Working from Home: Small Business Performance and the COVID-19 Pandemic
Zhang, T., Gerlowski, D. & Acs, Z. Working from home: small business performance and the COVID-19 pandemic. Small Bus Econ (2021). This is the preprint version of the paper. The published version can be accessed at https://rdcu.be/cjokP, https://doi.org/10.1007/s11187-021-00493-6.
38 Pages Posted: 27 Sep 2020 Last revised: 26 Apr 2021
Date Written: August 24, 2020
Abstract
During the COVID-19 pandemic many firms began operating in a working-from-home environment (WFH). This study focuses on the relationship between WFH and small business performance during the pandemic. We built a theoretical framework based on firm profit maximization, compiled an up-to-date (March through November) real-time daily and weekly multifaceted data set, and empirically estimated fixed-effect panel data, fractional logit, and multilevel mixed effects models to test our hypotheses. We find that in states with higher WFH rates, small businesses performed better overall with industry variations, controlling for the local pandemic, economic, demographic and policy factors. We also find that WFH rates increased even after stay-at-home orders (SHOs) were rescinded. With the ready technology and practice of WFH in the pandemic, our robust empirics confirm our theory and hypotheses and demonstrate WFH as a potential force that may expedite “creative destruction” instance and permanently impact industrial structure and peoples’ work lives.
Keywords: Work from Home, COVID-19, Small Business, Stay-at-home Order
JEL Classification: O33, L25, L16, M54
Suggested Citation: Suggested Citation