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Challenges in Economic Policy,
Business and Management
in the COVID-19 Era
Challenges in Economic Policy, Business and Management in the COVID-19 Era
ISBN 978-83-61597-80-3
9 788361 597803
ISBN: 978-83-61597-80-3
eISBN: 978-83-959006-0-0
edited by Anna Ujwary-Gil
& Bianka Godlewska-Dzioboń
Challenges in Economic Policy,
Business and Management
in the COVID-19 Era
Edited by
Anna Ujwary-Gil
Bianka Godlewska Dzioboń
Reviewers
Barbara Błaszczyk, Justyna Bugaj, Anna Fornalczyk, Marta Gancarczyk,
Anna Maria Lis, Andrzej Lis, Mieczysław Morawski, Paweł Pisany,
Natalia R. Potoczek, Anna Ujwary-Gil
Proofreader
Paweł Japoł
Cover design
Joanna Długosz
Cover photo
Adobe Stock
© Copyright by Authors & Publishers. Warsaw 2021
These are the open access articles under the CC.BY license
(https://creatiecommons.org/licenses/by/4.0/legalcode).
Publisher
Institute of Economics, Polish Academy of Sciences, Nowy Swiat 72, 00-33 Warsaw, Poland;
Websites: http://inepan.pl
Publishing partner
Cognitione Foundation for the Dissemination of Knowledge and Science; Bohaterów
Tobruku 5, 34-400 Nowy Targ, Poland; website: http://fundacjacognitione.org/en
ISBN: 978-83-61597-80-3 | eISBN: 978-83-959006-6-2
Printing, binding and typesetting
Wydawnictwo i Drukarnia Nova Sandec
ul. Lwowska 143, 33-300 Nowy Sącz, Poland, e-mail: biuro@novasandec.pl
CONTENTS
TABLES ................................................................................................................................... 5
FIGURES ................................................................................................................................. 6
FROM THE EDITORS .......................................................................................................... 9
PART 1
COVID-19 – RESEARCH OVERVIEW
1. Solutions and research directions to the COVID-19 pandemic
at the economy, industry and business levels: A literature review
Anna Ujwary-Gil, Bianka Godlewska-Dzioboń .......................................................... 15
2. SCDS spreads and the level of public debt in Poland during
the Covid-19 pandemic
Maria Czech ....................................................................................................................41
3. The impact of the COVID-19 crisis on the Czech luxury fashion industry
Radka MacGregor Pelikánová ........................................................................................61
4. Importance of knowledge management in COVID-19 pandemic:
A case of small and medium-sized enterprises
Tereza Horáková, Kateřina Maršíková ...........................................................................79
PART 2
INDUSTRY AND INTER-ORGANIZATIONAL COOPERATION
5. Photovoltaic cells industry in China: Industrial policy and revealed
comparative advantage in the XXI century
Bogusława Drelich-Skulska, Paweł Brusiło ................................................................ 111
6. The Chinese photovoltaic cells industry and the Belt
and Road Initiative: The intra-industry perspective
Paweł Brusiło ............................................................................................................... 139
7. Selected conditions for the development of inter-organizational
cooperation in innovative processes on the Polish capital market
Joanna Kurowska-Pysz ................................................................................................ 165
PART 3
PRO-ENVIRONMENTAL, RESILIENT
AND INNOVATIVE ORGANIZATIONS
8. Symptoms of pro-environmental culture in companies located in Poland
Katarzyna Piwowar-Sulej ............................................................................................. 203
9. The concept of organizational resilience model and adequate measurement
mechanism
Bartosz Grucza, Piotr Tomszys .................................................................................... 221
10. Measuring innovative management with Management Innovation
Assessment Tool
Magdalena Gorzelany-Dziadkowiec ............................................................................ 245
5
TABLES
Table 1.1. Thematic areas of articles on COVID-19 ..................................... 18
Table 2.1. Public debt structure. Sectoral approach ...................................... 43
Table 3.1. Case Study – Twenty Czech fashion businesses
and their key parameters .............................................................. 67
Table 3.2. Information related to the COVID-19/coronavirus/face
masks on Internet pages – January 2021 ...................................... 68
Table 3.3. Information related to the COVID-19/coronavirus/face masks
on Internet pages – July 2021 ...................................................... 69
Table 4.1. Potential knowledge sharing barriers ........................................... 88
Table 4.2. Selected studies in the field of knowledge management
and knowledge sharing in SMEs .................................................. 90
Table 4.3. Respondents of the knowledge management in in-depth
interviews .................................................................................... 93
Table 4.4. Factors influencing the implementation of knowledge
management in chosen SMEs ...................................................... 96
Table 4.5. Preparedness of SMEs to knowledge management
implementation ............................................................................ 97
Table 4.6. Aspects of knowledge sharing culture in selected SMEs ............. 99
Table 5.1. New structural economics recommendations towards
industrial policy instruments for individual categories of industries .. 117
Table 5.2. Total energy generation by source in China (2000–2019) ......... 126
Table 5.3. Chinese PV trade flows and RCA index of the Chinese
photovoltaic cells industry in 2000–2019 .................................. 130
Table 6.1. Intra-industry trade index for photovoltaic cells in the context
of the trade between the People's Republic of China and
the Belt and Road Initiative countries in 2019 ........................... 152
Table 7.1. Held and key soft competences – science ................................... 177
Table 7.2. Held and key soft competences – business ................................. 178
Table 7.3. Held and key soft competences – the legislative
and economic environment ........................................................ 179
Table 7.4. Key hard competences – science, business, and the
legislative and economic environment ....................................... 181
Table 7.5. Motivators of inter-sectoral cooperation – science, business,
and the legislative and economic environment .......................... 182
Table 7.6. Barriers in the inter-sectoral cooperation – science, business,
and the legislative and economic environment .......................... 184
Table 7.7. Assessment of the effectiveness of particular forms
of inter-organizational cooperation – science ............................ 185
6
Table 7.8. Assessment of the effectiveness of particular forms
of inter-organizational cooperation – business .......................... 186
Table 7.9. Assessment of the effectiveness of particular forms
of inter-organizational cooperation – legislative and
economic environment .............................................................. 187
Table 7.10. The most effective forms of inter-organizational cooperation 188
Table 8.1. Statements (items) related to cultural symptoms ........................ 209
Table 8.2. Characteristics of the research sample ....................................... 210
Table 8.3. The values of Pearson correlation coefficient calculated
for the items used in this study (results with p<0.05) ................. 212
Table 9.1. Hard and soft resilience .............................................................. 223
Table 9.2. Objectives and activities for different categories of resilience ... 227
Table 9.3. Map of the resilience model ....................................................... 228
Table 9.4. Black Swans and Gray Rhinos ................................................... 233
Table 9.5. Organization Resilience Assessment Form ................................ 235
Table 9.6. Estimated level of organizational resilience ............................... 239
Table 10.1. Innovative management assessment questionnaire
with random data ....................................................................... 254
FIGURES
Figure 2.1. The structure of public debt during the COVID-19 pandemic .... 52
Figure 2.2. State Treasury debt and the level of SCDS spreads
in the period before and during the COVID-19 pandemic .......... 53
Figure 2.3. Level of SCDS spreads and indicators of the government
response to the pandemic in Poland ........................................... 54
Figure 5.1. Installed electricity generation capacity from PV
cells in China 2000–2019 (in GW) ........................................... 128
Figure 5.2. Chinese exports and imports of photovoltaics
in 2000 – 2019 (in million USD) .............................................. 129
Figure 5.3. Presentation of the Revealed Comparative Advantage index
for the Chinese (HS) 854140 products in 2000 – 2019
with the polynomial trend line .................................................. 131
Figure 6.1. Belt and Road Initiative member countries in 2019 .................. 143
Figure 6.2. Development of Chinese aggregated exports and imports
of solar (PV) energy technology-based components
2000–2019 (in million USD) .................................................. 149
Figure 6.3. Net exports of photovoltaic cells between China
and the BRI countries in 2019 .................................................. 150
Figure 6.4. The value of intra-industry trade between China
and BRI countries in 2019 ........................................................ 153
7
Figure 7.1. Key soft and hard competences in innovation processes
on the capital market ................................................................ 194
Figure 7.2. Effective forms of inter-sectoral cooperation
in innovation processes on the capital market and
correlations between them ........................................................ 195
Figure 8.1. The results obtained for 20 cultural symptoms
in Poland (PL) and in the UK .................................................... 211
Figure 9.1. Disruption life cycle on bathtub curve model ........................... 225
Figure 9.2. Phases and resilience categories ............................................... 227
Figure 10.1. Innovative management – graphical representation
of the assessment .................................................................... 255
Figure 10.2. Innovative management in Respekt Myślenice
– graphical representation of the assessment .......................... 257
Figure 10.3. Innovative management in the investigated enterprises
– graphical representation of the assessment .......................... 258
Figure 10.4. Innovative management in medium and large
enterprises – graphical representation of the assessment ........ 259
9
FROM THE EDITORS
The COVID-19 pandemic has made it necessary to redefine the most significant
challenges faced by individual economies and society today. It contributed
to the change of contemporary social, technological and economic trends,
the effects of which will indeed be the subject of many scientific studies in
the coming years. As the pandemic progresses, it promotes reflection and
summaries of the consequences of behaviors or omissions in each country.
One of them is a synthetic presentation of ten lessons from the pandemic
(Gorynia, 2021), which the professor accurately diagnoses in the economic
context: 1) the pandemic as a non-economic (sanitary-medical) shock that
caused the economic, social and political crisis; 2) the pandemic as a “black
swan”, an unpredictable threat of high species gravity, but requiring anticipation
to minimize its harmful effects in the future; 3) determining the causes of
the appearance of the virus determines different preventive actions for future
threats; 4) resilience as the foundation of long-term economic efficiency; 5)
the set of measures to counteract the harmful effects of a pandemic should
not be unified but adapted to the specificity of the facilities it is to affect; 6)
the world economy as a system of vessels connected with its positive and
negative consequences; 7) the pandemic highlighted the role of coordination
of international cooperation; the shortcomings of globalization must be
overcome by fairly sharing the positive fruits of international cooperation
and resilience aimed at diversifying supplies; 8) economic policy pursued
by individual states with a view to preventing the effects of the economic crisis
caused by a pandemic cannot be voluntary; 9) the pandemic has sharpened the
perception of the shortcomings of contemporary economic, social and political
systems and prompts the questioning of certain pillars of the market economy
(e.g., homo oeconomicus, individual and global rationality, private and state
property, canons of monetary, fiscal, budgetary or industrial policy); 10) the
pandemic increases the pressure on systemic and holistic thinking taking
into account green economic development, saving energy, water and other
resources, using renewable energy sources, avoiding wastage of resources,
10
paying attention to social inequalities in the world, regions and countries,
solving poverty problems, and social exclusion. This monograph is partially
a response to the in-depth issues covered in these lessons. The authors of
individual chapters challenge contemporary topics relating to the COVID-19
pandemic, industry and inter-organizational cooperation, pro-environmental,
resilient, and innovative organizations. The monograph consists of three parts.
The first part (PART 1) covers an overview of very recent research,
considering the impact of COVID-19 on the economy, industries, and business.
The article by Anna Ujwara-Gil and Bianka Godlewska-Dzioboń deals with,
among others, the issues relating to pandemic impacts on the slowdown in
the functioning of the construction, electric automotive, and water industries.
Also, it affects the tourist industry, where countries are starting to pay attention
to the resource-saving green economy and problems of professional exclusion
in the pandemic era. In another article, Maria Czech refers to the influence
of public debt on the volatility of spreads during the COVID-19 pandemic.
This research is part of the study on the use of sovereign credit default swap
spreads to assess a country’s credit risk, which may be distorted in a pandemic
period. It is undisputed that the COVID-19 pandemic has a global dimension.
The crisis resulting from disorders such as in value chains has caused industry
to slow down. The Czech luxury fashion industry is no exception. As Radka
MacGregor Pelikánová points out, COVID-19 has turned out to be a threat
to its development.. Leading Czech luxury fashion companies withdrew to
a passive role and felt the negative consequences of the pandemic. As the
Author points out, few have engaged in corporate social responsibility and
showed ingenuity, which increases their chances of survival in the future.
In other studies, Tereza Horáková and Kateřina Maršíková identified factors
influencing the environment of effective knowledge exchange in SMEs, which
in the era of hybrid work during COVID-19, is particularly important.
The second part of the monograph (PART 2) includes two studies on the
photovoltaic cell industry in China from the perspective of comparative and
intra-industry advantage. As a significant player in the global trade scene and
various value chains, China is a fascinating subject of research undertaken
by Paweł Brusilo and Bogusława Drelich-Skulska. The results of the first
article demonstrate the success of the Chinese industry in terms of growth
potential, competitiveness, and development opportunities thanks to effective
state support and favorable market forces. As the authors point out, the Chinese
solar cell industry has not been studied so far in the context of comparative
advantage and the new structural economy. The results show the way for other
countries to consider or develop innovative industries, such as renewable
energy and solar energy. In the second article, Paweł Brusilo examines the
topic of the Belt and Road Initiative in the context of the Chinese photovoltaic
11
cell industry, energy transition policy, identification of modern intra-industry
trade patterns and opportunities for this industry, which is characterized
by significant state interventionism. The considerations in this article may
inspire EU countries to deepen economic and trade cooperation in the export
and import of solar cells with China. On the other hand, Joanna Kurowska-
Pysz has undertaken the analysis of the cooperation conditions within the
innovative processes of representatives of science, business, the legislative,
and economic environment cooperating on the capital market. The Author
focused on the motivators, barriers, but also the search for an effective form of
development of intersectoral cooperation enabling the exchange of knowledge
and experience, learning, including the flow of personnel between sectors,
joint organization of conferences, seminars, training, and implementation
of research projects constituting the basis of innovative processes, or the
diagnosis of network relationships. The model proposed by the Author will
surely inspire other researchers.
The third part of the monograph (PART 3) includes articles referring, inter
alia, to the pro-environmental organizational culture of enterprises. Katarzyna
Piwowar-Sulej, as an advocate of this valuable orientation today, has shown
that organizations are interested in developing pro-ecological behavior
and are aware of their impact on the natural environment. The article is in
line with the global trend focused on the sustainable, ecological, and green
economy enterprises operating in this trend, not only because of COVID-19.
Taking action to develop a pro-ecological organizational culture, taking
care of the natural environment is not only a moral and ethical requirement
but also an obligation for the future generation. This part also includes
an article by Piotr Tomszys and Bartosz Grucza, who present an inspiring
model of organizational resilience and an attempt to operationalize it. The
organizational resilience model proposed by the Authors is in line with
the growing interest in the analyzes and measurement of the enterprises’
resilience. The conceptualization and measurement of economic resilience
can inspire other researchers to further research in this area. The COVID-19
pandemic, as an unpredictable and destructive shock, might be a unique
opportunity to verify the developed model, as the authors point out. The last
article deals with the issue of innovative management and its measurement
based on a proprietary tool developed by Magdalena Gorzelany-Dziadkowiec.
The considerations undertaken by the Author are a reliable starting point for
further research concerning the impact of COVID-19 on the organization’s
functioning, the development of innovative management, changes in work
processes, and interpersonal relations in the era of increasingly dominant
digital technology and skills to use it.
12
The editors profoundly thank all the Authors for their valuable contribution
to this monograph and cooperation in its co-creation. We address our grateful
thanks to all the Reviewers for their insightful evaluation and high standards
of their work. These special thanks go to (in alphabetical order) Barbara
Błaszczyk Institute of Economics, Polish Academy of Sciences; Justyna
Bugaj, Jagiellonian University; Anna Fornalczyk, COMPER Fornalczyk
and Wspólnicy; Marta Gancarczyk, Jagiellonian University; Anna Maria
Lis, Gdańsk University of Technology; Andrzej Lis, Nicolaus Copernicus
University; Mieczysław Morawski, Warsaw University of Technology;
Paweł Pisany, Institute of Economics, Polish Academy of Sciences; Natalia
R. Potoczek, Institute of Economics, Polish Academy of Sciences. We also
thank Paweł Japoł for his thorough proofreading of this monograph.
Anna Ujwary-Gil, Bianka Godlewska-Dzioboń
Reference
Gorynia, M. (2021). Dziesięć lekcji z pandemii. Rzeczpospolita z dnia
27 października 2021. Retrieved from https://www.rp.pl/opinie-
ekonomiczne/art19051481-marian-gorynia-dziesiec-lekcji-z-pandemii.
Part 1
COVID-19 – RESEARCH OVERVIEW
15
A. Ujwary-Gil & B. Godlewska-Dzioboń (Eds.). (2021).
Challenges in Economic Policy, Business and Management in the COVID-19 Era, 15-39
Solutions and research directions to the
COVID-19 pandemic at the economy, industry
and business levels: A literature review
Anna Ujwary-Gil1, Bianka Godlewska-Dzioboń2
Abstract
This article responds to the contemporary challenges of COVID-19 that
require a structured approach to the analysis of research areas undertaken
by researchers around the world. It identifies solutions in response to the
COVID-19 crisis at the level of the economy, industries and business, as well
as the areas for further research in this field. The literature and narrative
reviews were used to select sources and analyze. Using the “COVID-19”
keyword included in the 1) Title, the Scopus database showed 142,521 results
that iteratively narrowed down to 2) Title, Abstract, Keywords were searched
within these results, taking into account the following keywords: “economy,”
“industry,” “business,” 3) Subjects areas: Business, Management
and Accounting; Social Sciences; Environmental Science; Economics,
Econometrics and Finance; Energy; Agricultural and Biological Sciences;
Engineering; Arts and Humanities; Earth and Planetary Sciences; Decision
Sciences; Multidisciplinary – showing 144 results; then published 4) Articles,
in the 5) Journal, in 6) English, 7) All Open Access – creating the result
including 63 articles and finally limited to 43. The research review allowed
for the division of articles into four main research areas in which the impact of
COVID-19 was determined: economy and industry, value chains, tourism and
hospitality, business, and management. As a consequence, the review of these
studies, the directions of solutions, and the directions for further research were
indicated. The research discussed in this article may contribute to identifying
research gaps using a more rigorous research approach. For practitioners,
provided a condensed overview of what was happening in the economy,
industry, and business in the COVID-19 era. This is the interdisciplinary
research review that addresses the economic, industry, and business impact
1 Anna Ujwary-Gil, Ph.D., Hab., Professor of the Institute of Economics, Polish Academy of Sciences, Nowy Swiat 72,
30-330 Warsaw, Poland, e-mail: ujwary@inepan.waw.pl (ORCID: 0000-0002-5114-7366).
2 Bianka Godlewska-Dzioboń, Ph.D., Assistant Professor, Cracow University of Economics, Rakowicka 27, 31-510
Kraków, Poland, e-mail: godlewsb@uek.krakow.pl (ORCID: 0000-0001-9668-458X).
This is an open access article under the CC BY license (https://creativecommons.org/licenses/by/4.0/legalcode).
16 / Anna Ujwary-Gil, Bianka Godlewska-Dzioboń
Part 1. COVID-19 - RESEARCH OVERVIEW
of COVID-19, aimed at identifying solutions proposed by governments and
enterprises during COVID-19 and future research directions.
Keywords: COVID-19, economy, industry, business, management, value
chains, tourism, hospitality, solutions, research directions.
1. Introduction
The COVID-19 pandemic has triggered a formalized response from
governments worldwide, which has affected society, the economy, and including
changing the work model of many organizations. The primary focus of most
countries during COVID-19 was healthcare or the economy. Governments
that have identified healthcare as a key target have generally experienced
fewer deaths and infections than governments that prioritize business and
politics. COVID-19 has imposed a series of fiscal and monetary incentives to
protect and sustainably transform the economy, business, and society. These
transformations are overly complex and multidirectional because changes in
the economy force changes in the behavior of society. In turn, changes in the
behavior of stakeholders or consumer habits lead to changes in business in
times of the global pandemic crisis. The pandemic caused previously unknown
turbulence as the mutating virus de facto changed the paradigm not only in
economy, industry, and business but also in the behavior and habits of society.
This was reflected in publications on an unprecedented scale in almost every
scientific discipline. How persistent and invasive the economic and social
effects of this pandemic will be? – it is certainly too early to be unequivocally
assessed. The pandemic continues, research is underway, the results of which
we will gradually learn after their publication.
The article aims to show an interdisciplinary research review, including the
identification of solutions in response to the COVID-19 crisis at the level of the
economy, industries and business, as well as the areas for further research in this
field based on the latest selected bibliographic sources. This review allowed the
grouping of research into four interrelated areas, which, in fact, prove how the
economy, society, and functioning economic entities are interconnected. These
areas show the importance of COVID-19 for the functioning of the electronic,
automotive, textile, water industries, value and supply chains, the service sector,
with particular emphasis on tourism and hospitality, entrepreneurship, employee
management, and many others listed in the following sections (3–6). Thanks
to this literature and narrative reviews, the primary solutions by individual
governments, businesses, and research directions, may inspire other researchers
to discover and identify research gaps.
17
A. Ujwary-Gil & B. Godlewska-Dzioboń (Eds.). (2021).
Challenges in Economic Policy, Business and Management in the COVID-19 Era, 15-39
Solutions and research directions to the COVID-19 pandemic
at the economy, industry and business levels: A literature review /
2. Methodological approach
To capture the impact of COVID-19 on the economy, industry, and business, the
latest publications between 2020–2021, indexed in the Scopus database, were
used. To this end, two approaches were used: a literature review, especially in
terms of source selection, and a narrative review. The first step was to select
sources from the Scopus database to determine whether the scientific literature
on research results, empirical evidence, identified solutions, and research
directions related to COVID-19 exist. The quantitative bibliometric analysis
was made on October 10, 2021, and the main filtering criterion in the search
was the phrase: “COVID-19” in the title of the article, which gave 142,521
results. Subsequently, within these results, the Title/Abstract/keywords were
searched for the following keywords: “Economy,” “Industry,” and “Business”
which gave 144 results. Finally, Subjects Areas were filtered by: Business,
Management and Accounting (44); Social Sciences (36); Environmental Science
(19); Economics, Econometrics and Finance (18); Energy (9); Agricultural
and Biological Sciences (4); Engineering (4); Arts and Humanities (3); Earth
and Planetary Sciences (3); Decision Sciences (2); Multidisciplinary (2) and
the results were reduced to the following sections: All Open Access articles,
published between 2020 and 2021 (in fact, most of them were published at
that time); Document Type: article; Source Type: journal; Language: English
creating the final result including 63 articles, and 43 of them were reflected in
the References section and Table 1.1. Articles that dealt with COVID-19 from
a financial perspective, such as insurance, were omitted as well as articles that
did not fit the general thematic areas listed in Table 1.1.
The selection and literature review was limited to journal articles only
(conference proceeding, book series, book was omitted) in order to reach for the
results of complete, scholarly, and peer-reviewed studies that were published in
scientific journals, the quality of which is confirmed by the Scopus database.
Other databases (e.g., Web of Science) were excluded, because the literature
review is preliminary; it is the introduction to another literature review, much
more advanced, covering not only the subject areas mentioned in this article,
but also the comparison of research methods and variables. Consequently, the
literature review allowed for assigning all 43 articles to the following subject
areas that emerged from the review: economy and industry; value chains;
tourism and hospitality; business and management (Table 1.1).
18 / Anna Ujwary-Gil, Bianka Godlewska-Dzioboń
Part 1. COVID-19 - RESEARCH OVERVIEW
Table 1.1. Thematic areas of articles on COVID-19
Thematic areas Authors (as mentioned in the text)
Economy and industry
Dean et al. (2021); Tudorache et al. (2021);
Renukappa et al. (2021); Chang and Wu (2021);
Kanupriya (2021); Kaur (2021)
Value chains
Liu et al. (2020a); Liu et al. (2020b); Vasiev et
al. (2020); Santacreu et al. (2021); Boehme et al.
(2021); Al-Doori et al. (2021); Fountain (2021);
Karunarathne et al. (2021)
Tourism and hospitality
Quang et al. (2020); Fang et al. (2021); Bourghelle
et al. (2021); Xue et al. (2021); Florido-Benítez
(2021); Adinolfi et al. (2021); Quang et al. (2020);
Dube (2021); Sucheran (2021); Ocheni et al. (2020);
Khalid et al. (2021); Janjua et al. (2021); Prideaux et
al. (2020); Hemmington and Neill (2021); Liu et al.
(2021); Lee et al. (2021); Sucheran (2021)
Business and management
Caiazza et al. (2021); Baryshnikova et al. (2021);
Liao et al. (2021); Jiang et al. (2020); Akpan et al.
(2020); Bretas and Alon (2020); Zimon et al. (2021);
Acciarini et al. (2021); Nowacki et al. (2021); Ford
and Ward (2021); Holder et al. (2021); Baum et al.
(2020); Dalton et al. (2021); Williams and Kayaoglu
(2020)
Source: based on the Scopus search.
As indicated, among others, by Coombes and Nicholson (2013), the
selection of articles in terms of keywords and abstract is insufficient. Marking
a phrase in the title of an article leads to a greater probability that the article
will cover selected topics. The choice of a narrative review relating to the study
of empirical and theoretical research is supported by the scope of freedom that
a researcher gains in applying a critical approach to analysis (c.f., Gancarczyk
& Ujwary-Gil, 2021; Florek-Paszkowska et al., 2021). The narrative review
allows the researcher to capture qualitative differences between studies,
combine different concepts and indicate the context of the problem, which
is the advantage of this method over the systematic literature review (c.f.,
Miller, Engel-Enright, & Brown, 2021). The main reason for analyzing and
interpreting data through these two approaches was to triangulate the data to gain
a multidimensional perspective (Foster, 1997) and to make a new contribution
to form original conclusions, which indicate areas for further exploration.
3. The impact of COVID-19 on the economy and industry
Strategically revitalizing the manufacturing sector after the COVID-19
pandemic and developing the debate about the future of government
intervention in Australia’s manufacturing and industrial policy with
19
A. Ujwary-Gil & B. Godlewska-Dzioboń (Eds.). (2021).
Challenges in Economic Policy, Business and Management in the COVID-19 Era, 15-39
Solutions and research directions to the COVID-19 pandemic
at the economy, industry and business levels: A literature review /
an emphasis on renewable energy has been the subject of research by Dean et al.
(2021). Australia has the natural resources and investment wealth to switch to
renewable energy while strengthening its strategically important, and socially
beneficial manufacturing sector. Citing the South Korean government, the
vision for sustainable economic development after the COVID-19 pandemic
highlights $ 135 billion of investment in renewable energy, microgrids, and
green production. The European Union has taken a similar direction with
a EUR 1.8 trillion recovery plan focusing on green technologies, an accelerated
transition to renewable energy, and the Just Transition Fund. Canada’s post-
COVID-19 recovery plan includes large investments in renewable energy,
a complete energy phase-out of coal by 2030, subsidies to produce electric
vehicles, and support for innovation clusters to increase added value to
research and production.
Other authors such as Tudorache et al. (2021) examined the impact
of the COVID-19 shock on the development of the EU industry between
January 2018 and November 2020, focusing on industrial confidence (the EU
industry confidence index fell by 12.862 points of deviation) and industrial
production. They reaffirmed the need for appropriate policies to stimulate
an industrial sector that is highly uncertain and dependent on the speed of
vaccination in each country. As in the services sector, government restrictions
also affected industrial production, causing it to decline by an average of
8.156 percentage points per month, revealing the low economic resilience of
European countries. Countries such as Italy, Slovakia, Romania, and Hungary
recorded the largest decline in industrial production, while Latvia, Malta,
Finland, and the Netherlands had moderate drops (Tudorache et al., 2021).
Direct government support for key sectors increased the chances of survival
of economic entities. The authors also observed a positive correlation between
confidence in the industrial sector and consumer confidence as falling demand
constrains producers’ supply.
The COVID-19 pandemic also negatively affected the water industry,
the implementation of projects in this sector, and organizational practices
(Renukappa et al., 2021). At the same time sharpening the importance of the
water industry to public health during a pandemic. Increased domestic water
consumption challenged the water sector to adapt new ways of working
by maintaining social distancing and personal hygiene, new ways of working
remotely and improving health and safety systems at construction sites. In this
sense, COVID-19 has contributed to the advancement of engineering projects in
the water sector by accelerating the modernization of ICT and remote working.
The impact of COVID-19 on the global market economy has also
increased operational risk for companies in the semiconductor industry
with high operational and financial risks. Chang and Wu (2021) examined
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the impact of financial flexibility on enterprise risk-taking in the Taiwanese
semiconductor industry during the COVID-19 pandemic. The results indicate
that the Taiwanese semiconductor industry should maintain flexible funding
and liquidity risk management for long-term added value, even after the
COVID-19 pandemic. Moreover, the impact of flexible financing on enterprise
risk management differs depending on the semiconductor companies using
an asset-heavy or asset-light business model.
In turn, Kanupriya (2021) analyzed the Indian textile sector, which plays
a key socio-economic role alongside the country’s agricultural industry.
Travel restrictions and difficulties related to planning business trips, regular
disinfection of the workplace, maintaining social distance among employees,
and staff safety, are the main areas of activity within textile entrepreneurs in the
COVID-19 era. The COVID-19 pandemic does not leave this sector without
its impact on consumer demand. The supply side of production networks,
engaging government, industry, and citizens to develop innovative measures
to minimize and protect against the negative effects of this pandemic crisis.
Kaur (2021) argued that the business problems faced by Indian entrepreneurs
due to COVID-19 include a radical impact on the company’s working capital,
employment, digitization, future marketing campaigns to seek new orders,
health problems, or goods in transit. Interestingly enough, most of the companies
in this industry are digitized, which allowed them to use their production
capabilities to produce N95 masks and personal protective equipment. These
problems were directly related to the stress level of entrepreneurs in the textile
industry in India. As a result, many of the previously reserved orders of the
textile traders were canceled or postponed at the time of the blockade.
4. The impact of COVID-19 on the value chains
The supply chain is a network of organizations that, due to globalization, are
deeply interconnected. COVID-19 has disrupted more than one organization,
which has disrupted the supply system as well. Iqbal et al. (2021) studied the
construction industry as it has a significant impact on the economy in many
countries, and COVID-19 has forced the development of safety practices and
a crisis management framework in construction processes. These practices
include maintaining social distance among employees, one employee – one
task, monitoring the workplace using innovative technologies, ongoing
disinfection of tools and equipment after work. COVID-19 caused many
construction projects to be delayed, production capacity contracted, slowing
economic growth. This study suggests that for the construction industry’s
supply chain to function smoothly during COVID-19, the supply chain must
be made more flexible. Advanced technology, such as machine learning,
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artificial intelligence, block chain in conjunction with 5G technology, allow
you to effectively calibrate the supply chain operations adequately to the
supply forecasts in the construction industry.
In the context of the fight against COVID-19, Liu et al. (2020a) pointed to
the importance of resilience, strategic agility, and entrepreneurship in the Asian
economy on the example of China, South Korea, and Singapore. The authors
highlighted the importance of global supply chains and value chains, which
have changed in the last two decades, along with global enterprise development
strategies based on de-internalizing less critical business activities. China is at
the forefront of an industrial production system based on networks of suppliers,
component manufacturers, and distributors. Taking into account the value
chain, adjustment measures were observed in the electronics and automotive
industries. The production of electronics (e.g., semiconductors) has been
temporarily shut down, affecting shortages of materials, components, and final
products such as consumer electronics and cars. In the automotive industry, the
disruptions in the value chain slowed down Korean producers due to the lack
of auto parts (e.g., wiring harness) imported from China. This also affected
suppliers and related companies, which also had to stop production. COVID-19
has made it necessary to rethink China’s supply chains and consider relocating
strategic manufacturing operations outside China.
The COVID-19 pandemic has had a number of consequences for the
Chinese logistics industry. Problems include a sharp decline in demand
for coordination services, disruptions to the logistics network, shortage of
transport capacity, a shift in service mode, and a rise in operating costs causing
losses to entrepreneurs (Liu et al., 2020b). As a consequence, COVID-19 has
accelerated two trends: separating from Chinese supply chains and shifting
strategic manufacturing operations outside China. China was the first country
to deal with the COVID-19 coronavirus pandemic, where economic activity
is gradually recovering thanks to government support. Due to falling oil
and other commodity prices, China is expected to buy assets in the Russian
Federation, which will promote Chinese culture and business standards, as
noted by Vasiev et al. (2020). In the future, relations between China and
Russia will gradually strengthen, successively eliminating the slowdown or
disruption of value chains in other Asian and European countries.
On the other hand, Santacreu et al. (2021) examined the role of global
value chains in the decline of employment and production in the US factories
during COVID-19 and the impact of diversification or re-nationalization of
global value chains (e.g., excluding countries such as China) on mitigating the
exposure of the economy to foreign shocks. The authors calculated that if raw
materials were purchased domestically during the pandemic, not in China, the
US would lose 23,000 fewer industrial jobs, saving 2.4% of all industrial jobs.
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In addition, the US would experience a lower fall in GDP of production by $
45.5 billion, reducing GDP losses during a pandemic by about 6%. Santacreu
et al. (2021) believe that while global value chains played a significant role
during COVID-19, they find no evidence that restructuring global value
chains could help mitigate this impact. This is due to the global nature of the
shock: diversifying or renationalizing global value chains would have limited
success in protecting the US producers from the virus as all countries were
affected by the virus, and most of them implemented restrictive policies to
contain them.
In other studies, Boehme et al. (2021) studied a geographic cluster that
used additive manufacturing to increase the supply and flexible production of
PPE in response to a supply chain disruption in Australia due to COVID-19.
The cluster was transformed into a commercial and profitable entity capable
of responding quickly to production and trade challenges. Delivering revenue
streams that will create and deliver value to investing organizations and
end-users is a challenge for clusters in terms of infrastructure supporting
information flow, project transfer, and performance management. Information
flow is important for supply chain managers as they investigate the resilience
of global chains and the benefits of reducing manufacturing risk through
collaboration and resource coordination.
The supply chain has an impact on the economy and society, especially
in the event of disruptions in the food supply chain and a lack of resources in
developing countries such as Iraq. Al-Doori et al. (2021) found that leadership,
supplier role, lean practices, quality information analysis, and customer focus
promote organizational innovation. Moreover, the interest rate and the inflation
rate are the main factors influencing the performance of the food supply chain
organization in the Iraqi food industry, which in turn affects the country’s
economy. Nevertheless, developed countries also suffered from COVID-19,
which negatively impacted the inflation rate and human development index,
which ultimately blocked economies and food supply chains. Singapore’s main
problem is its food supply, as 90% of its food products are imported from 170
countries (Al-Doori et al., 2021). Morocco, Peru, Singapore, Korea, Turkey,
and the United Kingdom are committed to maintaining global linkages, such
as transport and supply chain connections, and reducing tariffs. This means
global collaboration through close two-way and multilateral communication
to mitigate disruptions and respond to COVID-19.
In other interesting studies, Fountain (2021) explored the role of food and
drink in stabilizing New Zealand’s food and tourism sector after the COVID-19
pandemic. He identified three trends: “back to basics,” “local and regional
appreciation,” and “food for well-being” for the regenerative, fair, and inclusive
future of tourism. As the authors point out, the food and food value chain
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contributed significantly to the pandemic of many New Zealanders. Looking
to the future, food tourism may become more prominent in New Zealand’s
tourism. As a result, these experiences will have a global trend in sustainability
and shortening food supply chains. As these trends develop, an innovative
culinary culture will be available to domestic tourists and returning overseas
visitors. Karunarathne et al. (2021) focused their research on protecting the
health and safety of both the supplier and consumer of Sri Lanka’s tourism
sector and the need to develop contingency plans. They also noted that smarter
and more innovative product development and delivery mechanisms are
required at all levels of the tourism value network along the entire value chain.
5. The impact of COVID-19 on tourism and hospitality
COVID-19 has caused turbulence in the tourism sector on a global scale,
resulting in border closures, travel bans, forcing travel companies to launch
rescue plans, or suspending operations for a specified period. The pandemic
caused an economic crisis that affected travel, especially recreational tourism,
by reducing the wages of a significant part of the population. As noted in the
previous section, value chains are also observed in the tourism sector. The
findings of Quang et al. (2020) indicate that Vietnam’s tourism sector had
support from government authorities and tourism companies. By encouraging
domestic tourism with the program “Vietnamese Travel to Vietnam” has
stimulated the sector’s economic recovery. The Vietnam Tourism Association
has launched a program focused on producing and promoting a variety of
affordable tourism products based on collaboration at different levels of the
tourism supply chain. This study suggests active stakeholder involvement and
a strategic response to future crises in tourism entrepreneurship.
The COVID-19 pandemic has forced government interventions and
combating public health, which can be seen as an external shock to the
economy, especially in the tourism, leisure, and recreation industries where
human mobility is high. Fang et al. (2021) used data from 131 countries and
regions between February-May 2020, which indicates that a decline in the
share of recreation and leisure by 9.2 percentage points occurs in countries
with stringent interventions. It takes about seven weeks for this industry to
regain relative balance. However, only after thirteen weeks, engagement in
leisure and recreation returns to 70% of pre-pandemic levels when government
intervention was in place and stops at around 40% where these restrictions
were not applied. Interventions in the field of public health show a clear impact
on the functioning of the tourism sector of a given country, in which there
is a constant dilemma, how long these restrictions should last, considering
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economic losses and future benefits, especially in terms of protecting the
health of the society.
The tourism industry and air transport are intertwined. The COVID-19
pandemic negatively impacted the oil industry by causing a demand shock
(reducing global oil demand) and increasing economic uncertainty and
recession in most developed and emerging countries. The pandemic in this
sector also caused a supply shock due to the trade war between Saudi Arabia
and Russia, causing investors’ anxiety and thus oil price volatility (Bourghelle
et al., 2021). Xue et al. (2021) studied air transport in China (major airports
in Beijing, Shanghai, Guangzhou, and Wuhan), which collapsed in February
2020 (total flight volume decreased to 67.8%). Airlines have dramatically
reduced the number of flights and switched to smaller, more fuel-efficient
aircraft types to reduce financial losses. The authors investigated the short and
medium-term effects of COVID-19 on the number of flights, aircraft use, fuel
consumption, and aircraft emissions from commercial flights. As a result, due
to COVID-19 reduced air travel, aircraft fuel consumption and emissions in
the first half of 2020 were reduced to ~ 0.38; the index rebounded to ~ 0.85 in
the second half of 2020. In another study, Florido-Benítez (2021) considered
the impact of COVID-19 on the aviation and tourism industries, including
airlines, airports, and destinations in Andalusia. Also, in Andalusia, the closure
and reduction of the frequent air routes resulted in the bankruptcy of some
airlines. The fall in flight frequencies at Andalusia’s airports during COVID-19
resulted in an average decrease of 65% in passenger arrivals, which translated
into a loss of 23 million tourist arrivals. This forces airports to develop new
short and medium-term strategies for activating Andalusian tourism. Regional
ports, which are an integral part of local communities, are most at risk. Closing
these ports, shortening routes, and dismissing workers, let to increasing
unemployment in this area, and the costs were adjusted to the existing demand.
Adinolfi et al. (2021) explored South Africa’s (South Africa) tourism sector
and the potential opportunities to open tourism to its poor people, considering
aspects such as resident savings, pace-paying options, and travel culture. The
authors point out, like Quang et al. (2020) that, one of the strategic directions
for the development of the tourism sector is the promotion of domestic
tourism due to the short-term effects of government travel restrictions, the
increase in the cost of long-distance travel and individual concerns about the
health safety of travelers. Dube (2021) indicated another equally important
aspect of inhibiting the development of the tourism sector due to COVID-19,
namely the suspension of conservation works of the RSA’s cultural heritage.
In addition, some public and private airlines have been suspended, taken
under business administration, or shut down with far-reaching consequences
for various destinations. This will impact the African tourism industry that
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is gradually starting to recover thanks to the demand for fast, efficient, and
sustainable transport. Loss of jobs in this sector increases poverty in the
region, threatening the progress made so far in the sector’s contribution to
job creation over the years. COVID-19 has caused business losses across the
tourism value chain. South Africa’s tourism sector also includes excursion
tourism and cruise tourism, which has also experienced shock by COVID-19,
causing health risks to passengers and crew members. In this industry, the
employment revolution was particularly evident, as Sucheran (2021) noted,
pointing to the loss of 2,500 jobs due to the suspension of sea cruises every
day, and with every 1% decrease in the number of sailings, 9,100 jobs are lost
worldwide, and the global impact will be $ 64 billion and 428,000 job losses.
Ocheni et al. (2020) discussed the impact of COVID-19 on jobs, person-
hours, income, income, and livelihoods of workers and owners in the tourism
industry. Discussions also took place on how the impact of the pandemic on
the tourism industry translates into global GDP and foreign exchange income
in countries whose economy has a significant impact on tourism. The study
found that with the protracted lockdown, the tourism industry will continue to
experience a slowdown. Khalid et al. (2021), using data from 136 countries,
examined whether the size of the tourism sector affects the response of
economic policy to the COVID-19 pandemic. Thus confirming that the larger
the tourism sector, the greater the economic stimulus package (using fiscal
and monetary policies) introduced by governments around the world to protect
the tourism sector from destabilization. The authors indicate that the direct
contribution of travel and tourism to GDP, foreign spending, business tourism
spending, and tourist arrivals as measures of the size of the tourism sector
are positively related to the economic stimulus package offered by a given
country (e.g., interest rate cuts). Additionally, as indicated by Khalid et al.
(2021) countries dependent on tourism should create the necessary conditions
for the domestic tourism sector to serve as a buffer for the entire industry as
soon as the COVID-19 epidemic stops. This is because the domestic tourism
sector will be easier to get started once the COVID-19 pandemic is contained
in the destination country compared to the international tourism sector.
Also, in Thailand, the tourism sector plays a key role and has a large
share of Thailand’s GDP. Janjua et al. (2021) predicted that the influx
of international tourists to Thailand would decrease significantly due to
COVID-19, which would have repercussions on the Thai economy. On the
other hand, the authors emphasize that the decrease in tourist arrivals will
reduce air pollution in Thailand thus far have a positive impact on the quality
of the environment, increasing the use of renewable energy, ecological and
logistic efficiency in the Thai tourism sector. Especially that the tourism
industry is also facing the challenges of transforming the global economy,
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taking into account carbon neutrality, adopting a circular economy model to
reduce greenhouse gas emissions in economic production systems (Prideaux
et al., 2020). This model can offer the tourism industry the opportunity to
turn a high resource consumption model into an environmentally friendly and
resource-neutral model.
Tourism is also the hotel industry. Hemmington and Neill (2021) studied
the impact of the COVID-19 pandemic on the hotel industry in New Zealand.
The hotel industry has seen financial losses while giving impetus to technology-
driven strategic innovation (social media used to create innovative marketing
approaches and new ways of delivering services). Also, having direct customer
contact in the hotel industry (non-contact delivery) supported by government
wage subsidies and business loans. The COVID-19 pandemic has also
affected the Macao hospitality industry, becoming an opportunity for the city,
as indicated by Liu et al. (2021). Macao is overly dependent on the gambling
industry, creating an unsustainable industrial structure based on tax revenues
and employment. However, the competence of the Macao government during
COVID-19 showed its centralized and political power leading to immediate
action in a crisis and coordination of various industries for the sake of the
well-being and safety of the inhabitants, exploring the potential of industrial
diversification, regional integration for future development. The production
of personal protective equipment has become a growing area of activity as
the wearing of masks has become mandatory in the public spaces of countries
such as Macao, Taiwan, South Korea, and Hong Kong, which has effectively
influenced the control of COVID-19 transmission.
Lee et al. (2021) assessed the relationship between the COVID-19
outbreak, macroeconomic fluctuations, and returns from hotel resources in
China. The shift in the COVID-19 explosion is pushing up exchange rates
and lowering returns from the stock market and the hotel industry. On the
other hand, a positive change in the return rates from the stock exchange is
associated with a decline in exchange rates and an increase in return rates
from the hotel industry. Understanding these relationships is essential for
implementing effective policies to stabilize the stock markets and supporting
investors in their investment strategies in the hotel industry. In Sucheran
study (2021), he explored the extremes of the tourism system in terms of
too many and too few tourists during the COVID-19 period to achieve more
sustainable tourism. On the one hand, too much tourism causes imbalances,
the concentration of capital, and inequality. Also, too little tourism is
detrimental to the quality of life in each place. These trends make it necessary
to develop new assumptions of the tourism sector focused on slow tourism,
responsible and transformative travel.
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6. The impact of COVID-19 on business and management
Supply and value chains, business models, and consumption patterns have been
affected by the COVID-19 pandemic in industry and multi-sector services.
As rightly noted by Caiazza et al. (2021), SMEs have the largest share of
employment in market economies, so any discussion of the economic impact
of COVID-19 is incomplete without the SME sector. The authors studied the
prospects of implementing systems based on the absorption capacity of the
COVID-19 pandemic for SMEs, thus recognizing that the more policy-makers
remain open to innovation, the more knowledge gained from the pandemic
will represent the absorption capacity to deal with future crises. In turn,
Baryshnikova et al. (2021) analyzed the impact of the COVID-19 pandemic
on changes in the economic behavior of enterprises, business practices in
the field of adapting functional strategies to new threats and determining
the directions for the transformation of functional strategies. The pandemic
forced a change in marketing strategies (e.g., current trends in the sphere of
consumption), production (e.g., digitization and robotization of production,
restructuring of supply chains), personnel management (e.g., remote work,
digitization of processes and tasks). On the one hand, the authors conclude
that the pandemic highlighted the problems related to the ability of companies
to learn quickly in a rapidly changing environment, but on the other hand, the
COVID-19 pandemic is becoming a unique opportunity for development.
Liao et al. (2021) studied the Taiwanese government’s budgetary
responses to COVID-19 and focused on special budgets designed to contain
the virus, take rescue measures, and provide economic incentives. In 2020,
the Taiwanese government developed targeted rescue plans for industries
most affected by the pandemic and created triple stimulus cards to boost
the economy. Free vouchers for low-income people were intended to both
stimulate spending and promote social equality. As argued by Jiang et al.
(2020), state support for Chinese SMEs was effective and helped avoid a sharp
drop in production. The survival and recovery of SMEs is crucial for future
development, not only in the Chinese economy, but any other economy where
SME participation is dominant.
The COVID-19 pandemic has accelerated the development of advanced
technologies and innovations needed to streamline business operations and
redesign processes in SMEs in emerging markets to improve operational
efficiency and create a sustainable competitive advantage (Akpan et
al., 2020). Technologies (much more common in developed countries): such
as cloud computing, big data, predictive analytics, computing, the Internet of
Things required to develop new business models, reduce overheads, increase
competitive advantage, and digitize business operations remain in SMEs of
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emerging economies unused. Consequently, causing business operations to
close during COVID-19. Bretas and Alon (2020) examined the technology,
collaboration, flexibility, and strategies adopted by Brazilian franchisees,
believing that during the COVID-19 and recovery period, customers will be
primarily concerned with basic needs. This belief is reflected in the change
or adaptation of their business models to the new reality. Online sales,
omnichannel marketing, and mobile technology have become indispensable
components of the continuous operation of Brazilian companies. In addition,
collaboration, teamwork, communication has become more widespread, and
relationships are more horizontal than vertical.
Zimon et al. (2021) noted that SMEs in Poland have problems with
running a business resulting from border blocks and quarantine in the value
chain (supply systems and inventory management process). However, as the
authors note, inventory management in Polish SMEs has changed during the
COVID-19 pandemic. Companies operating in purchasing groups use the scale
effect, which means that the level of inventories may exceed the demand for
the area which is profitable in the long term and has a positive effect on their
financial security. During COVID-19, Polish companies decided to increase
their inventory levels, which resulted in an increase in the share of inventories
in current assets and an increase in financial liquidity.
In turn, Acciarini et al. (2021) examined how large companies operating
in multimedia, media, communications, investment banking, and mobile
telecommunications in Italy are responding to the COVID-19 pandemic. The
authors concluded that the role of digital technologies is critical in developing
effective responses to COVID-19 and firms’ resilience to crisis and the ability
to distinguish short-term actions from long-term decisions to capture potential
environmental opportunities. Thus, government or institutional financial
support and asset protection become essential in a crisis.
Along with the functioning of the business in a pandemic period, specific
problems related to employment and employee management emerge. Nowacki
et al. (2021) became interested in occupational risk management, proving
that the effectiveness of measures to protect the health of employees and the
production capacity of enterprises in a crisis is related to the size of the plant,
and this may be indirectly related to the organization of occupational health
and safety services in the country. This service should specify information
about the epidemic situation and the necessary, recommended measures to
protect workers’ health. Occupational risk management in the COVID-19 era
is the basis for further, methodical activities in enterprises aimed to protect
the health and life of employees, which directly translates into the production
capacity within the company. However, this is the domain of large enterprises
that have developed management systems for ongoing analysis of work safety.
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Such systems are less common in the SME sector. This certainly affects the
quality and speed of measures to protect employees in a crisis.
Much research has been devoted to the effects of the COVID-19
pandemic on the labor market. Ford and Ward (2021) studied the impact of the
pandemic on the legal protection of labor and union rights in economies that
have a strong export orientation towards labor-intensive industries and weak
institutions of industrial relations such as Indonesia, Cambodia, and Vietnam.
These countries are of different sizes and have different political cultures. The
disruptions in their economies and societies served to recreate the existing
patterns of state-work relations, not to overthrow them. The disruptions
caused by the COVID-19 pandemic provide opportunities to explore different
governments’ responses to employment in times of crisis. Interestingly, the
measures are taken to protect employment, workers’ wages, and working
conditions had little in common with the economic context or type of regime.
Black women, facing job segregation in the US, in the lowest-paid jobs
in the healthcare, social services, hotels, restaurants, and retail industries, are
particularly affected by job losses due to COVID-19. Over the month, the
unemployment rate increased by ten percentage points (Holder et al., 2021).
Also, Baum et al. (2020) addressed the topic of professional exclusion
affecting mainly young people and women during COVID-19. This exclusion
led to a reduction in demand for accommodation, the closure of schools,
kindergartens, and hotels. Thus, they confirmed that the hotel industry is
an industry where there is rapid recruitment and reduction of staff, the use
of low barriers to leave for work, and uncertain employment contracts are
observed. Dalton et al. (2021) found that establishments paying the lowest
average wages and the lowest-earning workers saw the sharpest decline in
employment and experienced the most sustained losses due to the COVID-19
pandemic. Among companies that reduced employment, low-wage companies
were much less inclined to pay some of the premiums for employee health
insurance. Low-wage establishments were also less likely to pay workers who
were banned from working. The pandemic has increased economic inequality
over the months observed to the extent that unemployment results in long-
term cuts in wages, a decline in savings, and a loss of human capital.
COVID-19 has led to job closures and movement restrictions, with
governments offering temporary financial support to businesses and workers
bypassing undeclared work primarily in the hospitality, retail, and personal
services sectors in Europe, as studied by Williams and Kayaoglu (2020). The
authors pointed to the problems related to the actual state of people excluded
from government support and the government initiating incentives to disclose
undeclared work without sanctions, giving employees and employers a chance
to exit the so-called gray economy.
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7. Directions of solutions and further research
The most important lesson from the COVID-19 pandemic is that national
governance arrangements vary hugely across the globe. Moreover, a unique,
effective model does not exist as it is highly dependent on the local
characteristics of a given country. Despite these differences, it is essential
to integrate collective actions such as social responsibility, communication,
and the adoption of technology. Public disclosure of planned blockages and
restrictions will allow organizations and clients of every industry to prepare
properly. To achieve economic equilibrium during COVID-19, governments
can improve debt management based on flexible budgets, offer support to
families through cash payments, and extend unemployment benefits. However,
in the post-COVID-19 period, manage expenditure cuts taking into account
the participation of citizens in the budget cuts process.
The review of the above studies shows that the tourism industry is most
often the subject of research by scientists around the world. The protection of
the tourism industry should include, on the one hand, support from governments
through subsidies encouraging tourism, travel, and accommodation, but on the
other hand, offering subsidies to the health sector to enable the recovery of the
sick. The governments of individual countries should develop sanitary norms
and standards for the safe operation of the tourism sector, and the adoption of
unified standards would allow the sector to function efficiently for the safety and
health of tourists. These standards are a key issue as COVID-19 has created safety
concerns among tourists. This concern should be accompanied by formalized
guidelines for the health safety of travelers, including an extensive vaccination
program covering the largest possible population on which to base marketing
activities, creating a tourist brand and customer trust. Tourism enterprises face
the challenge of offering tourists their services in the least invasive way possible.
Ideas are emerging such as automating customer registration, keeping distance
and safe distance, contactless service, encouraging participation in domestic
tourism through vouchers to be used for shopping in local places, online
ordering, and take-away services. So, businesses will be more geared towards
developing technological skills, data management, creativity, and innovation.
The development of digital technology and its application in tourism marketing
will find more and more common applications.
In the tourism industry, a well-designed financial aid package reducing
fees and taxes that could lower the prices of air tickets and other tourism
products seems to be one of the directions of support for this sector. On the
other hand, government assistance should protect the workplaces of people
who are particularly vulnerable to professional exclusion and discrimination
based on sex and race. This group includes women, young people, and workers
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from developing countries who perform the lowest-paid jobs, not only in the
tourism sector. Government lines of credit should include employee wage
payments and coverage of fixed costs.
Downtime in flights for tourism purposes allows aviation authorities
to assess the environmental impact of aircraft emissions and to develop
assumptions for a green and sustainable air transport system in the future.
In addition, countries should focus on the green economy, renewable energy
in general logistics operations, and improve environmental performance
by reducing emissions. Environmental efficiency is negatively correlated with
expenditure on public health. In addition, the conversion of passenger planes
into cargo planes in times of crisis, such as the COVID-19 pandemic and the
use of less fuel-efficient vehicles per passenger. Unification of management at
airports and airlines regarding security measures, controls, and hygiene of the
services offered would allow for their efficient handling. All these solutions
require examining the needs and behavior of consumers, understanding, and
weighing barriers that may also hinder the functioning of the tourism sector.
Future research should focus on analyzing the impact of COVID-19 on tourism
and the aviation sector in various regions where tourism is the main economic
activity. Moreover, how airlines that receive financial aid from governments
cope with tourist destinations and whether they are accessible to travelers.
The challenge during COVID-19 is business problems with working
capital and liquidity, asset protection for both SMEs and large companies.
The government can help entrepreneurs by offering a loan support package,
stimulating day-to-day fundraising, tax and VAT deferrals, and digital
investment incentives. It cannot be ruled out that offering long-term low-
interest or zero-rate loans will be the key to the survival of companies.
These activities would support companies in obtaining alternative orders
or shortening supply chains. There is a shift from a traditional management
system to a digital IT system supporting business processes of enterprises,
including the use of blockchain technology to promote product traceability
or employee sharing, which not only solves short-term labor shortages
but also alleviates the pressure on employment in society. Companies
have shifted to online shopping and delivery, investment in omnichannel
marketing, and digitizing sales. It can be assumed that digitized companies
using digital supply chain management did much better in the market during
COVID-19. For example, improving vaccine supply chain management and
investigating the role of logistics platforms in emergency inventory shipping,
also digital banking, payments, and marketing. Technical infrastructure
related to smartphone applications (e.g., for detecting people who have close
contact with COVID-19 cases), telecommunications, mass processing, and
data transmission are the directions concerning solutions for the enterprise
32 / Anna Ujwary-Gil, Bianka Godlewska-Dzioboń
Part 1. COVID-19 - RESEARCH OVERVIEW
sector of every industry. Despite their limited financial resources, SMEs can
take advantage of the cloud computing option that is now easily available
under various IT system platform operators. It is an affordable option and
can be implemented by enterprises with limited technical knowledge. Each
business has its specific characteristics; however, as a result of COVID-19,
an acceleration of the digital transformation in business is observed. For
companies exporting their goods to the international market, the government
can offer a comprehensive financial package that includes concessions to
exporters in the form of remission of duties or taxes on export products. It can
also include the development of cross-border e-commerce, directing the
transfer of export products to the domestic market, expanding a diversified
international market, and encouraging innovation in foreign trade.
Equally significant changes are observed in the workplace and education.
Remote work and education are becoming the “new norm” with all its
advantages and disadvantages. Maintaining social distancing, measuring body
temperature, wearing masks, managing sick employees, sanitary stations,
disinfecting public spaces, limiting public transport, activities in shopping
centers, suspending classes is conducive to creating flexible working
conditions and distance learning through online platforms offering virtual
teamwork, webinars, and more. These actions will force developing country
governments to invest in building the necessary infrastructure to enable the
use of digital platforms in education.
The COVID-19 pandemic and its social and economic impacts require the
attention and analysis of researchers around the world. The research results
will allow us to predict potential threats that may destabilize or even paralyze
the global economy. The impact of COVID-19 on the economy, business,
and governance requires further research and attention from researchers
worldwide. This impact is de facto related to three interrelated areas: market
interaction, technology, and public policy. Knowing how governments and
businesses behave in one crisis does not necessarily mean they will act the same
in others. This situation will likely depend on how policymakers interpret the
effectiveness of their interventions using administrative, fiscal, and monetary
policies. Future research should focus on digital and green transformation,
social inclusion, health systems and education, which are important drivers
of socio-economic resilience to the crisis. This resilience, both at the
organizational and country level, is understood as the ability to approximate,
avoid, and adapt to external shocks. Public-private cooperation should also be
assessed whether it creates the possibility of taking advantage of significant
opportunities and reducing risk in the event of a crisis. To accurately define
the set of potential risks for socio-economic resilience to the crisis, decision-
making at governmental and organizational levels needs to be redefined,
33
A. Ujwary-Gil & B. Godlewska-Dzioboń (Eds.). (2021).
Challenges in Economic Policy, Business and Management in the COVID-19 Era, 15-39
Solutions and research directions to the COVID-19 pandemic
at the economy, industry and business levels: A literature review /
considering critical functions and services, important values, and resource
reallocation potentials. Future analyzes can provide a complete picture of the
impact of COVID-19 by capturing the effects on retail and resource planning
as needed. In such a complex crisis resulting from COVID-19, advanced
business analytics based on big data is coming to the fore, so it would be
worth investigating whether big data can increase the resilience and protection
of a country’s socio-economic systems.
Enterprises and societies face new difficulties and challenges in terms of
the resumption of production and work, economic and social development.
Future research should relate to identifying ways to overcome the challenges
hindering the adoption and implementation of digital technologies that
seem to be the most pressing need for the survival and development of the
modern world. However, above all, study the short and long-term effects, the
intensity of changes, the positive and negative consequences of COVID-19
and its impact not only in business but also in the society and economy of
individual countries.
8. Conclusion
COVID-19 affects the economic, social, and business aspects with a scale and
dynamics of changes that have never been seen before. There were factors
and challenges related to social distancing, health protocols, and economic
lockdowns that had not been considered before. Therefore, new business
practices are being developed, more or less universal or standardized, adequate
to the functioning of the industries to manage the COVID-19 pandemic
effectively. This review was not intended to systematically, while maintaining
methodological rigor, compare the presented research in terms of research
problems and variables, theoretical approaches, or applied research methods.
Instead, the focus was on research areas in the context of COVID-19 that have
interested researchers in two disciplines: economics/finance, and business/
management around the world. The review is preliminary, initiating further
research, with more articles and an extended choice of keywords for the
abstract section. A research review of the proposed solutions in the COVID-19
era, as well as the indication of research directions, may inspire researchers to
undertake wider research in this field and identify research gaps.
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Biographical notes
Anna Ujwary-Gil, Ph.D. Hab., is professor at the Institute of Economics,
Polish Academy of Sciences in Warsaw, Poland. She received her Ph.D.
and habilitation in economics and management from the Warsaw School of
Economics. She is the Editor-in-Chief of the Journal of Entrepreneurship,
Management and Innovation (JEMI), also expert of the Network Analysis
Laboratory. She is founder and president of the Cognitione Foundation for
the Dissemination of Knowledge and Science. Her research interests include
social (organizational) network analysis, knowledge management, intellectual
capital, resource-based views, and dynamic approaches to organization and
management. She published her works in Library & Information Science
Research, Electronic Markets, Journal of Business and Industrial Marketing,
or Economics & Sociology.
Bianka Godlewska-Dzioboń, Ph.D., is assistant professor at the Cracow
University of Economics (UEK) in the Department of Public Policies, Faculty
of Public Economy and Administration. Moreover, she is the Vice-Rector for
Cooperation and Development of the Podhale State Vocational University
in Nowy Targ, Poland. Expert and trainer in research and implementation
projects in the field of promoting academic entrepreneurship and competence
development. Founder of the UEK Dialogue Laboratory, an initiative
39
A. Ujwary-Gil & B. Godlewska-Dzioboń (Eds.). (2021).
Challenges in Economic Policy, Business and Management in the COVID-19 Era, 15-39
Solutions and research directions to the COVID-19 pandemic
at the economy, industry and business levels: A literature review /
connecting the university community: students, research, and teaching staff
with the business community and local government.
Citation (APA Style)
Ujwary-Gil, A., & Godlewska-Dzioboń, B. (2021). Solutions and research
directions to the COVID-19 pandemic at the economy, industry and business
levels: A literature review. In A. Ujwary-Gil & B. Godlewska-Dzioboń (Eds.),
Challenges in Economic Policy, Business, and Management in the COVID-19
era (pp. 15–39). Warsaw: Institute of Economics, Polish Academy of Sciences.
41
A. Ujwary-Gil & B. Godlewska-Dzioboń (Eds.). (2021).
Challenges in Economic Policy, Business and Management in the COVID-19 Era, 41-60
SCDS spreads and the level of public debt in
Poland during the COVID-19 pandemic
Maria Czech1
Abstract
The purpose of this article is to study the relationship between the size of public
debt and the level of SCDS spreads during the COVID-19 pandemic. The
study hypothesized that the increase in the level of public debt caused by the
outbreak of the COVID-19 pandemic determined changes in assessment of the
country’s credit risk. The study uses source literature analysis and quantitative
research. The literature analysis made it possible to explain the essence and
application of SCDS spreads and to indicate their relationship to changes in
the level of credit risk. In the quantitative research, linear regression analysis
and dynamics analysis were used. Based on the linear regression analysis,
the correlation of public debt with the level of SCDS spreads was examined.
The dynamics analysis enabled the study of changes in the debt level and
changes in SCDS spreads both before and during the COVID-19 pandemic.
The research results did not confirm the hypothesis. The research has shown
that the increase in the level of public debt during the COVID-19 pandemic did
not affect the level of changes in the country’s credit risk assessment. Based
on the research results, it was found that SCDS spreads were not sensitive to
changes in the level of public debt during the COVID-19 pandemic. This study
is part of the current research on the use of SCDS spreads as a country credit
risk assessment tool. Since the study covered the period of the COVID-19
pandemic (during its course), the conclusions resulting from the study may
constitute an introduction to broader considerations, such as the study of the
determinants of SCDS spreads in the Polish economy, also during different
crises. Based on the analysis of the literature, a research gap was identified
in terms of the impact of public debt on the assessment of Poland’s credit risk
during the COVID-19 pandemic. This study will contribute to the knowledge
on the relationship between SCDS spreads and public debt. The study also
1 Maria Czech, Assistant Professor, Department of Banking and Financial Markets, University of Economics in Katowice,
ul. 1 Maja 50, 40-287 Katowice, Poland, e-mail: maria.czech@ue.katowice.pl (ORCID: 0000-0003-3572-6891).
This is an open access article under the CC BY license (https://creativecommons.org/licenses/by/4.0/legalcode).
42 / Maria Czech
Part 1. COVID-19 - RESEARCH OVERVIEW
contributes to the discussion on the ability of SCDS spreads to reflect economic
fundamentals during crises.
Keywords: sovereign credit default swap, SCDS, public debt, pandemic,
COVID-19, credit risk, Poland.
1. Introduction
The outbreak of the COVID-19 pandemic has caused significant economic
and social disruption. The pandemic affects not only the activities of
economic entities but also influences the financial decisions of governments.
Government authorities are forced to undertake activities related to ensuring
the health and financial security of citizens. Such activities include, above all,
increased purchases of medical equipment, the implementation of assistance
systems aimed at protecting the economy and preventing unemployment.
Consequently, the country’s borrowing needs are increasing while, at the same
time, budget revenues are decreasing. As a result of numerous restrictions and
limitations in the functioning of market entities, a fall in the value of GDP has
been observed, with a simultaneous increase in public debt. Unfortunately, the
long-term effects associated with the disruption of supply chains or the closure
of individual sectors of the economy are currently unknown. The duration of
the pandemic is also unknown, which leads directly to increased uncertainty
and generates the risk of accretion of public debt.
Public debt in this study is defined as the total gross debt at nominal
value, occurring at the end of the year and consolidated for all sectors of
public authority (European Union, 2008, Art. 2). According to the position
of the European Union, total public debt consists of government sector debt,
local government sector debt, and social security sector debt (Table 2.1).
Therefore, the structure of public debt is heterogeneous, which means
that many independent factors may affect its growth. Increasing the level
of indebtedness determines the increase in the macroeconomic instability
of the country, and as a result, has a negative impact on the assessment of
country risk.
One country risk measure is the level of sovereign credit default swap
spreads (SCDS). SCDS contracts belong to the group of credit derivatives
whose underlying instruments are government bonds. They are used to
transfer credit risk resulting from the possibility of a country defaulting on its
obligations. Transferring credit risk involves the payment of a spread, which
depends on the financial condition of the state.
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Challenges in Economic Policy, Business and Management in the COVID-19 Era, 41-60
SCDS spreads and the level of public debt in Poland during the Covid-19 pandemic /
Table 2.1. Public debt structure. Sectoral approach
Sectors of public authority Debt structure in sectors of public authority
Government sector Debt of the State Treasury and State Special Purpose
Funds with legal personality
Debt of state universities and research and development
units as well as state cultural institutions of the Polish
Academy of Sciences
Debt of independent public health care institutions
Debt of other state legal persons
Local government sector Debt of local government units and local government
special purpose funds with legal personality
Debt of independent public health care institutions
Debt of local government cultural institutions
Debt of other local government legal persons
Debt of the social insurance sector Debt of the Social Insurance Institution and funds
managed by ZUS
Debt of the Agricultural Social Insurance Fund.
Debt of the National Health Fund
Source: European Union (2008, Art. 2), Ministry of Finance (2021).
There is ample evidence, supported by research results, that the level
of CDS spreads reflects information and events affecting the ability to settle
liabilities and/or the possibility of bankruptcy of a given country (e.g., Czech,
2019; Grodzicki, 2012; Kocsis, 2014; Aït-Sahalia, Laeven, & Pelizzon, 2014).
An increase in the level of SCDS spreads indicates an increase in negative
macroeconomic events and an increase in the level of country credit risk. In
contrast, a decline in SCDS spreads is interpreted as an improvement in the
country’s macroeconomic situation and a reduction in credit risk.
The aim of this article is to study the relationship between the size of public
debt and the level of SCDS spreads during the COVID-19 pandemic. The
article hypothesizes that the increase in the level of public debt caused bythe
outbreak of the COVID-19 pandemic determines changes in the assessment
of the country’s credit risk. Quantitative methods were used in the research.
Based on linear regression analysis, the influence of public debt on the level of
SCDS spreads was examined. Then, changes in the level of Treasury debt in
relation to changes in SCDS spreads in both the pre-pandemic period and the
COVID-19 pandemic period were examined using dynamic analysis.
2. Literature review
The literature study followed a two-pronged approach. It included a study of
the impact of public debt on the economy and a study of the level of SCDS
spreads as indicators capable of assessing the scale of the risk of a country’s
creditworthiness. There is a large volume of published studies describing
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the role of public debt as a determinant of a country’s economic growth.
Research confirms that excessive public debt (e.g., above 90% of GDP)
weakens economic growth (e.g., Asteriou, Pilbeam, & Pratiwi 2021; Minea
& Parent, 2012; Panizza & Presbitero, 2012; Reinhart & Rogoff, 2010).
In contrast, other studies have shown that the relationship between GDP
growth and the level of public debt is limited, especially in an environment of
low interest rates (Blanchard, 2019). Numerous studies also indicate a non-
linear relationship between public debt and GDP growth. This applies to the
statement that low debt positively affects economic growth, while a high level
of debt negatively affects the level of GDP (Rzońca, 2007; Pattillo, Poirson,
& Ricci, 2004; Cohen, 1993). Much of the current literature pays special
attention to the correlation of public debt with various economic categories.
It has been shown that “high-debt countries experience larger increases in
interest rates in response to an unexpected decline in domestic output and
an increase of global volatility” (Lian, Presbitero, & Wiriadinata, 2021). Other
studies have considered the relationship between public debt and the level
of investment, and they have shown that high levels of public debt harm the
rate of return on investment and consequently reduce the level of investment
(Pattillo & Ricci, 2003). Pattillo and Ricci (2003) also point to the negative
correlation of public debt with total factor productivity growth.
The second strand of the literature study examined the level of SCDS
spreads as indicators capable of assessing a country’s creditworthiness risk.
Much of the current literature confirms the ability of SCDS spreads to reflect
economic fundamentals (e.g., Czech, 2019; Dieckmann & Plank, 2012;
Eichengreen et al., 2012; Piotrowski & Piotrowska, 2013). This is due to the
correlation of SCDS spreads with macroeconomic factors and with global
factors. However, studies show that the extent of this correlation varies. For
example, Ma, Deng, Ho and Tsai (2018) showed that in a period of economic
turmoil, global factors (e.g., US stock index return) have a stronger impact
on SCDS spreads, while in a period of stability, macroeconomic factors (e.g.,
exchange rates, local stock index return, or rating change) have a stronger
impact on SCDS spreads. The different influence of global factors on the level
of SCDS spreads is also shown by Czech (2019) and Kocsis (2014). Czech
(2019) studied the impact of both macroeconomic and global factors on the
level of SCDS spreads in twenty countries. This showed that Chinese SCDS
spreads do not correlate with macroeconomic factors but are related to global
factors. In contrast, SCDS spreads in the remaining countries were susceptible
to both macroeconomic and global factors, with the impact varying across
countries. Similar results were obtained by Chi, Chiu, Hsiao, and Tsai (2021),
who studied the impact of positive and negative macroeconomic news from
the US on SCDS spreads in emerging markets. Their findings reveal that good
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SCDS spreads and the level of public debt in Poland during the Covid-19 pandemic /
US macroeconomic news announcements contribute to reducing the level of
SCDS spreads, while bad news contributes to an increase in the level of the
investigated spreads in emerging markets. A number of studies have found that
SCDS spreads correlate with the level of public debt in relation to GDP (Pyka
& Czech, 2018; Yuan & Pongsiri, 2015) but do not correlate with the level of the
risk-free interest rate (Fontana & Scheicher 2016). In addition, there is a large
volume of published studies describing the relationship of SCDS spreads with
other macroeconomic values, such as the inflation rate (Aizenman, Hutchison,
& Jinjarak, 2013), exchange rates (Czech, 2019; Kliber, 2019; Wang & Ji,
2017; Liu & Morley, 2012), stock market indices (Longstaff et al., 2011),
or the VIX index (Camba-Méndeza & Serwa, 2016; Alper, Forni, & Gererd,
2013; Heinz & Sun, 2016). The research presented thus far provides evidence
that SCDS spreads are a tool for assessing a country’s creditworthiness and
thus provide an insight into a country’s credit risk. Collectively, these studies
provide important insights into the relationship of government debt to the
level of SCDS spreads.
Given all that has been mentioned so far, one may suppose that the
increase in debt will determine the change in the level of SCDS spreads.
Based on the literature analysis, a research gap has been demonstrated in
terms of the impact of public debt on the assessment of Poland’s credit risk
during the COVID-19 pandemic. This study will therefore contribute to the
knowledge on the relationship between SCDS spreads and public debt. The
study also contributes to the discussion on the ability of SCDS spreads to
reflect economic fundamentals during crises and their usefulness in assessing
country credit risk.
3. Research methods
The implementation of the study was based on a critical analysis of the source
literature and quantitative research. The literature studies made it possible to
explain the essence and application of SCDS spreads and to indicate their
relationship with changes in the level of credit risk. Two research methods
were used in the quantitative research: linear regression analysis and dynamics
analysis. Given the main goal of the study, the linear regression analysis was
carried out in the period from March 1, 2020, to March 31, 2021, on a sample
of 104 observations. The purpose of the linear regression analysis was to
indicate the sensitivity of SCDS spreads to the level of public debt during the
COVID-19 pandemic. The dynamics analysis was used in a 24-month research
period from March 1, 2019, to March 31, 2021. This period was divided into
two sub-periods: the pre-pandemic period (March 2019 - February 2020)
and the pandemic period (March 2020 - March 2021). The purpose of the
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breakdown of the research period was to indicate changes in the level of
SCDS spreads and the level of public debt during the COVID-19 pandemic in
relation to the period immediately preceding the pandemic.
The research period is determined by the duration of the pandemic and
the availability of statistical data. The pandemic outbreak in Poland dates to
March 2020, when the first case of COVID-19 disease appeared. However,
the end of the pandemic is yet unknown, as the Sars-CoV-2 virus responsible
for COVID-19 is subject to continuous mutations. Moreover, the Polish
population has not yet achieved herd immunity, which favors an increase in the
incidence of the disease. Such a situation causes difficulties in determining the
upper limit of the study due to the disproportional frequency of the publication
of individual statistical data. At the time of the research, the most current
statistical data was closed in March 2021. Therefore, the research period
covering the period of the COVID-19 pandemic was defined as from March
1, 2020 to March 31, 2021.
3.1. Linear regression analysis
In the quantitative research, linear regression analysis conducted in the
Statistica 13 program was used first. The aim of the analysis was to examine
the correlation between the level of SCDS spreads based on five-year treasury
bonds and the level of public debt during the COVID-19 pandemic. The
dependent variables are SCDS spreads, while the independent variables
(predictor variables) are as follows:
1) Government debt:
a. debt of the State Treasury and state special purpose funds with legal
personality;
b. debt of state universities and research and development units as well
as state cultural institutions of the Polish Academy of Sciences;
c. debt of independent public health care units;
d. debt of other state legal entities.
2) Debt of the local government sector.
3) Debt of the social insurance sector.
Data on individual variables was taken from the database of the Ministry
of Finance and the Reuters Eikon database. In the linear regression analysis,
the progressive stepwise regression method was used. In building the model,
all the indicators mentioned above were considered, but only those that were
statistically significant were entered into the model. Statistical significance
was assessed using the t-test, assuming a maximum 5% probability of error
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in the conclusions. Thus, those variables whose value was higher than the
critical value resulting from the Student’s t-distribution at the alpha level
< 0.05 were considered statistically significant. Then, after including all
statistically significant variables in the model, the linear significance for the
entire constructed model was tested using the F test statistic.
The estimated linear regression model was described by the equation:
Ŷ = b0 + b1x1 + b2x2 + b3x3 ± ζ
where: bi - partial regression factors, model parameters representing
independent variables affecting SCDS spreads based on 5-year treasury bonds.
The application of the linear regression model allowed the question to be
answered whether the level of SCDS spreads changes due to the influence of
changes in public debt caused by the outbreak of the COVID-19 pandemic.
3.2. Analysis of dynamics
The dynamics analysis examined the direction of changes in the level of SCDS
spreads and debt levels, and the dynamics of these changes. For this purpose,
a linear multiplicative time series model was built, then using the analytical
method, the main trend was determined, which was described by the formula:
Ŷ = b1 * t + b0
where: Ŷ – trend; b0 and b1 – model parameters; t – time
The trend function determines the change in the level of SCDS spreads
with respect to the time variable. The trend model parameters (b0 and b1) were
estimated using the least squares method (LSM):
b1 =
b0 = ȳ - b1tˉ
where: yt – level of SCDS spreads / level of public debt in Poland in
period t, t - number of consecutive units of time, ȳ - average level of SCDS
spreads / average level of public debt in Poland in period t, tˉ - average value
of time units.
(1)
(2)
(3)
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The trend of changes was estimated in relation to the time variable and
was shown to determine the direction of changes in SCDS spreads and the
changes in public debt in the period before the outbreak of the pandemic and
during the COVID-19 pandemic. On the other hand, the dynamics of changes
in SCDS spreads and the dynamics of changes in the level of public debt in
Poland were examined using the average rate of change:
-1
where: y1 – level of SCDS spreads / level of public debt in Poland in period
1; yn – level of SCDS spreads / level of public debt in Poland in period n; n−1
– the number of observations minus 1 (which results from the construction of
chain indices).
Based on the dynamics analysis, the rate of changes in the level of SCDS
spreads and the level of public debt in Poland in the period before and during
the COVID-19 pandemic were determined.
4. Results
4.1. Linear regression analysis results
Based on the level of government sector debt, local government sector debt,
and social security sector debt, a study of the impact of government debt
on the level of SCDS spreads during the COVID-19 pandemic period was
carried out. On the basis of the results obtained, it was found that during the
COVID-19 period, government sector debt had the greatest impact on changes
in the level of SCDS spreads. The linear regression equation for the period
March 1, 2020 to December31, 2020 is as follows:
SCDS spreads = -94.75 + 0.0001 * government sector debt ± 1.60
The constructed regression model is linear and statistically significant,
which is confirmed by the statistic value F = 20.88 and p <0.04. The correlation
coefficient R = 0.9553 is significantly different from zero and means that
there is a very strong linear relationship between the dependent variable and
the independent variables. The coefficient of determination is 0.9126, which
means that the model explains 91.26% of the changes in the level of SCDS
spreads. The standard error of the evaluation of the intercept in relation to its
value is low and amounts to 1.60.
(4)
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SCDS spreads and the level of public debt in Poland during the Covid-19 pandemic /
The results of the survey show a positive correlation between the debt of
the government sector and the level of SCDS spreads: along with an increase
in the debt of the government sector by PLN 1 million, the level of SCDS
spreads increases by 0.0001 bp, while a decrease in the debt of the government
sector by PLN 1 million causes a decrease in the level of SCDS spreads
by 0.0001 bp.
The research was then deepened and the correlation between individual
components of the government sector and the level of SCDS spreads were
examined. A linear regression model was built in which the dependent variable
was the level of SCDS spreads during the COVID-19 pandemic, while the
independent variables were:
•debt of the State Treasury;
•debt of state special purpose funds with legal personality;
•debt of state universities and research and development units as well
as state cultural institutions of the Polish Academy of Sciences;
•debt of independent public health care units;
•debt of other state legal entities.
Based on the research results obtained in the COVID-19 period,
a correlation was demonstrated between the level of SCDS spreads and the
debt of the State Treasury. The linear regression equation for the period from
March 1, 2020 to March 31, 2020, is as follows:
SCDS spreads = -95.08 + 0.0001 * Treasury Debt ± 1.58
The constructed regression model is linear and statistically significant,
which is confirmed by the statistic value F = 21.39 and p <0.04. The correlation
coefficient of R = 0.9563 is significantly different from zero and means
a very strong linear relationship between the dependent and independent
variables. The coefficient of determination is 0.8717, which means that the
model explains 87.17% of the changes in the level of the SCDS spreads. The
standard error of the evaluation of the intercept in relation to its value is low
and amounts to 1.58.
The results of the survey show a positive correlation between the debt
of the Treasury and the level of SCDS spreads: along with an increase in
the Treasury Debt by PLN 1 million, the level of SCDS spreads increases
by 0.0001 bp, while a decrease in the Treasury Debt by PLN 1 million causes
a decrease in the level of SCDS spreads by 0.0001 bp. The results of the study
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clearly indicate that increasing the level of indebtedness is not a significant
factor in determining the level of SCDS spreads.
The impact of domestic and foreign Treasury debt on SCDS spreads
was also examined. For this purpose, a linear regression model was built
in which the explained variable was the level of SCDS spreads during the
COVID-19 pandemic, while the explanatory variables were the domestic
debt of the State Treasury and the foreign debt of the State Treasury. The
linear regression model for the period from March 1, 2020, to March 31,
2020, has the following formula:
SCDS spreads = 106.50 - 0.0002 * Treasury foreign debt± 2.68
The constructed regression model is linear and statistically significant,
which is confirmed by the statistic value F = 6.62 and p <0.025. The correlation
coefficient of R = 0.61 is significantly different from zero and means that
there is a very strong linear relationship between the dependent variable and
the independent variables. The coefficient of determination is 0.3190, which
means that the model explains 31.90% of the changes in the level of SCDS
spreads. The standard error of the evaluation of the intercept in relation to its
value is low and amounts to 2.68.
The results of the survey show a negative correlation between Treasury
foreign debt and the level of SCDS spreads: along with an increase in the
Treasury foreign debt by PLN 1 million, the level of SCDS spreads increases
by 0.0002 bp, while a decrease in the Treasury foreign debt by PLN 1 million
causes a decrease in the level of SCDS spreads by 0.0002 bp.
Taking into account the debt of the State Treasury in terms of currency,
the correlation between SCDS spreads and debt in terms of currency was
examined. In the constructed multiple linear regression model, the dependent
variable was SCDS spreads, while the explanatory variables were the debt of
the State Treasury expressed in PLN, EUR, and USD. The regression model
equation is as follows:
SCDS spreads = 102.52 - 0.0002 * State Treasury debt in EUR ± 2.37
The constructed regression model is linear and statistically significant,
which is confirmed by the statistic value F = 11.54 and p <0.005. The
correlation coefficient of R = 0.72 is significantly different from zero and
means a very strong linear relationship between the dependent and independent
variables. The coefficient of determination is 0.4677, which means that the
model explains 46.77% of the changes in the level of SCDS spreads. The
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standard error of the evaluation of the intercept in relation to its value is low
and amounts to 2.37.
The results of the survey show a negative correlation between State
Treasury debt in EUR and the level of SCDS spreads: along with an increase
in State Treasury debt in EUR by PLN 1 million, the level of SCDS spreads
increases by 0.0002 bp, while a decrease in State Treasury debt in EUR by PLN
1 million causes a decrease in the level of SCDS spreads by 0.0002 bp. The
results of the study clearly indicate that increasing the level of indebtedness is
not a significant factor in determining the level of SCDS spreads.
Using linear regression analysis, the correlation between SCDS spreads
and the indicators of the government response to the pandemic situation in
Poland was also examined. A linear regression model was built in which the
dependent variable was the level of SCDS spreads during the COVID-19
pandemic, while the explanatory variables were:
•government restrictiveness reaction rate;
•health protection index;
•restrictiveness index;
•economic support index.
The Government Response Index is the most aggregate measure and is
based on 16 indicators related to pandemic containment policies (e.g., school
and workplace closures, face-covering), economic policy (e.g., household
financial support, fiscal measures, and international support), and healthcare
policies (e.g., testing policy, contact tracing, vaccination policy, and testing
policy). The second important indicator is the Health Protection Index. This is
an aggregate measure based on fourteen indicators of the political response to
COVID-19. These include school and workplace closures, travel bans, contact
tracing, face-covering, testing, and vaccination policies. The range indicator is
from 0 to 100, with zero being the mildest and 100 being the most stringent.
The Restrictiveness Index is similarly constructed. This index is based on 9
indicators, including mainly restrictions relating to the closure of schools and
workplaces, as well as restrictions on movement and covering the face. The
scale for this index is analogous to the health protection index. The lowest
number of indicators are included in the Economic Support Indicator. This
contains only two indicators, including financial support and the suspension
of loan payments to households.
Based on the research results obtained in the COVID-19 period, it was
found that there is no linear relationship between the level of SCDS spreads
and the indicators of the government’s response to the pandemic in Poland.
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4.2. Dynamics analysis results
First, the share of the government sector, the local government sector, and the
social security sector in the total public debt was examined. It was shown that
the highest level of debt occurs in the government sector (over 92%). In order
to deepen the analysis, the share of individual components affecting the debt
of the government sector was examined, and it was shown that the highest
level of debt (over 99%) is characterized by the Treasury (Figure 2.1).
Figure 2.1. The structure of public debt during the COVID-19 pandemic
Source: based on the Ministry of Finance.
Based on the above results and the linear regression analysis results,
the dynamics and direction of changes in the level of State Treasury debt
were examined in relation to the level of SCDS spreads in the two research
periods - in the period before the outbreak of the COVID-19 and during the
pandemic. In the period preceding the outbreak of the COVID-19 pandemic,
Treasury debt remained stable, on average PLN 998,445.50 million. The
value of this debt ranged from PLN 984,313.50 million to PLN 1,001,190.90
million and followed a moderate downward trend. Only as a result of the
trend-cycle component (without a seasonal and a remainder component), the
debt of the State Treasury decreased by PLN 362.18 million month-to-month,
as shown by the results of the analysis. The good condition of the state, which
favored a reduction in the country’s credit risk in the run-up to the COVID-19
pandemic, was reflected in the level of SCDS spreads. During this period, the
level of SCDS spreads was subject to dynamic declines averaging -0.49 bps
from week-to-week, ultimately with a reduction from the level of 70 bp to
46.9 bp (Figure 2.2).
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SCDS spreads and the level of public debt in Poland during the Covid-19 pandemic /
Figure 2.2. State Treasury debt and the level of SCDS spreads in the period
before and during the COVID-19 pandemic
Source: based on the Reuters Eikon database and the Ministry of Finance
https://www.gov.pl/web/finanse/zadluzenie-skarbu-panstwa.
Figure 2.2 shows that the outbreak of the COVID-19 pandemic had
a significant impact on the level of Treasury debt. From March 2020, this
debt increased by more than 12% over the calendar year, from less than PLN
991 million to more than PLN 1,111 million (on average, which is 1.05%
month-to-month). The analysis of the trend showed that because of the trend-
cycle component, the debt of the Treasury increased month-to-month by over
PLN 9,344 million. After the outbreak of the pandemic, there was an urgent
need to mitigate its effects, which increased the state’s borrowing needs. The
increase in indebtedness was dictated by an increase in unplanned expenses
resulting from the introduction of extraordinary measures, such as the anti-
crisis shield, the purchase of specialized personal protective equipment, or
the purchase of vaccines against Sars-Cov-2, which causes the COVID-19
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disease. At the same time, the results of the analysis showed that the increase
in indebtedness of the Treasury did not significantly affect the level of SCDS
spreads. An intense increase in the examined spreads was observed only at
the beginning of the pandemic, between March 2020 and May 2020. During
this time, the level of SCDS spreads increased an average of 0.98% week on
week, quickly reaching a level close to the pre-pandemic period, i.e., 64 bp.
The reason for the dynamic increase in the SCDS spreads was the uncertainty
and fear caused by the appearance of a new, unknown pathogen (Norman,
Bar-Yam, Taleb, 2020). From June 2020, the first dynamic decrease in the
level of SCDS spreads was observed, with a subsequent continuation of the
downward trend. The trend analysis showed that over the entire period of
the COVID-19 pandemic, due to the trend-cycle component, SCDS spreads
decreased by an average of -0.0973 bp week-to-week, and the average rate
of decline was -0.12% from week-to-week. The results obtained indicate that
SCDS spreads are not sensitive to sovereign debt levels.
Based on the analysis of the time series, the level of spreads in relation
to the indicators of the government’s response to the pandemic in Poland
was also examined. The results of the analysis show that as the restrictions
increase, the SCDS spreads decrease, and the easing of the restrictions entails
an increase in SCDS spreads (Figure 2.3).
Figure 2.3. Level of SCDS spreads and indicators of the government
response to the pandemic in Poland
Source: Based on Reuters Eikon.
The results of the analysis show that the largest decrease in SCDS spreads
occurred during the second and third waves of the pandemic, i.e., in October
and November 2020 and in February and March 2021. During this period, the
number of new cases of COVID-19 increased significantly, and the number of
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SCDS spreads and the level of public debt in Poland during the Covid-19 pandemic /
hospitalized people also increased (Serwis Rzeczypospolitej Polskiej, 2021;
Commonwealth Service, 2021). As a result, restrictions were introduced
by the government on social mobility, including the closure of schools, hotels,
shopping malls, cultural centers including, theaters, cinemas, and museums.
Also, restrictions reached sports facilities, including swimming pools, fitness
clubs, gyms, and ski slopes. In addition, face coverings and observing social
distancing became mandatory. The primary purpose of the restrictions on
social activity was to combat the surge in COVID-19 transmissions and
halt the pandemic’s spread. The observed coincidence in the timing of the
phenomena under study with the increase in number of cases and introduced
restrictions suggests that the market assessed the introduction of restrictions
on social activity as not threatening the ability to settle liabilities, which was
reflected in a reduction in the level of SCDS spreads.
5. Discussion
The research is part of the discussion on the ability of SCDS spreads to assess
a country’s credit risk. The analysis of the literature has shown the ability
of these instruments to reflect the economic fundamentals of a country.
One of the macroeconomic factors affecting the level of SCDS spreads
indicated in the literature is the level of public debt (Pyka & Czech, 2018;
Yuan & Pongsiri, 2015). As the correlation between SCDS spreads and
macroeconomic factors varies according to previous studies, this research
extends the knowledge on the relationship between SCDS spreads and public
debt during periods of rising uncertainty.
The aim of this study was to examine the relationship between the size of
public debt and the level of SCDS spreads during the COVID-19 pandemic.
The research objective was achieved, as the study involved both analysis of
the dynamics of SCDS spreads and public debt, as well as analysis of the
interdependence between these two variables. The verification of the research
hypothesis answered the question of whether an increase in public debt affects
the credit risk assessment of Poland. The linear regression model showed that
among the three components of public debt, only the level of government debt
correlates very little with the level of SCDS spreads. The regression analysis
also showed that only the debt of the State Treasury contributed negligibly
to changes in SCDS spreads (a change in the State Treasury debt by PLN 1
million contributes to a change in the level of SCDS spreads by 0.0001 bp).
The findings observed in this study mirror those of the results of the dynamics
analysis, in which the share of indebtedness of individual sectors in public debt
was examined. The evidence from this study suggests that the main component
of public debt is Treasury debt (over 99%). Contrary to expectations, this study
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did not find a significant correlation between government debt and SCDS
spreads. It is surprising that although the COVID-19 pandemic negatively
affects the country’s economic processes and GDP growth, this is not reflected
in the assessment of the country’s financial condition. However, the present
findings are consistent with other research, which found that the relationship
between GDP growth and government debt levels is limited (Blanchard, 2019).
Returning to the hypothesis posed at the beginning of this study, it is
now possible to state that it has been verified negatively. The hypothesis
assumed that the increase in the level of public debt caused by the outbreak
of the COVID-19 pandemic has determined changes in the country’s credit
risk assessment. The results of the study showed that the increase in the level
of public debt during the COVID-19 pandemic does not affect the level of
changes in the country’s credit risk assessment. On this basis, it was concluded
that SCDS spreads are not sensitive to changes in the level of public debt.
These results match those observed in previous studies, which showed that in
times of economic turmoil, macroeconomic factors are much less important
compared to global factors (Ma et al., 2018).
6. Conclusion
This article examines the relationship between the size of public debt and the
level of SCDS spreads during the COVID-19 pandemic. Given that public
debt consists of three components (government sector debt, local government
sector debt, and social security sector debt), the correlation analysis examined
the individual components of public debt against the level of SCDS spreads
based on five-year Polish Treasury bonds during the COVID-19 pandemic.
The following conclusion can be drawn from the present study: the increase
in the level of public debt caused by the outbreak of the COVID-19 pandemic
does not affect the level of SCDS spreads in Poland. The results of the
study showed no correlation between the level of indebtedness of the local
government sector and the social security sector and the level of SCDS spreads
in Poland during the COVID-19 pandemic. However, there was a positive
correlation between government sector debt and the level of SCDS spreads.
At the same time, it was proved that the correlation between the analyzed
categories was very small (0.0001 bp).
The results of the dynamics analysis also confirm that SCDS spreads
are not sensitive to changes in the level of Treasury debt. It has been shown
that during the COVID-19 pandemic, Treasury debt increased dynamically
(by over 12%) compared to the pre-pandemic period. In contrast, the level of
SCDS spreads in the entire period under study, i.e., both before and during the
COVID-19 pandemic, was characterized by a downward trend. An exception
57
A. Ujwary-Gil & B. Godlewska-Dzioboń (Eds.). (2021).
Challenges in Economic Policy, Business and Management in the COVID-19 Era, 41-60
SCDS spreads and the level of public debt in Poland during the Covid-19 pandemic /
was the period from March to May 2021, when there was an upward
adjustment of SCDS spreads. The obtained results confirm the results of the
analysis of the source literature. The researchers’ attention was focused on the
problem of the accumulation of public debt but, so far, no clear position has
been developed regarding the impact of this debt on the economy. Overall,
the inconsistency of the argument seems to disturb the correct assessment of
a country’s credit risk.
One of the more significant conclusions of this study is that during the
COVID-19 pandemic, SCDS spreads were sensitive to the level of restrictions
imposed. The results obtained confirm that as the restrictions increased, the level
of CDS spreads decreased. This is quite a surprising discovery, as restrictions
limiting the population’s mobility and the closing of workplaces have a negative
impact on tax revenues and often generate additional budgetary outflows (e.g.,
state financial aid). On the other hand, restrictions have a pandemic-reducing
effect and contribute to economic growth in the long term.
It should be noted that the results obtained should be interpreted with some
caution. This is because the dataset covers a relatively short time frame. This
is primarily due to limitations related to the availability of statistical data on
the evolution of both public debt during the COVID-19 pandemic, as well as
data on changes in SCDS spreads during the pandemic. It is worth considering
that the COVID-19 pandemic is an unprecedented phenomenon whose course
and effects are still unknown. Therefore, this study is only an introduction to
broader research on the Polish economy and other European economies - not
only during the COVID-19 crisis but also during earlier crises. Future research
focusing on the correlation between debt and SCDS spreads over a longer
period and in different countries could be of interest and would contribute to
a better understanding of the CDS market and thus the factors affecting the
pricing of a country’s credit risk during crises.
Acknowledgments
I would like to express my thanks for the funding provided for this article. The
work was carried out as part of an individual research project funded by the
University of Economics in Katowice.
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Biographical note
Maria Czech (Ph.D.) is a research and didactic worker at the Department of
Banking and Financial Markets at the University of Economics in Katowice.
In her research, she focuses on issues related to financial markets, financial
innovation, and the extensive use of credit default swaps in financial and non-
financial institutions. She conducts classes on financial innovation, banking,
and financial markets.
Citation (APA Style)
Czech, M. (2021). SCDS spreads and the level of public debt in Poland during
the COVID-19 pandemic. In A. Ujwary-Gil & B. Godlewska-Dzioboń (Eds.),
Challenges in Economic Policy, Business, and Management in the COVID-19
Era (pp. 41–60). Warsaw: Institute of Economics, Polish Academy of Sciences.
61
A. Ujwary-Gil & B. Godlewska-Dzioboń (Eds.). (2021).
Challenges in Economic Policy, Business and Management in the COVID-19 Era, 61-77
The impact of the COVID-19 crisis on the Czech
luxury fashion industry
Radka MacGregor Pelikánová1
Abstract
The COVID-19 crisis has a global dimension while affecting every business
in the EU, including businesses from industries reputable for their stability,
perpetuity, and abundant resources, such as the luxury fashion industry. It is
relevant to explore and assess the impact the COVID-19 crisis has had on top
businesses from the Czech luxury fashion industry based on their declarations
posted on their websites in January 2021 and in July 2021. A longitudinal
deeper case study involves websites of the 20 Czech luxury fashion businesses
with the largest turnover while researching how they report about COVID-19
in January and July 2021. The Meta-Analysis takes advantage of the content
analysis performed by the expert panel employing the manual Delphi
approach along with glossing and Socratic questioning. Websites of the top
Czech luxury fashion businesses provide a highly relevant message about the
passive and backward-looking approach making the COVID-19 crisis a threat
than an opportunity with only two businesses opting for a pro-active approach
and using COVID-19 as an opportunity for more social responsibility and
inventiveness. This message from January 2021 was reinforced in July 2021.
These findings follow theoretical propositions about crises impacts based on
their perception. Czech luxury fashion businesses have declined to follow
recommendations offered by the theory and they have paid the price for it,
even the ultimate price. This is a pioneering endeavor to explore and assess
how COVID-19 is perceived in the luxury fashion industry via the Internet
websites belonging to the twenty top Czech businesses, particularly what they
decided to post about themselves during the COVID-19 crisis.
Keywords: COVID-19, corporate social responsibility, CSR, luxury fashion,
sustainability
1 Radka MacGregor Pelikánová, JUDr., Ph.D., LL.M, MBA, Academic researcher, Department of International Business,
Metropolitan University Prague, Dubečská 900/10, 100 00 Prague 10, Czech Republic, e-mail: radkamacgregor@yahoo.
com (ORCID: 0000-0001-9628-71461).
This is an open access article under the CC BY license (https://creativecommons.org/licenses/by/4.0/legalcode).
62 / Radka MacGregor Pelikánová
Part 1. COVID-19 - RESEARCH OVERVIEW
1. Introduction
The current global society must reconcile available and often diminishing
resources with the requirements of the constantly increasing and demanding
world population (Meadows et al., 1972). Consequently, businesses are
expected to be both profitable and altruistic under the auspices of the
sustainability command resting on three pillars – economic, environmental,
and social (MacGregor Pelikánová, 2019). Therefore, businesses need to be
internally, vis-à-vis their shareholders and employees as well as externally,
vis-à-vis their other stakeholders, responsible (Schüz, 2012). They need to
achieve long-term profitability while contributing to sustainability via their
Corporate Social Responsibility (CSR) (MacGregor Pelikánová, 2021).
Currently, the sustainability command has been strongly shaped by the
instrument of International public law issued by the United Nations (UN),
especially the UN resolution from 2015 Transforming our World: the 2030
Agenda for Sustainable development (UN Agenda 2030), which brought with
it its 17 Sustainable Development Goals (SDGs) and 169 associated targets
(MacGregor Pelikánová & MacGregor, 2020). Boldly, sustainability with
its SDGs is not feasible without the effective and efficient engagement of
businesses via their CSR (Balcerzak & MacGregor Pelikánová, 2020), and this
is realized via the multi-stakeholder model and cross-sector partnership (Van
Tulder et al., 2016; Van Tulder & Keen, 2018). To put it differently, without
the support of the entire global society, sustainability is unrealistic and futile
(Bali & Fan, 2019; Turečková & Nevima, 2020). There are even stronger
voices to make the sustainability commitment via CSR legally binding, i.e., to
move from responsibility to liability.
Various patterns and trends are detected in different jurisdictions (Sroka
& Szántó, 2018). Regardless of that and the ongoing discourse about the
responsibility, v. liability of businesses do more than mere profit-maximizing,
it is well established that a higher level of such a responsibility (or perhaps even
liability) regarding sustainability has traditionally been extended to businesses
strongly underlying their financial strength and commitment to ethics and
values, such as luxury fashion businesses (Cerchia & Piccolo, 2019; MacGregor
et al., 2020; MacGregor Pelikánová et al., 2021). These expectations are shared
both by their customers (Olšanová et al., 2018), as well as their investors and
other stakeholders (MacGregor Pelikánová & MacGregor, 2020).
Furthermore, luxury fashion businesses are expected not only to be lavish,
opulent and support their values but to be stable and constant – Fifth Avenue
in New York, Champ Elysee Boulevard in Paris, Piazza di Spagna in Rome or
Pařížská Street in Prague were, are and shall remain as addresses for luxury
fashion businesses. Indeed, the luxury fashion industry has been heavily