The Covid-19 Pandemic as External Enabler of Entrepreneurship

The Covid-19 pandemic is as stark a reminder as one can imagine of the profound impact environmental changes have on business. And it is not all doom and gloom; many new and existing businesses are triggered or booming because of Covid-19. Not all of these are health-related but feed on the consequences of changes in regulations and behaviour resulting from the pandemic. In other words, Covid-19 works as an External Enabler (EE) for some businesses, even if many others suffer. And like for other EEs, its business effects can be analysed and understood with the help or our EE Framework.

What do we then see? Covid-19 is an EE of tremendous spatial, sectoral and socio-demographic Scope – it affects most people and industries in most countries in some ways. This means that it comes with big opportunities and many opportunities for new ventures. However, it is an EE of limited temporal scope, so many of these opportunities are of short duration. It may thus be a good idea not to get stuck with large inventories and too many fixed assets in pursuing them. Depending on when a specific country is affected the suddenness and predictability of the Onset of Covid-19 varies. This likely affects what type of business it triggers or boosts. Predictability is also in the eye of the beholder—those more in the know have better ability to act strategically in response.

The most obvious Mechanisms by which Covid-19 creates business opportunities is the creation, expansion, and substitution of demand. To take a simple example, people are likely to buy office chairs when they need to work from home. Less obvious but equally important is resource expansion. When other businesses run into serious trouble due to lockdowns, essential resources like premises, equipment and people with skills and motivation become more available at lesser cost. This is always an important factor in facilitating new business. Creative entrepreneurs find and use even less obvious and more demanding mechanisms – those that are high in opacity and agency-intensity. Opportunities leveraging such mechanisms are likely to occupy less crowded and therefore more profitable spaces in the market. Not all of us are well-equipped to conceive and pursue ideas like ridding escalator handrails from virus with UV-light.

In terms of Roles Covid-19 will trigger many new ventures, from simple (and appalling) attempts to trade toilet paper at ridiculous prices online to social ventures addressing the suffering resulting from the recession that comes in the pandemic’s wake. In other cases, the pandemic enhances outcomes for new or on-going businesses without being the trigger, like in the office chair example. Further, the pandemic can shape either the product or service offered, the venture creation process, or the organisation of the venture, for example its business model. Product-shaping occurs when the product is what it is because of the pandemic, like those directly addressing the health consequences during the pandemic and the social consequences after it. Process-shaping could entail, for example, speeding up things due to reduced bureaucratic hurdles. We have seen some amazingly swift transitions in the early days of the pandemic. Venture-shaping can be, for example, choosing a more online strategy than what would otherwise have been chosen.

The above shows that the EE Framework can be used to understand entrepreneurial responses to Covid-19. But better still, it can be used to find additional opportunities in response to Covid-19, as well as in response to any other change to the business environment, be they technological, regulatory, economic, demographic, socio-cultural, or natural-environmental. And for researchers, it provides a framework for designing and interpreting studies of strategic entrepreneurship in response to environmental change.

Some of the above links lead to short, practice-oriented pieces on External Enablers. For academic papers on this topic see:

Davidsson, P., Recker, J., & von Briel, F. (2018). External enablement of new venture creation: A frameworkAcademy of Management Perspectives.

von Briel, F., Davidsson, P., & Recker, J. (2018). Digital technologies as external enablers of new venture creation in the IT hardware sectorEntrepreneurship Theory and Practice42(1), 47-69.

Davidsson, P. (2015). Entrepreneurial opportunities and the entrepreneurship nexus: A re-conceptualizationJournal of Business Venturing30(5), 674-695.

Davidsson, P. (2019). Guidepost: Look out! See change? Sea change ahead!. Academy of Management Discoveries.


Written by Professor Per Davidsson – Australian Centre for Entrepreneurship Research at the QUT Business School