor when the pandemic has so abruptly destroyed our normality. Like you, I also grew up reading about the wonderful adventures of Geronimo Stilton and his friends to reading life-changing novels like “To Kill a Mockingbird” through local book vendors in my city. Thus so, I deeply resonate with you when you said that the issue of COVID-19 impacting local businesses struck close to home.
As soon as the waves of the pandemic hit, businesses were quick to establish online shops to maintain profits. However, this was not the case for every business. Many businesses located in disadvantaged areas lacked the resources necessary to list and advertise their items online while big service corporations like Amazon thrived in such deadly circumstances. Just to emphasize, Amazon’s profits have grown by 220% ever since COVID-19 made its mark in 2020. With just a click of a few buttons, one can almost instantaneously purchase what they normally would at any physical book store, whether it’s textbooks for school or the latest book by their favorite author. Doing this especially devalues local bookstores, such as Turn the Page Again, who sell books sustainably while also donating their profits to non-profit organizations.
Given these issues, it is safe to say that your statement regarding technology being a great tool to achieve equity is only a sliver of the truth. While technology has no doubt drastically eased the transition to a remote lifestyle, it has also further split a gap between the lower strata and the rest of society. In the United States, 37.2 million people were classified as socioeconomically disadvantaged. Out of these 37.2 million people, 41% of them do not own a desktop or laptop computer. Doing the math, we now know exactly that 15.3 million people do not have access to the proper technology that’s necessary to even open an online business to sustain themselves. The effects of this digital divide go beyond just businesses, it is also one of the main causes of students trailing behind in their education, especially during the pandemic.
With the ever-growing power of technology comes along the necessity for a bridge between technology and all populations in society. I propose that there be new initiatives launched with the goal of raising money to donate technology to those that are socioeconomically disadvantaged. To achieve this, businesses should reevaluate their missions to focus on combating this issue.
Kush, your startup will no doubt inspire many others to take action and also provide many more opportunities to vendors throughout the world. For our mutually shared love of Geronimo Stilton books, I wish you the best of luck with your future aspirations!
In my opinion innovation is the driving factor that has got us to the place where we all exist today. During the covid pandemic as a 14-year-old living in India, I embraced the opportunity to do something that would help the animals. In a country like India where there is a big problem of stray dogs living on the streets, they are not able to get adequate amounts of food. My friends and I set up drives in our neighborhoods to provide food and water to these dogs. After looking at the nearby businesses failing I figured that businesses have to be more flexible and have better protection against pandemics because this is certainly not the last one. Some of the observations I made were that covid with all of its drawbacks brought some things that have helped businesses be more efficient like online/hybrid mode which has come out to be quite productive and efficient. Since this is probably not the last pandemic, we must be prepared for the worst even in the best times. The businesses have to be more resilient to change to get peak efficiency. The Penn Wharton budget model has been a key in providing research and economic analysis for these businesses to be efficient. It is good for policymakers to implement these studies which are based on real-time data to help maximize productivity in the workplace and minimize the loss. The studies done by the PWBM can help improve the workplace in an efficient manner.
In 2020, when Covid-19 induced pandemic hit the country, everyone was stuck in home. As I had conversation with my peers, I found them to be happy. Why? Because they were relieved from going to school. After few months, many of them were tired of attending the daunting online classes. Even I felt dullness just by sitting in home.
As the time lapsed, I got elected as the Sports Captain, as part of the student council. Meanwhile in the first meeting with other members, after brainstorming, as a council we were convinced with an idea of e-sports fest. So, we planned together and implemented ‘festival de deportes’. While executing it, I realized that business is everywhere, i.e. business concepts are applicable in multiple scenarios. For instance, wherein I started with Market research through circulating e-forms amongst students and then we promoted the event on various media forms, especially social media which persuaded young audience to join the event. To keep it cost-effective we used open-source free software. It helped us make it more accessible.
For me key takeaways were, coordinating and collaborating with people possessing different skills, gaining experience of teamwork. Secondly, customer is centre of business planning. Since we kept our target audience in centre of strategy making, thus we achieved success with registrations coming up to nearly 1000 people. Thirdly, using IT is unavoidable. Without we using ICT, would have been unable to sustain during pandemics. This applies to businesses too. As I saw in many places, people were afraid to go and buy in stores or pay with notes and coins, instead many preferred to use mobile to pay electronically and buy from online sellers to keep covid at bay. Those (businessmen) who accepted it survived, while others suffered. Thus, we have to ultimately adopt technology.
This idea of online sports was even seen in across city, but when I did it myself, I felt I had achieved something.
While doing so it is important to remember that IT and computer-based technology requires well motivated and trained staff to see desired results.
From what Prof. Parke said it can be inferred that if employers increasingly delegate authority and decision-making powers to employees, they feel motivated. This empowerment and autonomy are indeed linked with Herzberg’s theory of motivation, meaning workers show creativity and take initiative. This has immensely benefitted some firms, where such laissez faire leadership style has been adopted and led to developing of some innovative solutions. But at the same time, I agree with Professor Parke as maintaining a balance is key. Especially when everyone is working from home it is difficult to keep workers away from distraction. Thus, companies need to develop a robust communication system, which fosters collaboration and motivation amongst employees. Some individuals need clear guidance from manager and thus regular conversation within organisation is very important.
Also, it is observed that many businesses do not need an office. In my opinion some companies work better from home, and do not need a brick-and-mortar office. If they continue leasing premises, they are just wasting their money. It would be better for them to move to remote model permanently.
Lastly, looking at the Penn Wharton Budget Model perfectly analyses the business environment, and goes beyond to what most businesses undertake PEST analysis- Political, Economic, Social and technological. For any business and its management looking at insights from this model can prove very useful as it provides rich overview of the market scenario. Similarly, when Government and lawmakers see this model, they can evaluate outcomes mentioned in this and use it accordingly to reshape the countries or global economy. It covers vast areas from Demographics to migration and housing to covid-19 thus even an entrepreneur can plan his future business strategy with help of this model.
In short pandemic has impacted all of us in some or the other way.
As we all know about this mask free hopeless covid – 19 pandemic has brought us a big step for the technology industries. The big changes happened to the adults who has a job or not. The pandemic had brought people to be jobless but for the people who stayed in the work the environment had changed. The pandemic had brought people to work on their homes. Where the quarantine worked proved that the productivity in the house did not impact decreasing where some companies had increased their productivity. Where before, the working on the company building was normal and nowaday this kind of moving is unwelcomed to workers. This could make an estimation where after the pandemic this working home would continue by the workers. Thus, countries are directly hitting the effect of the supply chain crisis. For example, after a pandemic the country would work on to prevent this crisis again for any situation. Countries would rather increase work and supply making in their own country rather than dealing with other countries diplomatically. For example, the U.S. had difficulties producing cars because there was no industry to produce semiconductors. On the other hand, Korea had their own semiconductors industries where they had a better situation than the U.S. This means, countries like the U.S. will reshorize the companies where they were out and call other countries industries in their own country. This would have another jobless effect on the other countries.
However, the recently hot issue ‘Metaverse’. The Metaverse is simply another fake world inside and living like a real world, the similar version could be VR. This would make the imagination of the technological world such as the movie ‘Ready One Player’ into a real life. The developments of the technology had a big change where this Metaverse is of a big interest now. On the other hand, The OTT business are growing because of the pandemic where the interest of the other countries are increasing. Therefore the entertainment business is increasing in other countries. For example, by the Netflix ‘Squid Game’, K-pop and K-cultures are a big boom in other countries including Korea itself. So, some countries have a K- culture concept of cafe, restaurants. As a Korean this would be the biggest honor. If the pandemic had ended would this kind of business continue?
To conclude, some ideas like new where we imagined it could happen in future are now happening such as Metaverse. The country’s culture of working is now changing like Google where they work in their comfortable place and could be focused to make the best productivity. After a pandemic some countries will have a country-centered system, and the economic and cultural effects of the pandemic are very large to return to life before the pandemic. The biggest effect of the pandemic on the business was it made people make a big development on the technology industries that would happen in about 50 years future.
The pandemic was something that changed so many things beyond these parts of the finance and business world, but when looking at these specific sections, it can be seen how the effects on the business world can have such strong impacts. Reading this article explained to me further the effects on businesses beyond what you hear on the news. Since I work closely with some smaller businesses where I live, I was able to observe what changed as the pandemic progressed for their companies, and reading this article was able to put everything into perspective.
The research that is being done particularly about the learning loss with children in school is something that I find interesting. As someone who currently goes to a private school and has a younger sister who goes to a public school, I was able to do some research of my own on the learning loss in private schools vs. public schools during the pandemic. The statistics that the Penn Wharton Budget Model has found confirmed my own observations over the past two years and given me new insight. I look forward to doing more research into this topic and following the long-term effects of the learning loss.