International entrepreneurship in the post Covid world
Journal of World Business XXXXXXXXXX
Available online 14 September 2020
XXXXXXXXXX/© 2020 Elsevier Inc. All rights reserved.
International entrepreneurship in the post Covid world
Shaker A. Zahra
University of Minnesota, Strategic Management and Entrepreneurship Department, Carlson School of Management, University of Minnesota, 321-19th Avenue South,
Minneapolis, MN, XXXXXXXXXX, USA
A R T I C L E I N F O
Keywords:
International entrepreneurship
International new ventures (INVs)
Covid-19
Institutional change
Digitalization
Innovation
Research agenda
A B S T R A C T
How will the world look post Covid-19? What is the role of international entrepreneurship (IE) in this new
world? This article attempts to answer these two questions. It highlights the changes caused by Covid and how
they might affect the scope and types of international entrepreneurial activities in years to come. It also discusses
how international entrepreneurs are likely to operate and shape the emerging world order. The article concludes
y outlining the implications of these changes for IE scholarship, offering an agenda for future research.
1. Introduction
Well before the a
ival of Covid-19 (Covid), a debate waged on the
future of globalization and the place of new firms in the emerging world
order. Populist, nationalist and anti-globalization movements—with
varying ideological agendas—have raised serious questions about the
ole of international institutions as well as who benefits from interna-
tionalization (Devinney & Hartwell, 2020; Rodrik, XXXXXXXXXXAgainst this
ackdrop of political turmoil, the a
ival of Covid has only made things
worse, fueling concerns about the future of world business and the role
of multinational firms, large and small. Given that innovation and
entrepreneurship is what sparks and sustains companies’ international
usiness activities, it is common to ask: How will the world look after
Covid? How will this impact international business and, especially, interna-
tional entrepreneurship (IE)? While the reasons that motivate these
questions are understandable, no one knows the answer. What is now
obvious is that Covid has been a profoundly devastating global
pandemic that has spread wide and fast with ho
ible effects on econ-
omies, businesses and people. Predictions about its effects abound, but
what appears to be certain is that it will not go away quickly, and if it
does, its destructive legacy will continue for years to come. Covid has
already affected our way of life, views of our governments and con-
nections to other peoples. It has also affected our well-being.
This article will highlight key changes Covid has introduced into the
global economy. It will then discuss how these changes are likely to
affect international new ventures (INVs), which could be independently
owned or corporate sponsored, such as those created by MNEs
(Cumming, Sapienza, Siegel, & Wright, 2009; Zahra, XXXXXXXXXXWhether
corporate or independent, some INVs pursue profit making while others
adopt social missions. Still, other INVs have hy
id missions that focus
on profit making while having social impact. INVs originate and operate
from developed and emerging economies, pursuing opportunities across
international borders. Some of these companies internationalize their
operations from inception, actively moving people, ideas, innovative
technologies, business models and money around the globe (Keupp &
Gassmann, 2009; Reuber & Fischer, XXXXXXXXXXThe article will also outline
several research areas and related questions worthy of research.
Covid’s effects have been extensive, and it would be hard to discuss
them in detail in a single article. It is even much harder to predict its long
term consequences; these consequences are also likely to vary from one
country to another. Therefore, my presentation in this article is selec-
tive, focusing on key trends I consider especially pertinent to interna-
tional entrepreneurship. These effects are likely to affect a large portion
of the globe. Hence, by necessity, my presentation is not exhaustive.
Understandably, other researchers may view other issues not discussed
here as especially salient.
2. Covid and the change in the global business environment
Examining the vast literature on major crises (e.g., natural disasters
and epidemics) and how organizations survive offers some useful in-
sights (Danielsson, Valenzuela, & Zer, 2018; Jorda, Singh, & Taylor,
2020; Rerup, 2009; Wolf, 2014; Wright, XXXXXXXXXXTo be sure, financial
crises (e.g., global financial crisis of 2008) and epidemics (e.g., the
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Received 21 July 2020; Received in revised form 24 August 2020; Accepted 24 August 2020
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2
plague, Spanish flu and SARS) have engulfed many countries and
affected millions of people, destroying many businesses small and large.
Their effects touched every part of the global economy. It took years for
some economies to recover but others never did.
However, unlike some recent crises, Covid is a chronic health crisis
that has multiple dimensions. As a global public health crisis, it has led
to the closure of businesses and people staying home for months. Esti-
mates of the effect of Covid on the global economy are sketchy and vary
widely (for reviews, Congressional Research Service, XXXXXXXXXXThe
Congressional Research Service XXXXXXXXXXestimates that Covid “has
affected the $90 trillion global economy beyond anything experienced
in nearly a century”. Covid’s cost in terms of human lives has been
staggering. According to data by the World Health Organization (World
Health Organization, 2020), 12,750,275 people around the world have
contracted Covid, leading to 566,355 deaths; the numbers continue to
ise by the hour. Further, the International Labor Organization (2020)
data suggest that uncertainties created by Covid could cause half of the
labor force around the world to lose their jobs. They also estimate that
1.6 billion persons operating in the “informal economy” have suffered
massive damage to their capacity to earn a living. Millions of others have
lost their jobs, have been laid off or furloughed without a clear prospect
of returning to work. These changes have made Covid a national security
crisis that many countries also need to address to protect their people’s
wealth and well-being. As such, when and how to restart national
economies has sti
ed debate across the globe as predictions about
Covid’s resilience and persistence vary.
When thinking about the global business environment and how it
affects international ventures, it is clear that Covid has already
ought
about major changes that will profoundly impact these businesses for
years to come. Epidemics have this effect (Wright, 2020): they do
change how people live, think, and transact and organize their societies.
Most important of these changes
ought about by Covid to date are:
damaging long standing institutions, reshaping the global supply chains,
disrupting existing businesses and personal networks, and undermining
the flow of knowledge, technology capital, ideas and people across in-
ternational borders. While each of these changes can cripple interna-
tional ventures’ business activities, their joint effect is likely to be even
more devastating because these changes are interconnected, as dis-
cussed below.
2.1. Damaged institutions
Internationalization has grown rapidly over the past three decades
ecause of the emergence of stable international institutions that pro-
vided safeguards against opportunism. International treaties governing
intellectual property rights are a prime example. Institutions and treaties
provided guidance on fair trade and mechanisms to resolve disputes as
they arise (Lin, Zheng, Lu, Liu, & Wright, 2019; Ashlstrom & Bruton,
2010; Chandra & Coviello, 2010; Li, Liu et al., 2019, Li, Hernandez, &
Gwon, 2019; Marquis & Raynard, XXXXXXXXXXThese institutions have also
encouraged the liberalization of national economies and opening them
to foreign companies, enabling companies from developed and
emerging economies alike to participate in international business.
However, these institutions have come under attack as favoring more
advanced countries, allowing them to grow richer at the expense of the
poor. Some populist leaders have also come to see these institutions as a
means of hegemony that undermine national sovereignty, calling for
their reform or abandonment (Devinney & Hartwell, 2020; Zahra,
2020). Covid has taken hold globally at a time of great political turmoil,
further highlighting the vulnerabilities of international institutions as
countries have closed their borders and competed with each other to
procure medical supplies needed to take care of their citizens. This
competition has raised questions about the relevance, stability,
compatibility and effectiveness of international institutions.
Changes in the institutional context are likely to induce major
changes in international ventures’ goals, decision rules and strategic
ehavior (Odlin, XXXXXXXXXXThe growing politicization of international in-
stitutions is likely to further weaken their powers, making it hard for
them to function effectively in tomo
ow’s tu
ulent environment. For
example, with weak international institutions, countries may also erect
a
iers to protect their industries and citizens, which can reduce the
entry of INVs and limit the scope of their operations. This is likely to
complicate these ventures’ decisions as to where to operate interna-
tionally and how to conduct their businesses (e.g., which mode of entry
to use to enter particular markets). With the fate of some institutions in
question and the rise of protective ba
iers, the complexity of interna-
tional ventures’, strategic choices rises. In particular, in this environ-
ment, INVs from emerging economies might find it increasingly harder
to sustain their presence in international markets as they face institu-
tional voids at home and complex and unstable institutions in foreign
markets. It also becomes harder for INVs to raise funds from cross-border
investors such as angels and venture capitalists.
The changes just described make it critical for INVs to become active
institutional entrepreneurs; i.e., they need to devote considerable time,
esources and energy to help address the limitations of existing in-
stitutions or participate in the development of new viable institutions, a
task that takes considerable