IDEAS home Printed from https://ideas.repec.org/a/kap/sbusec/v58y2022i2d10.1007_s11187-021-00493-6.html
   My bibliography  Save this article

Working from home: small business performance and the COVID-19 pandemic

Author

Listed:
  • Ting Zhang

    (University of Baltimore)

  • Dan Gerlowski

    (University of Baltimore)

  • Zoltan Acs

    (George Mason University)

Abstract

During the COVID-19 pandemic, many firms began operating in a working-from-home environment (WFH). This study focuses on the relationship between WFH and small business performance during the pandemic. We built a theoretical framework based on firm profit maximization, compiled an up-to-date (March through November) real-time daily and weekly multifaceted data set, and empirically estimated fixed-effect panel data, fractional logit, and multilevel mixed effects models to test our hypotheses. We find that in states with higher WFH rates, small businesses performed better overall with industry variations, controlling for the local pandemic, economic, demographic, and policy factors. We also find that WFH rates increased even after stay-at-home orders (SHOs) were rescinded. With the ready technology and practice of WFH in the pandemic, our robust empirics confirm our theory and hypotheses and demonstrate WFH as a potential force that may expedite “creative destruction” instance and permanently impact industrial structure and peoples’ work lives. Plain English summary The Rise of Working from Home (WFH) as a Silver Lining and “Creative Destruction” in the Pandemic: WFH Helps Small Businesses Perform Better with Industry Variations and Continues to Shine after Stay-at-Home Orders Ended. This study focuses on the role of working from home (WFH) for small business performance during the COVID-19 pandemic. We built a theoretical framework based on firm profit maximization and identified WFH as a rational business choice. We then compiled a real-time multifaceted data set, estimated panel fixed-effect, fractional logit, and multilevel mixed effects models, and find that (1) small businesses in states with higher WFH rates performed better with industry variations, controlling for local pandemic and socioeconomic factors; and (2) WFH rates increased after stay-at-home orders were rescinded. Our study demonstrates WFH as a potential “creative destruction” force that may expedite our technologically ready WFH adoption and permanently impact industrial structure and peoples’ work lives.

Suggested Citation

  • Ting Zhang & Dan Gerlowski & Zoltan Acs, 2022. "Working from home: small business performance and the COVID-19 pandemic," Small Business Economics, Springer, vol. 58(2), pages 611-636, February.
    • Handle: RePEc:kap:sbusec:v:58:y:2022:i:2:d:10.1007_s11187-021-00493-6
    DOI: 10.1007/s11187-021-00493-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11187-021-00493-6
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11187-021-00493-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nicholas Bloom & James Liang & John Roberts & Zhichun Jenny Ying, 2015. "Does Working from Home Work? Evidence from a Chinese Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(1), pages 165-218.
    2. Dingel, Jonathan I. & Neiman, Brent, 2020. "How many jobs can be done at home?," Journal of Public Economics, Elsevier, vol. 189(C).
    3. Catherine Buffington & Carrie Dennis & Emin Dinlersoz & Lucia Foster & Shawn Klimek, 2020. "Measuring the Effect of COVID-19 on U.S. Small Businesses: The Small Business Pulse Survey," Working Papers 20-16, Center for Economic Studies, U.S. Census Bureau.
    4. Alexander W. Bartik & Marianne Bertrand & Zoë B. Cullen & Edward L. Glaeser & Michael Luca & Christopher T. Stanton, 2020. "How Are Small Businesses Adjusting to COVID-19? Early Evidence from a Survey," NBER Working Papers 26989, National Bureau of Economic Research, Inc.
    5. Gihleb, Rania & Giuntella, Osea & Stella, Luca & Wang, Tianyi, 2022. "Industrial robots, Workers’ safety, and health," Labour Economics, Elsevier, vol. 78(C).
    6. Haltiwanger, John & Hurst, Erik & Miranda, Javier & Schoar, Antoinette (ed.), 2017. "Measuring Entrepreneurial Businesses," National Bureau of Economic Research Books, University of Chicago Press, number 9780226454078, December.
    7. Kolasa, Marcin & Rubaszek, Michal & Taglioni, Daria, 2010. "Firms in the great global recession: The role of foreign ownership and financial dependence," Emerging Markets Review, Elsevier, vol. 11(4), pages 341-357, December.
    8. Jose Maria Barrero & Nick Bloom & Steven J. Davis, 2020. "60 Million Fewer Commuting Hours Per Day: How Americans Use Time Saved by Working from Home," Working Papers 2020-132, Becker Friedman Institute for Research In Economics.
    9. Evan DeFilippis & Stephen Michael Impink & Madison Singell & Jeffrey T. Polzer & Raffaella Sadun, 2020. "Collaborating During Coronavirus: The Impact of COVID-19 on the Nature of Work," NBER Working Papers 27612, National Bureau of Economic Research, Inc.
    10. Alexander W. Bartik & Zoe B. Cullen & Edward L. Glaeser & Michael Luca & Christopher T. Stanton, 2020. "What Jobs are Being Done at Home During the Covid-19 Crisis? Evidence from Firm-Level Surveys," NBER Working Papers 27422, National Bureau of Economic Research, Inc.
    11. Zoltán J. Ács & Pontus Braunerhjelm & David B. Audretsch & Bo Carlsson, 2015. "The knowledge spillover theory of entrepreneurship," Chapters, in: Global Entrepreneurship, Institutions and Incentives, chapter 7, pages 129-144, Edward Elgar Publishing.
    12. Jeffrey M. Wooldridge, 2011. "Fractional response models with endogeneous explanatory variables and heterogeneity," CHI11 Stata Conference 12, Stata Users Group.
    13. Ting Zhang & Zoltan Acs, 2018. "Age and entrepreneurship: nuances from entrepreneur types and generation effects," Small Business Economics, Springer, vol. 51(4), pages 773-809, December.
    14. Basso, Gaetano & Boeri, Tito & Caiumi, Alessandro & Paccagnella, Marco, 2020. "The New Hazardous Jobs and Worker Reallocation," IZA Discussion Papers 13532, Institute of Labor Economics (IZA).
    15. ., 2020. "Do trade unions champion worker interests?," Chapters, in: Managing the Cooperative Enterprise, chapter 4, pages 63-82, Edward Elgar Publishing.
    16. Wilton, Robert D. & Páez, Antonio & Scott, Darren M., 2011. "Why do you care what other people think? A qualitative investigation of social influence and telecommuting," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(4), pages 269-282, May.
    17. Abizada, Azar & Bó, Inácio, 2021. "Hiring from a pool of workers," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 576-591.
    18. Aguilera, Anne & Lethiais, Virginie & Rallet, Alain & Proulhac, Laurent, 2016. "Home-based telework in France: Characteristics, barriers and perspectives," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 1-11.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Oudom Hean & Nattanicha Chairassamee, 2023. "The effects of the COVID-19 pandemic on U.S. entrepreneurship," Letters in Spatial and Resource Sciences, Springer, vol. 16(1), pages 1-22, December.
    2. Agnieszka Janik & Adam Ryszko, 2023. "Sustainability Reporting during the Crisis—What Was Disclosed by Companies in Response to the COVID-19 Pandemic Based on Evidence from Poland," Sustainability, MDPI, vol. 15(17), pages 1-54, August.
    3. Michele Samuele Borgia & Francesca Di Virgilio & Maura La Torre & Muhammad Adnan Khan, 2022. "Relationship between Work-Life Balance and Job Performance Moderated by Knowledge Risks: Are Bank Employees Ready?," Sustainability, MDPI, vol. 14(9), pages 1-20, April.
    4. Aleem, Majid & Sufyan, Muhammad & Ameer, Irfan & Mustak, Mekhail, 2023. "Remote work and the COVID-19 pandemic: An artificial intelligence-based topic modeling and a future agenda," Journal of Business Research, Elsevier, vol. 154(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Barrero, Jose Maria & Bloom, Nick & Davis, Steven J., 2020. "Why Working From Home Will Stick," SocArXiv wfdbe, Center for Open Science.
    2. Abrardi Laura & Grinza Elena & Manello Alessandro & Porta Flavio, 2022. "Work From Home Arrangements and Organizational Performance in Italian SMEs: Evidence from the COVID-19 Pandemic," Working papers 076, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    3. Maria Barrero, Jose & Bloom, Nicholas & Davis, Steven J., 2021. "Internet access and its implications for productivity, inequality and resilience," LSE Research Online Documents on Economics 113869, London School of Economics and Political Science, LSE Library.
    4. Gavoille, Nicolas & Hazans, Mihails, 2022. "Personality Traits, Remote Work and Productivity," IZA Discussion Papers 15486, Institute of Labor Economics (IZA).
    5. Erdsiek, Daniel, 2021. "Working from home during COVID-19 and beyond: Survey evidence from employers," ZEW Discussion Papers 21-051, ZEW - Leibniz Centre for European Economic Research.
    6. Althoff, Lukas & Eckert, Fabian & Ganapati, Sharat & Walsh, Conor, 2022. "The Geography of Remote Work," Regional Science and Urban Economics, Elsevier, vol. 93(C).
    7. Marta Fana & Francesco Sabato Massimo & Angelo Moro, 2021. "Autonomy and control in mass remote working during the Covid-19 pandemic. Evidence from a cross-professional and cross-national analysis," LEM Papers Series 2021/28, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. Nicholas Bloom & Philip Bunn & Paul Mizen & Pawel Smietanka & Gregory Thwaites, 2020. "The Impact of Covid-19 on Productivity," NBER Working Papers 28233, National Bureau of Economic Research, Inc.
    9. Julia Darby & Stuart McIntyre & Graeme Roy, 2022. "What can analysis of 47 million job advertisements tell us about how opportunities for homeworking are evolving in the United Kingdom?," Industrial Relations Journal, Wiley Blackwell, vol. 53(4), pages 281-302, July.
    10. Christian Kagerl & Julia Starzetz, 2023. "Working from home for good? Lessons learned from the COVID-19 pandemic and what this means for the future of work," Journal of Business Economics, Springer, vol. 93(1), pages 229-265, January.
    11. Kristian Behrens & Sergey Kichko & Jacques-Francois Thisse & Sergei Kichko, 2021. "Working from Home: Too Much of a Good Thing?," CESifo Working Paper Series 8831, CESifo.
    12. Hansen, Stephen & Lambert, Peter John & Bloom, Nicholas & Davis, Steven J. & Sadun, Raffaella & Taska, Bledi, 2023. "Remote Work across Jobs, Companies, and Space," IZA Discussion Papers 15980, Institute of Labor Economics (IZA).
    13. Essbaumer, Elisabeth, 2022. "Home Office is here to stay? Access to Home Office and Remote Work Potentials across Swiss Industries," Economics Working Paper Series 2213, University of St. Gallen, School of Economics and Political Science.
    14. Tomiura, Eiichi & Kumanomido, Hiroshi, 2023. "Impacts of inter-firm relations on the adoption of remote work: Evidence from a survey in Japan during the COVID-19 pandemic," Japan and the World Economy, Elsevier, vol. 68(C).
    15. Masayuki Morikawa, 2022. "Work‐from‐home productivity during the COVID‐19 pandemic: Evidence from Japan," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 508-527, April.
    16. Cevat Giray Aksoy & Jose Maria Barrero & Nicholas Bloom & Steven J. Davis & Mathias Dolls & Pablo Zarate, 2022. "Working from Home Around the World," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 53(2 (Fall)), pages 281-360.
    17. Christopher T. Stanton & Pratyush Tiwari, 2021. "Housing Consumption and the Cost of Remote Work," NBER Working Papers 28483, National Bureau of Economic Research, Inc.
    18. Hevia, Constantino & Macera, Manuel & Neumeyer, Pablo Andrés, 2022. "Covid-19 in unequal societies," Journal of Economic Dynamics and Control, Elsevier, vol. 140(C).
    19. Michael Gibbs & Friederike Mengel & Christoph Siemroth, 2023. "Work from Home and Productivity: Evidence from Personnel and Analytics Data on Information Technology Professionals," Journal of Political Economy Microeconomics, University of Chicago Press, vol. 1(1), pages 7-41.
    20. Caselli, Mauro & Fracasso, Andrea, 2021. "Covid-19 and Technology," GLO Discussion Paper Series 1001, Global Labor Organization (GLO).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:sbusec:v:58:y:2022:i:2:d:10.1007_s11187-021-00493-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.