The Impact of E-Business on Entrepreneurship Development in the
Context of COVID-19
LIUDMYLA VERBIVSKA
Department of Business, Trade and Stock Exchange Operations,
Yuriy Fedkovych Chernivtsi National University,
2 Kotsyubynsky str., 58012, Chernivtsi,
UKRAINE
HASSAN ALI AL- ABABNEH
Faculty of Administrative and Financial Sciences - E - Marketing and Social Communication,
Irbid National University,
PO Box 2600, 21110 Irbid,
JORDAN
ALINA KORBUTIAK
Department of Public, Corporate Finance and Finance Intermediation,
Yuriy Fedkovych Chernivtsi National University,
2 Kotsyubynsky str., 58012, Chernivtsi,
UKRAINE
OLENA BONDAR
Department of Information Systems and Technologies,
Bila Tserkva National Agrarian University,
8/1 Soborna Sq., 09117, Bila Tserkva,
UKRAINE
ANNA PANCHENKO
Department of Business Economics and Investment,
Lviv Polytechnic National University,
12 Bandera str., 79013, Lviv,
UKRAINE
INNA IPPOLITOVA
Department of Entrepreneurship and Trade,
Simon Kuznets Kharkiv National University of Economics,
9-A Nauki Ave., 61166, Kharkiv,
UKRAINE
Abstract: - The COVID-19 pandemic impacted every aspect of life on a global scale. E-business has become a
key factor influencing the profitability of businesses in various fields, regardless of their size. The aim of this
study was to assess the effectiveness of e-business in entrepreneurship development in various fields during the
COVID-19 pandemic. For this purpose, a panel analysis of data from 212 micro, small, medium-sized and large
companies, and nine business sectors (trade, chemical, light, pharmaceutical, food, agricultural, HoReCo (hotel
and restaurant industry), electronics and IT, transport) was used with data comparison for 2019 and 2020 in
Ukraine, Bulgaria, Poland, Moldova and Georgia. The e-business platform was found to be the key indicator of
maintaining performance during a pandemic. The analyzed questionnaire data show that 58% of respondents
saw an increase in online income in 2020 compared to 2019 that in such sectors as trade, IT and pharmacy.
There were 59% of respondents who saw the need to expand communication networks with existing and
potential customers, because it was positively correlated with the efficiency of e-business. Besides, the results
show that equity financing and proper liquidity management consolidate the economic performance of
WSEAS TRANSACTIONS on BUSINESS and ECONOMICS
DOI: 10.37394/23207.2022.19.164
Liudmyla Verbivska, Hassan Ali Al- Ababneh,
Alina Korbutiak, Olena Bondar,
Anna Panchenko, Inna Ippolitova
E-ISSN: 2224-2899
1824
Volume 19, 2022
businesses in terms of return on equity and return on assets. Our findings are useful to managers and investors,
and can help them make the best decisions about their management or investment activities. Moreover, the
study demonstrates how companies were responding to the pandemic in order to identify sectors that are more
vulnerable to the effects of the crisis and the key financial management decisions that companies need to make
during the crisis.
Key-Words: - E-business; Business; Return on assets; Return on investment; COVID-19.
Received: June 6, 2022. Revised: September 18, 2022. Accepted: October 22, 2022. Published: November 14, 2022.
1 Introduction
The COVID-19 pandemic has become a catalyst for
global economic change and radically reshaped
global business trends. The changes caused by
forced restructuring in the behavior of ordinary
consumers, the nature of trade, and even lifestyles
have affected every business. E-business has
become not only one of the main sectors of the
economy, but also an integral part of people’s
economic and social activities. In a broad sense, e-
business is any economic activity that involves the
use of electronic digital technologies. According to
[1], the e-business market grew by 25% in the
United States and by almost 30% in Europe in 2021
compared to 2020. Author, [2], states that analysts
single out the UK and the US with a share of e-
business of 10% or more in total retail sales among
the leading countries in terms of e-business market
development. The COVID-19 pandemic, being
significantly different from other types of
pandemics, has had a significant impact on the
world of e-business, although it is difficult to find
any unaffected aspect of our lives. For example, [3]
states that COVID-19 has spread to 112 countries
and, as of April 2022, is the most widespread virus
in the world. COVID-19 can also be diversified by
industry, as it has affected the manufacturing and
service sectors, including the HoReCo industry.
Author, [4], notes that 52% of consumers avoided
shopping and crowding during the pandemic.
Researchers, [5], provide the following data: 50% of
respondents said that they are less likely to visit
shopping malls and take part in entertainment,
followed by 46%, who said that they eat in public
catering establishments less often. Besides, [6] notes
that the COVID-19 outbreak changed the supply
channels for consumers, and therefore accelerated
the structural changes in the industry that affected
all. Author, [7], adds that it has also affected the
channels of interaction between manufacturers
(business relationships) and the way companies
work with their direct suppliers, wholesalers and
distributors.
Finally, the COVID-19 has impacted the end
consumer, and many suppliers cannot sell expensive
goods, while other outbreaks of the pandemic have
not had much impact on purchasing power.
Researcher [8] indicates that companies have many
questions in the chaotic situation of a pandemic
outbreak, such as how they can withstand downtime
and how long it will take them to recover from a
pandemic.
The role of e-business has grown significantly
because of the pandemic, and consequently the
people’ inability to go into the street. According to
the World Trade Organization, more than 3.2 billion
people were quarantined and worked at home in
2020, which resulted in a significant increase in
online shopping transactions during this period.
Authors, [9], note that COVID-19 has become a
source of global economic catastrophe and
uncertainty, as it has changed the value chain and
consumer models, as well as issued the challenges
of rapid cross-functional business evaluation [6].
Therefore, the study of the impact of the pandemic
and e-business trends is extremely urgent.
Author, [7], indicates that the world has
experienced the rapid development of information
technology, which entailed positive growth in e-
business in recent years, and COVID-19 has further
promoted the development of e-business, so it is
expected to reach $ 6.5 trillion by 2023. Besides, the
pandemic has increased demand for some products
by 30-40%, [10], and formed the customers’ habit to
shop online, [11], indicating significant potential for
development. Figure 1 illustrates the ten most
popular e-commerce retailers in the 2020 pandemic.
On the other hand, the COVID-19 pandemic has
caused significant difficulties for the business
environment around the world, as the growth or
decline in demand for a particular digital service
largely depends on customer behavior in terms of
perception of this global problem. Measures that
blocked and reduced business mobility have created
many barriers in the supply chain, [12], and have
threatened business continuity in a wide range of
activities [13].
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DOI: 10.37394/23207.2022.19.164
Liudmyla Verbivska, Hassan Ali Al- Ababneh,
Alina Korbutiak, Olena Bondar,
Anna Panchenko, Inna Ippolitova
E-ISSN: 2224-2899
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Fig. 1: The most popular e-business retail websites
in a pandemic [5]
The aim of the study was to assess the
effectiveness of e-business on business development
during the COVID-19 pandemic. This aim was
achieved through the fulfilment of the following
interrelated objectives:
- Conduct a survey of business entities of
different sizes and areas of activity to form a
research sample;
- Analyze the collected statistics for 2019-2020
to assess the impact of the COVID-19 pandemic on
the business environment;
- Identify the impact of e-business on business
development during COVID-19.
2 Literature Review
Author, [14], defines electronic business (e-
business) as an economic field that encompasses all
types of Internet transactions, including e-
commerce. The company’s e-business provides for
its own website, virtual store, [8], company
management system, e-advertising, marketing, [15],
business-to-business (B2B) or business-to-consumer
(B2C) models, [16].
This area currently includes a wide range of
remote services, which is constantly expanding due
to the increasingly progressive introduction of
economic activity on the Internet. Researcher, [14]
argues that while COVID-19 is a catalyst for
companies to revise their strategic business
development plans, short-term actions can be
implemented to respond to or mitigate the effects of
the COVID-19 pandemic to ensure business
continuity, [15].
Besides, author, [15] argues that companies
should train their employees to make decisions
remotely and independently. Author, [12],states that
businesses should also use digital technology and
production automation. This is likely to reduce the
negative impact on business operations during the
COVID-19 pandemic outbreak, and reduce the
profitability decline, [17].
Researcher, [15], states that COVID-19 causes a
“tsunami-like” action, which affected all sectors of
the economy without exception. Author, [13],
emphasized that there has never been a period in
economic history where business has experienced
such complex stress because of the restrictions
imposed by the governments around the world on
free movement of goods. Researcher, [18], analyzed
key changes in the activities of economic entities to
assess business efficiency in response to the
COVID-19 pandemic:
- First, companies had to stop the supply of
raw materials because of the lockdown, which
created significant difficulties for suppliers and the
entire logistics chain. Prices have risen due to
supply shortages and unchanged high demand, [10].
- Second, COVID-19 halted production, and
demand for several products decreased significantly.
In particular, food sales fell by 80-100% because of
quarantine, [19].
- Third, receiving cash from retail chains has
slowed down sharply. This means that cash turnover
in commodity circulation has been critically
reduced, with the exception of critical suppliers.
This shortage has caused chaos in the tourism and
hospitality industry and negatively affected the
production and delivery of products, [20].
Pandemics are included in the list of unexpected
disruptions in the company’s economic activity
(force majeure). Besides, they pose a particular
threat to business activity management, which is
primarily manifested in three main components:
there is a feeling of long-term and great shock at the
beginning, [10]; which is followed by the supply
disruptions and spread of business chaos, and
finally, pandemics cause large-scale disruptions in
the infrastructure, [20]. Author [11] adds the fourth
component — declining general consumer demand
and distortion of consumption patterns, that is the
emergence of market anomalies caused by panic
buying due to changes in commodity preferences
[10].
COVID-19 has also significantly affected
countries’ GDP. For example, the UK’s GDP
decreased by 21.7% in Q4 2020 because of COVID-
4059
1227
804
648
614
562
532
395 292 272
Amazon.com Ebay.com
Racuten.co.jp Samsung.com
Walmart.com Apple.com
Aliexpress.com Etsy.com
Homedepot.com Allegro.pl
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Liudmyla Verbivska, Hassan Ali Al- Ababneh,
Alina Korbutiak, Olena Bondar,
Anna Panchenko, Inna Ippolitova
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19 [21], with Spain ranking second after a 22.1%
decline in GDP in 2020 [11]. COVID-19 also
negatively affects the activities of business entities
by significantly reducing their profits. For example,
the German Post announced the EBIT reduction by
EUR 60-70 million, [22]; retail prices in China grew
by an average of 21.9% in February 2020 [10].
Apple, [23], reported a 15% and 18% decrease in
quarterly earnings for the Q3 and Q4 2020,
respectively.
Author [12] estimates that the COVID-19
outbreak caused a downtime of almost 9% of the
container fleet, while China’s production indices
had reached their lowest level since the Great
Recession upon suspension of production processes
induced by COVID-19 as of late 2020.
Research on the effects of the pandemic
outbreaks on business operations is not new, [24].
However, literature review reveals that most studies
have focused on the impact of COVID-19 in terms
of logistics. In fact, these studies mainly deal with
the impact of COVID-19 in terms of geography and
scale, without due regard to the methods of
stabilization of business activity by an entity.
Therefore, the focus of our research is the analysis
of the impact of e-business on entrepreneurship
during the global COVID-19 pandemic.
Some researchers made attempts of economic
analysis of the impact of the coronavirus pandemic
on businesses. Researchers [5] analyze the current
business situation and state that the crisis may arise
earlier for enterprises than for the whole country or
the world economy because of internal violations.
New trends assimilated by the businesses in
response to the pandemic included e-commerce and
new development opportunities helping to avoid
closure. Another interesting position of the
researchers is that the effects of the crisis last long
after it has actually ended, for all levels of
management, from employees and their families to
countries and the world, [25]. It is necessary to
manage cash flows properly, especially during a
crisis, such as the COVID-19 pandemic.
According to author [7], there are numerous
business indicators that reveal inadequate working
capital, such as late payments (inability to pay bills
on time), late deliveries (because the organization
cannot maintain adequate inventory, because it buys
materials from suppliers only after receiving orders
from buyers for particular products, and this
delivery period involves delays), and short-term
loan (the organization requires that its customers
pay an advance in cash to finance the manufacture
of products).
Another group of studies [20], [21], [24] focuses
on the management of large and small companies
during a crisis. Researcher [21] found that small and
medium-sized companies suffer more from the crisis
than large companies because of the likely
responsibility for shortage and lack of resources. An
extensive study conducted by author [20] in August
2020 involving 2,200 small and medium-sized
companies from five European countries (France,
Germany, Italy, Spain and the United Kingdom)
revealed that the vast majority of analyzed
businesses reported a decline in their income. The
decline was around 30-33% in Italy, Spain and the
United Kingdom, while it is much lower in France
and Germany (27% and 23%, respectively).
3 Methodology
The aim of the research was achieved through the
research methodology which was based on the use
of a multiple case study, where each company is
considered as a separate case. In general, the
research procedure consisted of the following
stages:
1. Empirical information was collected through a
questionnaire consisting of 17 questions related
to basic information about companies and their
characteristics (for example, size and industry),
impact of COVID-19 outbreak on business,
declining sales and profits, survival period (crisis
period), normalization period and probable
government support. The questionnaire is
attached in Appendix A.
2. It was decided to involve a personal and
professional network of researchers in order to
increase the number of responses. We contacted
potential respondents through various social
networking platforms such as WhatsApp,
Facebook and LinkedIn, including e-mail, and
invited them to participate in an online survey.
Complete confidentiality was guaranteed to all
respondents so that a large number of companies
could take part in the survey. Participation in the
survey was voluntary, and no financial
compensation was provided for the survey. The
official launch of the survey was preceded by
pre-testing the elements of the questionnaire
among a small sample of business owners to
assess the clarity and relevance of the
questionnaire items to identify and address any
potential problems.
3. As a result, data were collected from micro,
small and medium-sized and large companies
operating in nine industries: trade, chemical,
light, pharmaceutical, food, agricultural,
WSEAS TRANSACTIONS on BUSINESS and ECONOMICS
DOI: 10.37394/23207.2022.19.164
Liudmyla Verbivska, Hassan Ali Al- Ababneh,
Alina Korbutiak, Olena Bondar,
Anna Panchenko, Inna Ippolitova
E-ISSN: 2224-2899
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HoReCo (hotel and restaurant), electronics and
IT, transport (data were grouped according to the
availability of the company’s e-business
platform, this is why small and large businesses
could get into the same group, despite the large
scale of variation in their variables). A total of
212 companies were surveyed. Geography —
Ukraine, Bulgaria, Poland, Moldova, Georgia.
Note that many researchers have also taken a
similar approach and found it useful, as well as
time- and cost-saving, [26], [27].
4. All variables were analyzed for two periods:
2019 (pre-pandemic period) and 2020 (active
phase of the COVID-19 pandemic). All
dependent variables studied are generally
accepted indicators of management accounting
on company performance: Return on Capital and
Return on Investment of companies, which are
further explained by several independent
variables: working capital ratios, cash turnover
ratio; capital structure ratios, financial autonomy
ratio; and size indicators, such as the company’s
total assets, etc. (Table 1).
Table 1. Methodological imperative of the study
Group of
variables
Indicator
Formula
Performance
indicators
Return on
Equity (ROE)
Net Income /
Shareholders’ Equity
Return on Assets
(ROA)
Net Income/Total
Assets
Size
Total Assets
Total Assets (EUR)
Working
capital
Net Working
Capital
Net Working Capital
/ Total Assets (%)
Cash Turnover
Ratio
(Cash + Marketable
Securities) / Current
Liabilities (%)
Receivables
Turnover Ratio
Sales / Average
Receivables
Capital
structure
Financial
Autonomy Ratio
Equity Capital/Total
Liabilities (%)
Debt ratio
Debt/Equity (%)
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Liudmyla Verbivska, Hassan Ali Al- Ababneh,
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Anna Panchenko, Inna Ippolitova
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5. The data were interpreted through the
descriptive analysis of changes. This method studies
the impact of e-business in all its manifestations on
the company’s performance. In general, all selected
research methods (multiple case studies,
questionnaires, economic and statistical analysis,
descriptive analysis of change, etc.) are integrated
with the work of researcher, [28], who created
online trading platforms and allowed customers and
suppliers to trade online anytime, anywhere, even
though they are in different time zones on different
continents. The approaches that this researcher
applied contributed to the Information Processing
Theory and Digital Economy Theory, especially on
the influence of e-business on consumer decision-
making and the purchasing process itself. These
approaches also provided support in determining the
influence of e-accessibility on consumer decision-
making and the purchasing process.
6. The next step was the advancement of the
first hypothesis of the research:
- H1: The availability of an e-commerce platform
has a correlation with the productivity of the whole
business.
On the other hand, researchers [5] proposed a
theory based on companies’ beliefs about the impact
of customer satisfaction with an online business
platform on conversion rates and subsequent buying
intentions. They also explained that each unit of
website satisfaction indicator is projected to increase
the company’s average monthly revenue by $14.26
million based on the average e-commerce retailer
model.
7. This step involved the advancement of the
following hypothesis (H2), which is considered
through multi-attribute utility function:
- H2: Expansion of communication networks
with existing and potential customers is positively
correlated with the efficiency of e-business.
At the same time, different digital
communication strategies for consumers in
polychronic and monochronic countries should be
taken into account in the context of e-business
process management. According to author [17],
polychronic culture (the multitasking culture of the
French and Americans, among others) is a high-
context culture that is more convenient for
businesses to make decisions about buying and
promoting goods to consumers through e-
commerce.
Author, [28] identified seven factors of
marketing communications’ influence on driving
online buyers: economic motivation (competitive
pricing), social motivation (favorable social
environment), product motivation (product
availability), pragmatic motivation (convenience,
family’s/friend’s influence), situational motivation
(lack of time, lack of mobility, geographical
distance, need for special items), service quality
motivation (value-based perception) and
demographic motivation (demographic parameters).
So, the H2 hypothesis allows assessing the impact
of positive decisions that the consumers make on e-
commerce platforms on business performance.
In the context of the pandemic, we consider it
important to analyze the degree of impact of
COVID-19 on business performance indicators and
try to interpret their meanings to understand the
effects of the crisis on the selected companies. All
variables are added by means of preliminary
assessment with due regard to multicollinearity
aspects.
4 Results
The first main results of our study are presented in
Table 2, which reflects the changes in the
performance of the surveyed companies in 2020
compared to 2019.
WSEAS TRANSACTIONS on BUSINESS and ECONOMICS
DOI: 10.37394/23207.2022.19.164
Liudmyla Verbivska, Hassan Ali Al- Ababneh,
Alina Korbutiak, Olena Bondar,
Anna Panchenko, Inna Ippolitova
E-ISSN: 2224-2899
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Table 2. Change in the performance of the surveyed companies, 2020 to 2019
Sector
Availability of e-
commerce platform
2020 to 2019, (+/-) thousand USD
Non-current
assets, total
Long-term
financial
investment
Total current
assets
Total equity
Receipts
Cost of raw
materials and
consumables
Staff costs
Net profit
Agriculture
+
−3.23
23743
46082
−4.75
44604
43313
26.98
41.32
-
44652
322.30
23043
34213
−279.57
14.63
22160
−228.70
Trade
+
24654
44698
−13.19
32874
33.38
28.81
12816
55.54
-
−2.49
−0.11
24381
−0.75
−24.43
−56.68
12540
−9.29
Chemical
industry
+
−24.39
−14.31
0.53
69.63
133.12
89.95
−28.77
29.48
-
−1.15
21671
44741
17319
−11.93
44774
33208
−9.27
HoReCo (hotel
and restaurant)
+
−5.15
−53.76
13.52
−0.79
−33.80
−20.93
−12.62
−335.39
-
17930
0.38
−18.19
0.06
−61.88
−50.88
−32.78
−92.16
IT and
electronics
+
28.86
0.81
0.44
47.76
129.47
27.44
−4.68
120.24
-
−13.35
27120
−13.31
−10.34
-111.19
14.50
38.19
−162.30
Food industry
+
−7.64
32540
−0.73
22.78
−30.19
−20.17
−18.78
−14.08
-
−1.07
44745
−40.84
−9.23
−8.01
−28.30
18598
38.06
Pharmacy
+
−3.02
0.00
46539
23802
21.49
22.31
44645
209.01
-
23102
30590
22798
28126
−15.51
−22.28
36312
−38.69
Light industry
+
−10.09
46631
−8.80
−15.28
−25.60
−36.18
−28.42
−158.03
-
−1.69
−4.10
13606
−32.24
−44.58
−7.23
149.83
Transport
+
18.73
394.39
76.08
44645
−6.85
3244.75
421.49
-6188.81
-
27.60
114.47
−18.97
22341
−57.02
−12.40
18841
-26177
Significant changes in the main performance
indicators that all types of businesses have
undergone were noted in 2020 compared to the pre-
COVID year of 2019. The interpretation of
qualitative data related to the digital methods the
company used to make its offers to customers found
that many responses related to enhancing sales
through digital means (for example, using a website
to manage orders, takeaway sales, etc.). The
analysis of the data from the questionnaires revealed
that 58% of respondents had an increased income
generated online in 2020 compared to 2019 in such
areas as trade, IT and pharmacy. The primary reason
for that is the large number of people who are stuck
in their homes and accepted online shopping as a
fact. This means that many companies quickly re-
oriented on people’s needs and began to provide
people with what they want and need. It was a rapid
marketing re-orientation towards e-business that
provided increased income. Pharmaceutical
businesses achieved the largest positive change in
profitability — 73% of companies in this sector
reported growth. Consumer electronics also became
very popular during the pandemic — 69% of
companies have increased their revenue. There were
65% of companies selling cosmetics and personal
care items which demonstrated growth, with 18% of
them showing growth by more than 51%, which is
higher than in any other category.
Figure 2 groups companies by the percentage of
revenue from online sales in order to simplify the
analysis:
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DOI: 10.37394/23207.2022.19.164
Liudmyla Verbivska, Hassan Ali Al- Ababneh,
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Anna Panchenko, Inna Ippolitova
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Fig. 2: Distribution of companies by groups of revenue growth in 2020 compared to 2019
According to our grouping, Group A included
businesses that have increased their revenues by 11-
25% over the said period (56 businesses); group B
— 26-50% (97 businesses); group C — 51-75% (32
businesses); 76-100% (27 businesses). According to
the survey, 58% of those surveyed said that their
income generated online increased due to COVID-
19. According to respondents, revenue growth
during this period also depends on the company’s
online sales volumes. Revenue increased to 25% in
56% of Group A companies and 53% of Group B
companies. Revenue increased by 50% in most
Group C companies, while it increased by 51% or
more in 47% of Group D companies.
Despite the growth in sales of certain products in
many e-business companies, 48% of respondents
reported consumers to reduce their costs due to job
losses. Other barriers to income generation include
delays in supply chains (48%) and lack of business -
consumer communication (46%). A few e-business
representatives surveyed indicated that they
concerned themselves with the end consumers’
opinions about the purchased product. To fill this
gap, the vast majority (72%) stated their readiness
to intensify their marketing policies in order to
maintain dialogue with consumers. This was
reported by 88% of pharmaceutical companies,
producers and sellers of consumer electronics
(86%), personal care items (82%) and producers of
household commodities (80%). If we consider e-
commerce sales compared to total sales, 82% of
Group C companies promote their sales. They are
followed by Group D (80%), Group B (72%) and
Group A (50%) companies.
A total of 59% of respondents indicated that
COVID-19 made them invest more in e-commerce
channels in the near future, because they believe in
their rapid development. The distribution by
business areas is as follows: consumer electronics
(78%); ready-made food and beverages (77%);
personal care items (75%). Despite the pandemic is
abating, many people who would normally buy
offline by 2020 have assimilated a habit of buying
online. It is interesting that Group A companies are
likely to invest more in e-commerce channels, as
65% of respondents reported. They were followed
by Groups D (61%), Group C (58%) and Group B
(57%) companies.
Therefore, the COVID-19 recession has affected
all business areas, but not all companies use this
time to move forward and retain their customers.
The companies that maintain a constant dialogue
with buyers will keep their business and will have a
sustainable development as soon as the economy
begins to recover. According to the respondents,
59% consider a company’s presence on social
networks as positive communication; 54% of
respondents plan to invest in the brand reputation. A
positive brand image and its protection is most
important for companies engaged in the
pharmaceutical business (80%), consumer
electronics (78%), cosmetics (70%). A total of 62%
Group C and Group D respondents said they would
spend money on brand protection, followed by
Group B (55%) and Group A (46%).
The analysis of the statistics collected separately
over two years, which include the timing of our
research panel allowed assessing the impact of the
COVID-19 pandemic on the business environment
and its evolution with a view to e-business. It was
noted that the average Return on Investment in the
selected companies decreased in 2020, while the
11
26
51
76
25
50
75
100
А = 56
В = 97
С = 32 D = 27
0
20
40
60
80
100
120
020 40 60 80 100 120
А
В
С
D
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DOI: 10.37394/23207.2022.19.164
Liudmyla Verbivska, Hassan Ali Al- Ababneh,
Alina Korbutiak, Olena Bondar,
Anna Panchenko, Inna Ippolitova
E-ISSN: 2224-2899
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Return on Assets increased. This is explained by an
increase in the actual volume of investments for the
introduction of digital Internet platforms for
business development (and not fixed assets, for
example) and, as a result, an increase in the profit of
operating activities. Smaller investments at the
expense of equity (equity) capital used to finance
the company's assets in 2020 (compared to 2019)
made it possible to increase the indicators of
financial autonomy in 2020. Besides, the total assets
of companies and the ratios of net working capital
and cash flow increased on average in 2020
compared to the previous year. This is also due to
online shopping. However, the average receivables
turnover decreased in 2020 because of the
pandemic (Table 3). Table 4 designs a correlation
matrix between the studied variables.
Table 3. Analysis of statistical data on the results of economic entities in 2019 and 2020
Variable
Value
Std. Dev.
Min
Max
ROE_2019
0.2979
13.9491
−57.595
84.2946
ROE_2020
−1.5306
22.307
−261.369
74.2492
ROA_2019
−0.2322
7.0084
−30.9663
60.1173
ROA_2020
0.0217
2817817
−36.5278
168.7168
Debt Ratio_2019
53.0753
305.8779
−2680.71
3177.765
Debt Ratio_2020
50.8131
239.6238
−1342.27
1641.404
Financial Autonomy Ratio_2019
61.1329
44.703
−289.909
227.2304
Financial Autonomy Ratio_2020
63.9617
44.9695
−259.862
99.6157
Net Working Capital_2019
618661
43.8933
−218.322
233.5644
Net Working Capital_2020
755628
41.2283
−205.247
227.2274
Total Assets_2019
3.12 × 108
2.92 × 109
873.979
4.28 × 1010
Total Assets_2020
3.27 × 108
3.09 × 109
1015.44
4.53 × 1010
Accounts Receivable_2019
2438392
4.1371
−0.6091
49.4474
Accounts Receivable_2020
1940082
2112990
−0.6091
32.1221
Cash Turnover_2019
133.896
332.5721
−81.5196
2481.238
Cash Turnover_2020
144.5681
286.4192
−81.5196
2247.916
Table 4. Correlation matrix of the studied variables
ROE
ROA
Total
Assets
RTR
FAR
Net
Working
Capital
AR
Cash
Turnover
ROE
1
ROA
0.4946
1
Total Assets
0.0241
0.0289
1
Receivables Turnover
Ratio (RTR)
−0.3971
−0.0136
0.0031
1
Financial Autonomy
Ratio (FAR)
0.0322
0.3277
0.0061
0.0313
1
Net Working Capital
0.049
0.37
0.0085
0.1465
0.758
1
Accounts Receivable
(AR)
0.0585
0.0375
−0.012
−0.0415
−0.0219
−0.0384
1
Cash Turnover
0.0574
0.0975
−0.0091
−0.0378
0.213
0.2188
0.0611
1
Studies confirm the direct and indirect
relationships between ROE and ROA, on the one
hand, and other independent variables, on the other
hand, that are reflected in the positive or negative
correlation coefficients. So, Table 5 provides
estimates of simple and multiple regression
modelling applied to our unbalanced short data set.
The obtained model estimates the impact of the
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Debt Ratio on the Return on Capital of companies
and shows a negative correlation in many business
areas, as expected from the correlation matrix of
these variables, taking into account previous
calculations (Table 3). This debt indicator has the
greatest explanatory power (its correlation
coefficient is 0.0781). When the debt-to-equity ratio
of companies increases by one, their rate of return
on equity decreases by an average of 0.2204, with
everything else remaining unchanged. This explains
the general economic situation when most
companies tried to save their business during the
COVID-19 pandemic by additional equity infusions.
Calculations demonstrated that the more companies
finance their activities throughout the crisis, the
lower their return on equity.
Table 5. Companies’ performance based on ROE and ROA modelling as dependent variables
Sector
ROE
ROA
Simple
regression
Multiple
regression
Simple
regression
Multiple
regression
Agriculture
3.1046
3.1844
0.8909
0.9519
Trade
1.626792
1.780559
0.2424
0.3298
Chemical Industry
0.8859
0.9388
3.747348
2.91483
HoReCo (hotel and
restaurant)
−1.213
−1.2631
0.8453
0.9917
IT and Electronics
2.0719
2.0543
0.7827
0.7159
Food Industry
-3.61198
-2.74866
-3.34613
-2.552
Pharmacy
2.17534
1.038964
2.366102
4.0871
Light industry
-2.829
-2.401503
-2.053760
-2.142150
Transport
−11.2652
−11.2261
-7.0925
-6.1502
R2
0.2204
0.1325
0.0981
0.3372
Adjusted R2
0.1925
0.0781
0.2839
0.1523
Besides, the answers to the open-ended
questions of the questionnaire were analyzed
through specific methods of qualitative data
analysis. There were 153 of 212 businesses (72.2%)
that agreed that their companies used more digital
methods in its offers to customers during the crisis
caused by COVID-19, and noted a positive growth
of their business. Figure 3 illustrates this in the
sectoral context.
Fig. 3: Changes in the performance indicators of business entities since the introduction of e-business in the
sectoral context
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5 Discussion
This study was devoted to identifying the impact of
the global coronavirus pandemic on the results of
entrepreneurial activity in various business areas in
different countries. Thus, it was found that the most
common method of preventing the devastating
effects of COVID-19 on business areas such as
procurement, logistics, finance, etc., many
companies have implemented online trading to
reduce the likely impact in the long term. The
findings suggest that adopting e-commerce practices
helps companies better manage the impact of
COVID-19 and prepare accordingly for the next
unforeseen event. The similar importance of
conducting global scenario planning for predicting
the impact of COVID-19 is widely discussed in the
scientific literature. For example, author, [14],
argued that a decision support system should be
developed to predict the long-term impact of
COVID-19, while author, [15], presented a
simulation model to predict the effects of COVID-
19. Our results are consistent with these studies and
argue that using Internet technologies to mitigate the
impact of global pandemics can help companies
better prepare for operational constraints.
Our study has managerial implications. It
highlights actions taken by companies to mitigate
the impact of COVID-19, such as proactively
developing e-business. Using a multiple case
approach, data from companies of different sizes
operating in nine industries were analyzed: trade,
chemical, light, pharmaceutical, food, agricultural
industry, HoReCo (hotel and restaurant industry),
electronics and IT, transport found that companies
that use more digital methods in their business
processes have better performance during the
pandemic. These digital methods include both
communication (for remote access to the internal
workflow organization system or active
communication with consumers of your product),
and work platforms, social network platforms (for
trading, etc.).
We also found that many companies implement
flexible systems to solve online communication
problems, and it is difficult for some companies to
cope with the sudden transition to online activities
with a less reliable system that ensures business
continuity, [21]. This is why we propose the
companies to take additional steps and actively
develop a strong infrastructure to ensure the
continuity of e-business.
Besides, in agreement with author, [11], the
following hypotheses about differences in end-
customer approaches before and after the COVID-
19 outbreak were confirmed:
- before the pandemic, the experience of
customers (evaluation of feedback) had a positive
but not so significant impact on the (relative)
performance of the e-commerce platform. However,
the pandemic outbreak has changed customer
behavior, and businesses should make an effort to
buy what they need to buy under certain restrictions;
- before the pandemic, the relationship between
business performance and e-commerce platform
performance was not as pronounced as during its
outbreak. The reason for this was the transformation
of the method of obtaining the desired product by
the final consumer due to territorial transport bans
and the mass mobility restriction. As [6] states, this
has forced companies to implement strategies to
stimulate demand and flexible production to make it
closer to the consumer.
The results of the study show that the majority of
surveyed organizations (77.8%) use more digital
methods of communication with their clients now
than before the COVID-19 crisis (no country-related
differences were observed). Contacts with
customers through digital methods are directly
related to changing consumer behavior due to the
COVID-19 crisis.
One of the limitations of this study is the small
pool of respondents in the sample, which, although
reasonably reliable from a statistical point of view,
may not cover the diversity of organizations
necessary to fully represent the business
environment in all countries. We remind you that
the data were collected anonymously by surveying
top business managers, which preserved the veracity
of the data obtained. Also, because this study was
cross-sectional, differences between sectors were
not taken into account. The second limitation is that
the data were collected in the pre-2019 period and
the first phase of the COVID-19 outbreak (2020),
which does not show the full picture of the impact
of the Internet business development strategy on the
profitability of enterprises. For future studies, it is
suggested to increase the number of respondents in
the sample, to study three phases of COVID-19
(2020, 2021 and early 2022), as author, [19],
advises, and to process data using structural
equation modeling, [5], to see how the difference
between the results. This approach will confirm the
opinion that digitalization in general helps
organizations to create sustainable business models,
and the choice and method of implementation of the
applied digital methods depends solely on the level
of digitalization in the country of business
operation, [9]. We believe that future research is
required to better understand the impact of the
COVID-19 pandemic on business models and to use
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digitalization to reduce its negative effects on
business models.
6 Conclusions
The COVID-19 pandemic was a sudden but
ambiguous factor of impact on businesses around
the world. While some businesses will remain
closed after COVID-19, others may experience huge
growth. The aim of the study was to analyze key
changes in the activities of business entities to
assess the efficiency of e-business and its impact on
the entrepreneurship development in various fields
during the COVID-19 pandemic.
The multiple case study was used to collect data
from micro, small and medium-sized and large
companies operating in nine industries: trade,
chemical, light, pharmaceutical, food, agricultural,
HoReCo (hotel and restaurant industry), electronics
and IT, transport. The data were grouped by
availability of e-business platform, regardless of
company size. The descriptive analysis of changes
was used to interpret the data.
The hypotheses advanced in the study were
confirmed step by step: Hypothesis (H1) suggested
a correlation between the availability of an e-
commerce platform and increasing the productivity
of the whole business. The analyzed data from the
questionnaires show that 58% of respondents in
such industries as trade, IT and pharmacy saw an
increased income generated online in 2020
compared to 2019. This is due to the reorientation
towards e-business during the global COVID-19
pandemic. In terms of business areas,
pharmaceutical businesses (73%), IT and electronics
(69%); cosmetics and personal care items (65%)
achieved the largest positive change in profitability.
In the survey, 59% of respondents said they
would invest more in e-commerce channels in the
near future as a result of COVID-19, because they
believe in its rapid development. The distribution by
business areas is as follows: consumer electronics
(78%); ready-made food and beverages (77%);
personal care items (75%). This confirmed
hypothesis H2: the expansion of communication
networks with existing and potential customers is
positively correlated with the efficiency of e-
business.
In the context of the pandemic, the models of the
impact of COVID-19 on business performance were
developed and an attempt was made to interpret
their significance in order to identify the effects of
the crisis on the selected companies.
It was noted that the average return on
investment in the sample of companies decreased in
2020, while the return on assets increased. This
explains the general economic situation when most
companies during the COVID-19 pandemic tried to
save their business by additional equity infusions.
Calculations have shown that the more companies
finance their activities throughout the crisis, the
lower their return on equity.
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Anna Panchenko, Inna Ippolitova
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Appendix A
Questionnaire on the Impact of E-Business on Entrepreneurship during COVID-19 (developed by the authors)
1. Country of registration of business and country of official location
2. Business area
3. Business size according to European classification (micro, small, medium-sized, large)
4. Does the e-business platform work in the company?
5. Did the business operate during the active phase of the COVID-19 pandemic (February-June
2020)?
6. Did the COVID-19 pandemic affect the company’s overall business activity?
7. Assess the impact of COVID-19 on the financial and economic performance of business as of
the end of 2020 compared to 2019 (+/-):
7.1. Change in the value of non-current assets (including tangible and intangible assets);
7.2. Change in the size of long-term financial investment;
7.3. Change in the value of total current assets (including inventories, cash, receivables);
7.4. Change in long-term and short-term liabilities of different types;
7.5. Change in the equity size;
7.6. Change in revenue;
7.7. Change in costs of raw materials and supplies (transportation including);
7.8. Change in business performance (profit/loss);
8. Did the business feel government support (monetary/non-monetary) during the pandemic?
9. How long will it take the company to resume its activities after the COVID-19 pandemic?
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