Productivity and firm exit during the COVID-19 crisis: cross-country evidence
Small Business Economics
; 2022.
Article
in English
| Scopus | ID: covidwho-2014325
ABSTRACT
This paper examines whether the economic crisis induced by the COVID-19 pandemic exhibits a Schumpeterian “cleansing” of less productive firms. Using firm-level data collected for 34 economies up to 18 months into the crisis, the study finds that less productive firms have a higher probability of permanently closing during the crisis, suggesting that the process of cleansing out unproductive activities is occurring. The paper also uncovers strong and negative relationships of firm exit with digital presence and with innovation. These relationships are driven by small firms. The study further finds that a burdensome business environment increases the probability of firm exit, also driven by small firms, and that a negative relationship exists between firm exit and age. Finally, evidence shows that the cleansing process is disrupted in countries which have introduced policies imposing a moratorium on insolvency procedures. © 2022, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.
Full text:
Available
Collection:
Databases of international organizations
Database:
Scopus
Type of study:
Randomized controlled trials
Language:
English
Journal:
Small Business Economics
Year:
2022
Document Type:
Article
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