The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees

Georgij Alekseev (), Safaa Amer (), Manasa Gopal (), Theresa Kuchler (), J. W. Schneider (), Johannes Stroebel and Nils Wernerfelt ()
Additional contact information
Georgij Alekseev: Stern School of Business, New York University, New York, New York 10012
Safaa Amer: Facebook, Menlo Park, California 94025
Manasa Gopal: Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30308
Theresa Kuchler: Stern School of Business, New York University, New York, New York 10012; National Bureau of Economic Research, Cambridge, Massachusetts 02138; Center for Economic and Policy Research, Washington, District of Columbia 20009
J. W. Schneider: Facebook, Menlo Park, California 94025
Nils Wernerfelt: Facebook, Menlo Park, California 94025

Management Science, 2023, vol. 69, issue 1, 7-24

Abstract: We analyze a large-scale survey of small business owners, managers, and employees in the United States to understand the effects of the COVID-19 pandemic on those businesses. We explore two waves of the survey that were fielded on Facebook in April 2020 and December 2020. We document five facts about the impact of the pandemic on small businesses. (1) Larger firms, older firms, and male-owned firms were more likely to remain open during the early stages of the pandemic with many of these heterogeneities persisting through the end of 2020. (2) At businesses that remained open, concerns about demand shocks outweighed concerns about supply shocks though the relative importance of supply shocks grew over time. (3) In response to the pandemic, almost a quarter of the firms reduced their prices with price reductions concentrated among businesses facing financial constraints and demand shocks; almost no firms raised prices. (4) Only a quarter of small businesses had access to formal sources of financing at the start of the pandemic, and access to formal financing affected how firms responded to the pandemic. (5) Increased household responsibilities affected the ability of managers and employees to focus on their work, whereas increased business responsibilities impacted their ability to take care of their household members. This effect persisted through December 2020 and was particularly strong for women and parents of school-aged children. We discuss how these facts inform our understanding of the economic effects of the COVID-19 pandemic and how they can help design policy responses to similar shocks.

Keywords: small businesses; COVID-19; working from home; small business finance; product pricing (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (10)

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http://dx.doi.org/10.1287/mnsc.2022.4327 (application/pdf)

Related works:
Working Paper: The Effects of Covid-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees (2020)
Working Paper: The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees (2020)
Working Paper: The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees (2020)
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