The impact of government financial aid and digital tools on firm survival during the COVID-19 pandemic

David Bruce Audretsch (), Martina Aronica (), Maksim Belitski (), Davide Caddemi () and Davide Piacentino ()
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David Bruce Audretsch: Indiana University Bloomington
Martina Aronica: University of Palermo
Maksim Belitski: University of Reading
Davide Caddemi: University of Palermo
Davide Piacentino: University of Palermo

Small Business Economics, 2025, vol. 65, issue 2, No 6, 813-836

Abstract: Abstract This study explores the effect of bailout capital and digital diversification by small- and medium-sized enterprises (SMEs) on their propensity to survive during and after the COVID-19 pandemic. Using a random sampling of 5469 SMEs from 16 European countries, collected by the World Bank Enterprise Survey in May 2020, January 2021, and May 2021, we conduct a two-stage estimation to examine factors that first affected the propensity of SMEs to access bailout capital, and second, factors that increased the propensity of SMEs to survive longer during and after crises. Two key findings emerge. Diversification of government financial aid and the adoption of various digital tools to leverage the effect of shock by SMEs increase their propensity to survive by sized firms. Moreover, government financial aid does not moderate the effect of digital tool adoption on the propensity to survive. Policy insights and implications are also discussed.

Keywords: Bailout capital; Digitalization; Survival; COVID-19 pandemic; SMEs; Europe (search for similar items in EconPapers)
JEL-codes: D21 D22 L26 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11187-025-01014-5

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