Entrepreneurial resiliency, innovation, and change during the COVID-19 Crisis

Lead Research Organisation: University of Edinburgh
Department Name: Business School

Abstract

Entrepreneurship is a critical part of the Government's economic development efforts and is a major goal for local and devolved governments. However, the COVID-19 crisis threatens many entrepreneurial firms. Existing research on crisis management and resiliency is oriented towards large multinational firms and gives little guidance to how entrepreneurs can protect their companies and innovate their business models in times of uncertainty. This project will investigate how entrepreneurs across the country are reacting to this crisis. Through interviews with 60+ high-growth commercial and high-impact social entrepreneurs we will identify the immediate strategies entrepreneurs use to limit the damage done to their firms. Repeated interviews over the next 18 months will show how these strategies evolve from damage control to planning how to redeploy their existing resources and create new capabilities to take advantage of new market niches created by the COVID-19 pandemic. These interviews will produce a detailed and nuanced perspective on how entrepreneurs react to crisis and how these reactions change over time. Findings will be rapidly communicated to the entrepreneurial community to share best practices and local and national policymakers to help them craft the most effective policies for aiding the recovery of country's entrepreneurial economy.
 
Description The project led to the collection of one of the world's largest qualitative datasets of interviews with high-growth entrepreneurs. Our original intention was to interview 60 entrepreneurs with at least 40 follow-up interviews over the course of the project, for a total of 100 interviews. We achieved 243 interviews with 93 entrepreneurs, more than doubling our initial estimates. This gives us an extremely large dataset to analyse, a process that will take multiple years even after the conclusion of the project. However, we have already derived several key findings which have rapidly been published through project reports, conference proceedings, and peer-reviewed papers.

Wellbeing and emotional labour: One of our first emergent findings was the importance that founders placed on maintaining wellbeing within their organization during the pandemic. This was part of broader resiliency strategies to help their organizations survive the pandemic both financially but also in terms of their employees' ability to perform. Interestingly, we noted that in order to ensure this organizational resiliency, entrepreneurs significantly increased the amount of emotional labour they performed, such as taking substantial time to talk to employees about personal matters or even breaking lockdown rules to meet with employees in person when they were having a crisis. For many entrepreneurs, this new emotional labour becomes a critical part of their crisis leadership strategy. The role of this type of emotional labour has not been noted in entrepreneurial crisis or leadership research and our findings provide an important new perspective about how entrepreneurs respond to a crisis.

Networks and ecosystems: Our longitudinal interviews allowed us to see how entrepreneurs' use of their social networks and their local ecosystems changed over the course of the study period. At the onset of the crisis, entrepreneurs made heavy use of their pre-existing social networks to make plans and get advice about topics such as furloughs and applying for pandemic support. Many leaned heavily on informal communities using platforms like Slack, Discord, or WhatsApp to talk with each other and see what actions their colleagues were taking. However, as the pandemic went on most interviewees made progressively less use of their social networks and instead tended to solve problems internally. This was due to the lack of face-to-face contact, which weakened connections between people. It is unclear if entrepreneurs will now strengthen their networks now that lock-down restrictions have been ended or if they will make progressively less use of their networks post-pandemic.

Sales cycles: The pandemic had a massive impact on how entrepreneurial firms, particularly business-to-business firms, sell their products. The lockdown meant an end to in-person sales calls and the loss of in-person events such as conferences and trade fairs that firms use to make new sales contacts. This change had positive and negative impacts. On the positive side, founders and sales teams found that they could now make video pitches to prospective clients who before would have demanded in-person visits. This allowed for higher sales productivity. In many cases, founders found that they could now more easily internationalize due to not having to travel to their customers. On the negative side, sales professionals found that without face-to-face interaction it was harder to progress and close deals, which increased the length of sales cycles and the cost of customer acquisition. Many firms invested heavily in new digital marketing and sales strategies. This problem was compounded by the loss of trade shows and networking events, which effectively 'froze' their sales networks, which may have long-term consequences for landing major new customers.

Business model innovation: Our dataset provides a new way of identifying how firms innovated their products, processes, and external configurations over the course of the pandemic. Using a novel methodology, we identified 24 instances of business model innovation, representing 25.8% of the interviewed firms. Using a qualitative comparative analysis approach, we have identified several configurations of firm and founder attributes that led to rapid business model innovation during a crisis. Two major configurations involve smaller, less-resourced companies undergoing 'survival innovation' in order to pivot out of markets closed off by the pandemic. Larger, more resourced firms were able to engage in 'scaling innovation' to take advantage of new opportunities created by the pandemic. However, we also found that the most well-resourced firms, especially those that raised substantial outside investment after the onset of the pandemic, had less need to engage in radical innovation and largely kept along existing trajectories.
Exploitation Route The sheer scale of the interview collection we have amassed provides us with the ability to develop several new findings about entrepreneurs in a crisis, which can be developed by other researchers. In addition to what we have already published, over the next year we expect to release new reports and publications regarding issues such as entrepreneurs' emotional labour leadership techniques, the nature of entrepreneurial innovation during a protracted crisis, and the changing role of networks during a disruption. In particular, our work on crisis innovation develops a new methodology for qualitative assessment of business model innovation which we feel will be of great use to other researchers.
Sectors Creative Economy,Digital/Communication/Information Technologies (including Software),Education,Financial Services, and Management Consultancy,Government, Democracy and Justice,Manufacturing, including Industrial Biotechology
 
Description Though our impact work is only just beginning, we have already had the opportunity to influence how policymakers have responded to the pandemic. Our greatest impact so far has been on members of our advisory board. Through presentations to our board, we highlighted the issue of frozen networks - how entrepreneurs were using their pre-existing networks less and less over the course of the pandemic. We suggested that this may have profound implications for both existing entrepreneurs but also new entrepreneurs who started the pandemic. Because these networks are critical for helping entrepreneurs overcome the common challenges of growth and innovation, their loss represents a major danger. We encouraged our advisors to begin in-person events as quickly as was legally and safely possible, as our data showed clearly that founders were no longer interested in web-based events. This research-based advice has helped organizations such as Entrepreneurial Scotland reconfigure their support delivery strategy over the past year. Our findings on the changing nature of sales cycles have been communicated to entrepreneurs through our public reports and media interviews as well as to local and national policymakers through talks and private communications. We have received anecdotal evidence from several founders about how an article in The Times on our findings helped them recognise both the challenges presented by new sales processes brought on by Covid but also the opportunities they provide.
First Year Of Impact 2020
Sector Creative Economy,Digital/Communication/Information Technologies (including Software),Government, Democracy and Justice,Manufacturing, including Industrial Biotechology
Impact Types Economic,Policy & public services
 
Description Blog posts on project site 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Public/other audiences
Results and Impact Bi-weekly blog posts were posted by project memebers on project site (https://www.ericcproject.uk/blog) to rapidly communicate emergent research findings to general public and entrepreneurs.
Year(s) Of Engagement Activity 2020
URL https://www.ericcproject.uk/blog
 
Description Briefing given to Innovate UK Top Management Team 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact Briefing given to Innovate UK top management team drawing on findings from this research project to discuss new directions for innovation policy and scaling support.
Year(s) Of Engagement Activity 2021
 
Description COVID-19 and entrepreneurship: Impact on entrepreneurial well-being - Presentation at MISUM FORUM 2020: COVID CRISIS - INCREASING INEQUALITIES AND DECREASING INVESTMENTS 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Other audiences
Results and Impact Presentation and panel discussion with Mistra Center for Sustainable Markets at the Stockholm School of Economics as part of larger conference on economic and social effects of Covid pademic. Between 100-200 in audience.
Year(s) Of Engagement Activity 2020
 
Description Coverage of project in Civil Service World 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact Brief mention of the PI's research presentation to InnovateUK and UKRI in Civil Service World, the professional newsletter for UK civil service,
Year(s) Of Engagement Activity 2022
URL https://library.myebook.com/csw/civil-service-world-312-december-2021/3797/#page/16
 
Description Entrepreneurial Networks and Ecosystems during the Covid-19 Crisis: Evidence from the ERICC project 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Other audiences
Results and Impact Research talk given at Cardiff University Centre for Innovation Policy Research
Year(s) Of Engagement Activity 2021
URL https://www.cardiff.ac.uk/events/view/2501553-workshop-2-policies,-actors,-and-outcomes-in-entrepren...
 
Description Fireside chat: Scotland CanDO Collective 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Professional Practitioners
Results and Impact Provided overview of to project findings to leaders of Scottish entrepreneurial ecosystems and officials from Scottish government. Discussed near-term and policy options for building stronger entrepreneurial ecosystems.
Year(s) Of Engagement Activity 2021
 
Description Maintaining Wellbeing in a Crisis: A Guide for Scale-Up Entrepreneurs 
Form Of Engagement Activity A broadcast e.g. TV/radio/film/podcast (other than news/press)
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Industry/Business
Results and Impact A guide for entrepreneurs on how to maintain their personal wellbeing and that of their employees in order to preserve productivity and avoid burnout. Distributed to public through website and social media channels and sent to all study participants.
Year(s) Of Engagement Activity 2020
URL https://www.ericcproject.uk/blog/new-report-maintaining-entrepreneurial-wellbeing-in-a-pandemic
 
Description News coverage of project research in The Times 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Public/other audiences
Results and Impact Article in The Times "Remote working during Covid makes it harder to close deals, entrepreneurs say" citing work coming out of the project.
Year(s) Of Engagement Activity 2021
URL https://www.thetimes.co.uk/article/remote-working-during-covid-makes-it-harder-to-close-deals-entrep...
 
Description Panelist at Westminster Business Forum policy conference Priorities for supporting new businesses to start and scale up in the UK 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Panelist for session "Developing future entrepreneurs - education, mentoring, and wellbeing" after introduction by Paul Scully MP, Minister for Small Business, Consumers and Labour Markets, Department for Business, Energy & Industrial Strategy and moderated by Lord Leigh, Vice-Chair, All-Party Parliamentary Group for Entrepreneurship. Provided key findings from research adn contextualized them within UK entrepreneurship policy.
Year(s) Of Engagement Activity 2021
URL https://www.westminsterforumprojects.co.uk/
 
Description Presentation at Actionable Insights Seminar Series 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Spoke at ESRC/GSR Panel to communicate policy findings of research to more than 150 policymakers and government professionals across Government in attendence. Spoke about implications of changing sales processes and business networks to future entrepreneurial growth.
Year(s) Of Engagement Activity 2021
 
Description Presentation at Entrepreneurial Resilience and Recovery panel 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Public/other audiences
Results and Impact Presentation at panel on Entrepreneurial Resilience and Recovery, organzed by Professor Erkko Autio at Imperial University. More than 150 people in attendence to hear progress on two ESRC-funded projects focusing on how entrepreneurs responded to the Covid-19 pandemic. Discussion included input from UK government policymakers and advisors, entrepreneurs, and researchers .
Year(s) Of Engagement Activity 2021
URL https://www.imperial.ac.uk/business-school/events/entrepreneurial-resilience-and-recovery-after-covi...
 
Description Presentation at InnovateUK Breakfast Club 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact InnovateUK KTN Innovators Breakfast. Briefed 50+ UKRI / InnovateUK employees, including InnovateUK CEO Indro Mukerjee, on findings from the ERICC project. Discussed impact of frozen networks on entrepreneurial growth and what InnovateUK can do to help thaw networks across the country.
Year(s) Of Engagement Activity 2022
 
Description Presentation at Japanese Committee of International Council for Small Business 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Presentation by co-investigator Fumi Kitagawa to the Japanese Committee of International Council for Small Business and the Japanese Society for the Promotion of Science (JSPS) Experts' committee on industrial structure and SMEs. CO-I spoke about the UK research approaches to the COVID crisis, talking about the ERICC project, team work, and key findings referring to the blog/reports on the ERICC website. Dr. Kitagawa added policy implications for SMEs and start-ups and the importance of place/sectoral focused measures and local demand creation
Year(s) Of Engagement Activity 2021
URL https://www.jsps.go.jp/j-soc/list/118.html
 
Description Presentation to InnovateUK leaders as part of Innovation Caucus Thought Leadership prohect 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Presented findings from project as part of larger Thought Leadership project with Innovate UK. Presentation is being disseminated within InnovateUK as part of their structural transformation towards InnovateUK edge and other changes related to future innovation policy.
Year(s) Of Engagement Activity 2021
 
Description Presentation to Scottish Enterprise Strategic Investment Directorate 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Policymakers/politicians
Results and Impact Presentation to Scottish Enterprise's Strategic Investment Directorate to inform them of project findings and make recommendations about innovation strategy to aid post Covid-19 recovery.
Year(s) Of Engagement Activity 2021
 
Description Public report: What we don't know will hurt us: The invisible problems hurting entrepreneurs 
Form Of Engagement Activity A broadcast e.g. TV/radio/film/podcast (other than news/press)
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Industry/Business
Results and Impact A public report on the subtle ways that the Covid-19 pandemic was affecting entrepreneurs. We focused on two emergent findings from our data: the freezing of entrepreneurial networks and changes to the sales funnel of high-growth firms. This report was circulated to project participants, posted on the project's website, and disseminated through the media.
Year(s) Of Engagement Activity 2021
 
Description Talk given at Babson College, Boston USA 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact A research talk given at Babson College, MA, USA. 30+ faculty attended and helped develop ideas for publication.
Year(s) Of Engagement Activity 2022
 
Description Times article on project: Don't neglect your networks, entrepreneurs are told 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Public/other audiences
Results and Impact Article in Times (digital and print) based on research findings from project.

Don't neglect your networks, entrepreneurs are told
Hannah Prevett

Entrepreneurs risk incurring lasting damage to their businesses by letting their networks stagnate during the Covid-19 pandemic, according to research highlighting "invisible problems" facing business owners.

Founders have focused on dealing with the financial impact of the pandemic or the effects on their workforce but have spent much less time cultivating new or existing contacts, according to a study from the University of Edinburgh Business School and the Economic and Social Research Council (ESRC).

This could have a negative impact on companies' growth prospects as they attempt to bounce back after the pandemic, the researchers warned. "We know that entrepreneurs with bigger, stronger, more diverse networks will do better than entrepreneurs without those things," Ben Spigel, senior lecturer in entrepreneurship at the University of Edinburgh Business School and author of the research, said.

"What we see now is that networks have been frozen for a year, no one has met anybody new and this is going to have profound consequences."

There are three principal ways in which entrepreneurs use their networks to help their companies to grow, according to the research: finding investors, finding customers and finding peer support. Networks in effect frozen during the pandemic negatively affected all three of these activities, Spigel said.

These are all challenges that resonate with Deirdre McGettrick, founder of ufurnish.com, a platform for buying furniture and home accessories. She is trying to raise venture capital funding without being able to meet investors face to face, something on which she has relied heavily in the past. "I met my lead investor [of my seed investment round] at a networking event," she said. "I spoke to him for five minutes and I got his business card. Over three years, before I even started the business, we'd meet for coffee once a year. He then became my lead investor."

This time she is having to rely much more on introductions to investors from within her existing network, as well as actively using social networks such as LinkedIn. "You do get some rejection but what's really great about it is that [with] those people that do connect you can pretty much guarantee that they will introduce you to two or three other people and that's what it's all about: it's not just about that one person but about who they know and trying to get those six degrees of separation connections."

It was thanks to one of these chance connections made through LinkedIn that McGettrick met Toni Wood, the former chief marketing and commercial officer at DFS, who was appointed chief marketing officer at ufurnish last summer. "All of a sudden, thanks to networking, we have a CMO who is top class."

Oli Barrett, creator of the training course Build a Better Network, said, however, that the role of sharing offline peer-to-peer advice in business growth and success could not be overestimated. "Those interactions are gold dust," he said. "One of the challenges with online environments is [that] typically you'll either keep [problems] to yourself or you share them with the whole world because some of these platforms are designed to be extremely public. They don't always lend themselves to conversations where you need or want to confide in someone.

"I encourage people to seize this opportunity to write to people and ask them for specific advice on a particular topic or challenge. I've noticed a real surge in generosity and helpfulness from business people who have been fortunate to have success in wanting to give something back.

"It's really important for businesses to understand that there's a lot of support out there and sometimes you just need to ask."
Year(s) Of Engagement Activity 2021
URL https://www.thetimes.co.uk/article/dont-neglect-your-networks-entrepreneurs-are-told-9s7vxg9fh
 
Description Videos of conversations between founders and research team 
Form Of Engagement Activity A broadcast e.g. TV/radio/film/podcast (other than news/press)
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Public/other audiences
Results and Impact To help disseminate our research findings and the impact of our research, we hosted a series of conversations between the research team and our research participants to identify some of the key lessons learnt during the pandemic. Conversations focus on several of the most pressing challenges founders have faced over the past two years and the most effective techniques we observed in our research. These videos were used in conjunction with our social media sites to help disseminate our work and tell important stories from our data.

The videos can be viewed at

https://www.youtube.com/watch?v=25IasJXarE0
https://www.youtube.com/watch?v=HoQWrZGg4IA
https://www.youtube.com/watch?v=qv_US1w3gBs
Year(s) Of Engagement Activity 2021,2022
URL https://www.youtube.com/watch?v=25IasJXarE0