The K-shape Economic Recovery and a New Company Classification

Abstract

One of the main consequences the pandemic has brought is the economic recession since economic activities have been affected and, as a final result, companies have gone bankrupt and unemployment has increased. Specific negative impacts occur according to the economic activity type a company carries out, mainly due to face-to-face interaction intensity with economic agents. Companies that were able to innovate their production and distribution processes not only endured the pandemic but also grew. Companies that were not able to innovate stopped growing or, even worse, shrunk or went bankrupt. The research objective is to show that both economic recession and recovery alike are creating a broader two-sector classification based on the physical interaction intensity among economic activities. In order to do so, the link between economic recovery and business bankruptcy is performed by considering the economy sectors for European and North American regions; in particular, 14 European countries, Canada, the United States and Mexico were the studied economies. Findings show that face-to-face interaction is a main factor for some economic activities to decline; hence, business bankruptcy is related to that interaction so the K-shape economic recovery is created. Consequently, the pandemic has brought a new classification for companies.