IDEAS home Printed from https://ideas.repec.org/p/jrp/jrpwrp/2021-007.html
   My bibliography  Save this paper

The COVID-19 Pandemic and Entrepreneurship in Germany: First Observations and Interpretations

Author

Listed:
  • Michael Fritsch

    (Friedrich Schiller University Jena, Germany)

  • Maria Greve

    (Friedrich Schiller University Jena, Germany and University of Groningen, The Netherlands)

  • Michael Wyrwich

    (University of Groningen, The Netherlands and Friedrich Schiller University Jena, Germany)

Abstract

The COVID-19 pandemic severely affected not only incumbent firms, but also the emergence of start-ups. This paper investigates and analyzes the pandemic's effect on new business formation, as well as business exits and insolvencies, in Germany. We find that the overall level of business registrations slightly decreased during the first year of the pandemic, but that the effect is specific to certain industries. Innovative manufacturing industries and technology-oriented services experienced an increase in numbers of start-ups. High subsidies and a temporary suspension of important criteria obliging firms to declare insolvency weakened market selection resulting in fewer exits in 2020. The relaxation of insolvency regulations may lead to considerable numbers of 'zombie' firms. Generally, the pandemic re-enforced ongoing structural change, but also exerted specific effects that may be temporary in nature.

Suggested Citation

  • Michael Fritsch & Maria Greve & Michael Wyrwich, 2021. "The COVID-19 Pandemic and Entrepreneurship in Germany: First Observations and Interpretations," Jena Economics Research Papers 2021-007, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2021-007
    as

    Download full text from publisher

    File URL: https://oweb.b67.uni-jena.de/Papers/jerp2021/wp_2021_007.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Konon, Alexander & Fritsch, Michael & Kritikos, Alexander S., 2018. "Business cycles and start-ups across industries: An empirical analysis of German regions," Journal of Business Venturing, Elsevier, vol. 33(6), pages 742-761.
    2. Sebnem Kalemli-Ozcan & Bent Sorensen & Carolina Villegas-Sanchez & Vadym Volosovych & Sevcan Yesiltas, 2015. "How to Construct Nationally Representative Firm Level Data from the Orbis Global Database: New Facts and Aggregate Implications," NBER Working Papers 21558, National Bureau of Economic Research, Inc.
    3. David Bailey & Jennifer Clark & Alessandra Colombelli & Carlo Corradini & Lisa De Propris & Ben Derudder & Ugo Fratesi & Michael Fritsch & John Harrison & Madeleine Hatfield & Tom Kemeny & Dieter F. K, 2020. "Regions in a time of pandemic," Regional Studies, Taylor & Francis Journals, vol. 54(9), pages 1163-1174, September.
    4. Sørensen, Bent E & Kalemli-Özcan, Sebnem & Volosovych, Vadym & Villegas-Sanchez, Carolina & Yesiltas, Sevcan, 2015. "How to construct nationally representative firm level data from the ORBIS global database," CEPR Discussion Papers 10829, C.E.P.R. Discussion Papers.
    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. Albert, Christoph & Caggese, Andrea & González, Beatriz & Martin-Sanchez, Victor, 2023. "Income inequality and entrepreneurship: Lessons from the 2020 COVID-19 recession," Journal of Banking & Finance, Elsevier, vol. 149(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. Stieglitz, Moritz & Setzer, Ralph, 2022. "Firm-level employment, labour market reforms, and bank distress," Journal of International Money and Finance, Elsevier, vol. 120(C).
    2. Fuest, Clemens & Hugger, Felix & Neumeier, Florian, 2022. "Corporate profit shifting and the role of tax havens: Evidence from German country-by-country reporting data," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 454-477.
    3. Marco FRIGERIO & Daniela VANDONE, 2018. "Virtuous or Vicious? Development Banks in Europe," Departmental Working Papers 2018-07, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    4. Alam, M. Jahangir, 2020. "Capital misallocation: Cyclicality and sources," Journal of Economic Dynamics and Control, Elsevier, vol. 112(C).
    5. Jarkko Harju & Ilpo Kauppinen & Olli Ropponen, 2023. "Firm Responses to an Interest Barrier: Empirical Evidence," Working Papers 7, Finnish Centre of Excellence in Tax Systems Research.
    6. Julia Bachtrögler & Christoph Hammer & Wolf Heinrich Reuter & Florian Schwendinger, 2019. "Guide to the galaxy of EU regional funds recipients: evidence from new data," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(1), pages 103-150, February.
    7. Joanna Tyrowicz & Siri Terjesen & Jakub Mazurek, 2017. "All on board? New evidence on board gender diversity from a large panel of firms," GRAPE Working Papers 5, GRAPE Group for Research in Applied Economics.
    8. Peter Gal & Alexander Hijzen, 2016. "The short-term impact of product market reforms: A cross-country firm-level analysis," OECD Economics Department Working Papers 1311, OECD Publishing.
    9. Lidia Smitkova, 2023. "Profits, ‘Superstar’ Firms and Capital Flows," Economics Series Working Papers 1030, University of Oxford, Department of Economics.
    10. Liang, Yan, 2022. "Impact of financial development on outsourcing and aggregate productivity," Journal of Development Economics, Elsevier, vol. 154(C).
    11. Serhan Cevik & Fedor Miryugin, 2022. "Death and taxes: Does taxation matter for firm survival?," Economics and Politics, Wiley Blackwell, vol. 34(1), pages 92-112, March.
    12. Kohler, Wilhelm & Kukharskyy, Bohdan, 2019. "Offshoring under uncertainty," European Economic Review, Elsevier, vol. 118(C), pages 158-180.
    13. Martijn J. Smit, 2017. "Cross-border agglomeration benefits," Letters in Spatial and Resource Sciences, Springer, vol. 10(3), pages 375-383, October.
    14. Castiglione, Concetta & Infante, Davide & Zieba, Marta, 2023. "Public support for performing arts. Efficiency and productivity gains in eleven European countries," Socio-Economic Planning Sciences, Elsevier, vol. 85(C).
    15. Klein, Daniel & Ludwig, Christopher A. & Nicolay, Katharina, 2020. "Internal digitalization and tax-efficient decision making," ZEW Discussion Papers 20-051, ZEW - Leibniz Centre for European Economic Research.
    16. Neira, Julian, 2019. "Bankruptcy and cross-country differences in productivity," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 359-381.
    17. Pezone, Vincenzo, 2020. "The real effects of judicial enforcement," SAFE Working Paper Series 192, Leibniz Institute for Financial Research SAFE, revised 2020.
    18. Bram De Lange & Bruno Merlevede, 2020. "State-Owned Enterprises across Europe: Stylized Facts from a Large Firm-level Dataset," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 20/1006, Ghent University, Faculty of Economics and Business Administration.
    19. Mr. Sergi Lanau & Petia Topalova, 2016. "The Impact of Product Market Reforms on Firm Productivity in Italy," IMF Working Papers 2016/119, International Monetary Fund.
    20. Raffaele Manini & Oriol Amat, 2018. "Credit scoring for the supermarket and retailing industry: analysis and application proposal," Economics Working Papers 1614, Department of Economics and Business, Universitat Pompeu Fabra.

    More about this item

    Keywords

    COVID-19; entrepreneurship; new business formation; Germany;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:jrp:jrpwrp:2021-007. 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: Markus Pasche (email available below). General contact details of provider: http://www.jenecon.de .

    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.