Abstract
Background: Following the outbreak of Coronavirus disease 2019 (COVID-19), many businesses have put out measures to counter the impact of the outbreak and its related reactions from economic actors (individuals, authorities and other businesses) on their business operations. However, nearly no empirical studies or reports have been carried out to investigate the effectiveness of those measures.Aim: This study aimed at examining the effectiveness of business response measures to COVID-19 impact on business outcome.Setting: This study focused on businesses that are value-added tax (VAT) registered.Methods: A cross-sectional survey design was used. The authors applied logistic regression technique to analyse the effectiveness of business response measures on business outcome.Results: The authors found evidence that business responses such as virtual connection, innovative e-commerce and increasing working hours are more effective business responses, whilst decreasing work hours, laying off workers temporarily and ordinary e-commerce are less effective measures against the impact of the outbreak. Furthermore, business characteristics such as industry type (e.g. ‘agriculture, hunting, forestry and fishing’ and ‘electricity, gas and water supply’) are more resilient to COVID-19 shock, whilst pure export market and small businesses, secondary and tertiary, are significantly less resilient.Conclusions: Firstly, the study shows that some business responses are more effective in remediating the adverse impact of COVID-19 and therefore recommends policy intervention and industrial actions to promote them. Secondly, it is also recommended that financial bailout and/or Internet infrastructure and domestic support for small and export businesses could make them more resilient to the adverse impact of the outbreak.
Highlights
The outbreak of Coronavirus disease 2019 (COVID-19) has caused major economic shock and abnormalised business operation
It was estimated that each additional month the COVID-19 crises cost 2.5% – 3% of global gross domestic product (GDP), up to over 15% fall in a country’s GDP (Fernandes 2020), and this trend is expected to continue to the future as a result of (1) the forced reduction in the production of goods and services because of lockdown restriction, (2) reduction in household demand for goods and services, (3) disruption of global production and supply chains and (4) the impact of uncertainty on business investment (Arndt et al 2020)
South Africa is by no means exempted from the adverse impact of the COVID-19 pandemic
Summary
The outbreak of Coronavirus disease 2019 (COVID-19) has caused major economic shock and abnormalised business operation. The outbreak of COVID-19 has far-reaching effects, leading to about ‘half a million firms at risk of collapse’ (AmankwahAmoa, Khan & Wood 2020), accelerating unemployment by causing 24.3 million job losses (Ozili & Arun 2020). This has significantly reduced investor’s confidence (OECD Interim Economic Assessment 2020), posed significant short-run logistical challenges and severely disrupted goods demand (Juergensen, Guimón & Narula 2020). South Africa recorded a negative growth rate of −5.4% (Arndt et al 2020; Boumans, Link & Sauer 2020), closure of many firms and a decrease in employment from 57% to 38% (Ranchhod & Daniels 2020) This affects the overall business turnover of companies and investors. Nearly no empirical studies or reports have been carried out to investigate the effectiveness of those measures
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