Peer Influence and Individual Motivations in Global Small Business Adaptation

This research challenges the macro-centric narrative of crisis management by examining the socially embedded responses of small business owners during the global COVID-19 pandemic. While the literature frequently prioritizes the structural resilience of large firms, this study utilizes a novel conceptual framework to analyze how social networks, collective identities, and normative motivations shaped the adaptation strategies of over 27,000 entrepreneurs across 43 countries. Our analysis reveals that entrepreneurial agencies are deeply tied to interpersonal influence; expectations for future opportunities were significantly molded by peer effects, while the social contagion of nearby business closures exacerbated perceived impediments to growth. Furthermore, the study highlights a critical divergence based on entrepreneurial identity: family and purpose-driven actors—whose logic is rooted in social stability—suffered a more pronounced decline in innovation following income shocks compared to their wealth-driven counterparts. Finally, the study quantifies a significant structural shift in the entrepreneurial pipeline. While the pandemic triggered a 1.5% increase in potential entrepreneurs (reflecting a shift in societal aspirations), it caused a 2.3% contraction in emerging entrepreneurs, signaling a breakdown in the transition from individual intent to formal social organization. These findings suggest that crisis adaptation is not merely a financial calculation, but a complex negotiation of social support systems, peer-group benchmarking, and institutional trust.