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International entrepreneurship in the post Covid world Journal of World Business 56 (2021) 101143 Available online 14 September 2020 1090-9516/© 2020 Elsevier Inc. All rights reserved. International entrepreneurship in the post Covid world Shaker A. Zahra University of Minnesota, Strategic Management and Entrepreneurship Department, Carlson School of Management, University of Minnesota, 321-19th Avenue South, Minneapolis, MN, 55455-040, USA A R T I C L E I N F O Keywords: International entrepreneurship International new ventures (INVs) Covid-19 Institutional change Digitalization Innovation Research agenda A B S T R A C T How will the world look post Covid-19? What is the role of international entrepreneurship (IE) in this new world? This article attempts to answer these two questions. It highlights the changes caused by Covid and how they might affect the scope and types of international entrepreneurial activities in years to come. It also discusses how international entrepreneurs are likely to operate and shape the emerging world order. The article concludes by outlining the implications of these changes for IE scholarship, offering an agenda for future research. 1. Introduction Well before the arrival of Covid-19 (Covid), a debate waged on the future of globalization and the place of new firms in the emerging world order. Populist, nationalist and anti-globalization movements—with varying ideological agendas—have raised serious questions about the role of international institutions as well as who benefits from interna- tionalization (Devinney & Hartwell, 2020; Rodrik, 2018). Against this backdrop of political turmoil, the arrival of Covid has only made things worse, fueling concerns about the future of world business and the role of multinational firms, large and small. Given that innovation and entrepreneurship is what sparks and sustains companies’ international business activities, it is common to ask: How will the world look after Covid? How will this impact international business and, especially, interna- tional entrepreneurship (IE)? While the reasons that motivate these questions are understandable, no one knows the answer. What is now obvious is that Covid has been a profoundly devastating global pandemic that has spread wide and fast with horrible effects on econ- omies, businesses and people. Predictions about its effects abound, but what appears to be certain is that it will not go away quickly, and if it does, its destructive legacy will continue for years to come. Covid has already affected our way of life, views of our governments and con- nections to other peoples. It has also affected our well-being. This article will highlight key changes Covid has introduced into the global economy. It will then discuss how these changes are likely to affect international new ventures (INVs), which could be independently owned or corporate sponsored, such as those created by MNEs (Cumming, Sapienza, Siegel, & Wright, 2009; Zahra, 2020). Whether corporate or independent, some INVs pursue profit making while others adopt social missions. Still, other INVs have hybrid missions that focus on profit making while having social impact. INVs originate and operate from developed and emerging economies, pursuing opportunities across international borders. Some of these companies internationalize their operations from inception, actively moving people, ideas, innovative technologies, business models and money around the globe (Keupp & Gassmann, 2009; Reuber & Fischer, 2011). The article will also outline several research areas and related questions worthy of research. Covid’s effects have been extensive, and it would be hard to discuss them in detail in a single article. It is even much harder to predict its long term consequences; these consequences are also likely to vary from one country to another. Therefore, my presentation in this article is selec- tive, focusing on key trends I consider especially pertinent to interna- tional entrepreneurship. These effects are likely to affect a large portion of the globe. Hence, by necessity, my presentation is not exhaustive. Understandably, other researchers may view other issues not discussed here as especially salient. 2. Covid and the change in the global business environment Examining the vast literature on major crises (e.g., natural disasters and epidemics) and how organizations survive offers some useful in- sights (Danielsson, Valenzuela, & Zer, 2018; Jorda, Singh, & Taylor, 2020; Rerup, 2009; Wolf, 2014; Wright, 2020). To be sure, financial crises (e.g., global financial crisis of 2008) and epidemics (e.g., the E-mail address:
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[email protected] www.sciencedirect.com/science/journal/10909516 https://www.elsevier.com/locate/jwb https://doi.org/10.1016/j.jwb.2020.101143 https://doi.org/10.1016/j.jwb.2020.101143 https://doi.org/10.1016/j.jwb.2020.101143 http://crossmark.crossref.org/dialog/?doi=10.1016/j.jwb.2020.101143&domain=pdf Journal of World Business 56 (2021) 101143 2 plague, Spanish flu and SARS) have engulfed many countries and affected millions of people, destroying many businesses small and large. Their effects touched every part of the global economy. It took years for some economies to recover but others never did. However, unlike some recent crises, Covid is a chronic health crisis that has multiple dimensions. As a global public health crisis, it has led to the closure of businesses and people staying home for months. Esti- mates of the effect of Covid on the global economy are sketchy and vary widely (for reviews, Congressional Research Service, 2020). The Congressional Research Service (2020) estimates that Covid “has affected the $90 trillion global economy beyond anything experienced in nearly a century”. Covid’s cost in terms of human lives has been staggering. According to data by the World Health Organization (World Health Organization, 2020), 12,750,275 people around the world have contracted Covid, leading to 566,355 deaths; the numbers continue to rise by the hour. Further, the International Labor Organization (2020) data suggest that uncertainties created by Covid could cause half of the labor force around the world to lose their jobs. They also estimate that 1.6 billion persons operating in the “informal economy” have suffered massive damage to their capacity to earn a living. Millions of others have lost their jobs, have been laid off or furloughed without a clear prospect of returning to work. These changes have made Covid a national security crisis that many countries also need to address to protect their people’s wealth and well-being. As such, when and how to restart national economies has stirred debate across the globe as predictions about Covid’s resilience and persistence vary. When thinking about the global business environment and how it affects international ventures, it is clear that Covid has already brought about major changes that will profoundly impact these businesses for years to come. Epidemics have this effect (Wright, 2020): they do change how people live, think, and transact and organize their societies. Most important of these changes brought about by Covid to date are: damaging long standing institutions, reshaping the global supply chains, disrupting existing businesses and personal networks, and undermining the flow of knowledge, technology capital, ideas and people across in- ternational borders. While each of these changes can cripple interna- tional ventures’ business activities, their joint effect is likely to be even more devastating because these changes are interconnected, as dis- cussed below. 2.1. Damaged institutions Internationalization has grown rapidly over the past three decades because of the emergence of stable international institutions that pro- vided safeguards against opportunism. International treaties governing intellectual property rights are a prime example. Institutions and treaties provided guidance on fair trade and mechanisms to resolve disputes as they arise (Lin, Zheng, Lu, Liu, & Wright, 2019; Ashlstrom & Bruton, 2010; Chandra & Coviello, 2010; Li, Liu et al., 2019, Li, Hernandez, & Gwon, 2019; Marquis & Raynard, 2015). These institutions have also encouraged the liberalization of national economies and opening them to foreign companies, enabling companies from developed and emerging economies alike to participate in international business. However, these institutions have come under attack as favoring more advanced countries, allowing them to grow richer at the expense of the poor. Some populist leaders have also come to see these institutions as a means of hegemony that undermine national sovereignty, calling for their reform or abandonment (Devinney & Hartwell, 2020; Zahra, 2020). Covid has taken hold globally at a time of great political turmoil, further highlighting the vulnerabilities of international institutions as countries have closed their borders and competed with each other to procure medical supplies needed to take care of their citizens. This competition has raised questions about the relevance, stability, compatibility and effectiveness of international institutions. Changes in the institutional context are likely to induce major changes in international ventures’ goals, decision rules and strategic behavior (Odlin, 2019). The growing politicization of international in- stitutions is likely to further weaken their powers, making it hard for them to function effectively in tomorrow’s turbulent environment. For example, with weak international institutions, countries may also erect barriers to protect their industries and citizens, which can reduce the entry of INVs and limit the scope of their operations. This is likely to complicate these ventures’ decisions as to where to operate interna- tionally and how to conduct their businesses (e.g., which mode of entry to use to enter particular markets). With the fate of some institutions in question and the rise of protective barriers, the complexity of interna- tional ventures’, strategic choices rises. In particular, in this environ- ment, INVs from emerging economies might find it increasingly harder to sustain their presence in international markets as they face institu- tional voids at home and complex and unstable institutions in foreign markets. It also becomes harder for INVs to raise funds from cross-border investors such as angels and venture capitalists. The changes just described make it critical for INVs to become active institutional entrepreneurs; i.e., they need to devote considerable time, resources and energy to help address the limitations of existing in- stitutions or participate in the development of new viable institutions, a task that takes considerable