Is recession an opportunity for entrepreneurs?
Mojca Svetek | 18 October 2023
Many of today’s most resilient startups were launched during recessions. Consider Airbnb, which innovated short-term rentals; Uber, which disrupted the taxi industry; Slack, which modernised team communication; Groupon, which introduced daily deals; and Credit Karma, which made access to credit information easy. This raises the question: Are these companies simply exceptions to the rule, or do recessions indeed provide a fertile environment for launching new businesses?
Tune into this episode where we are going to unpack:
- How recessions impact entrepreneurial activity;
- Two types of opportunities that recessions bring to entrepreneurs;
- Why startups can compete in recessions despite having far fewer resources than established firms;
- Three evidence-based success factors for startups during recessions.
Research articles:
- Cowling, M., Liu, W., Ledger, A., & Zhang, N. (2015). What really happens to small and medium-sized enterprises in a global economic recession? UK evidence on sales and job dynamics. International Small Business Journal, 33(5), 488-513.
- Devece, C., Peris-Ortiz, M., & Rueda-Armengot, C. (2016). Entrepreneurship during economic crisis: Success factors and paths to failure. Journal of Business Research, 69(11), 5366-5370.
- González-Pernía, J. L., Guerrero, M., Jung, A., & Pena-Legazkue. (2018). Economic recession shake-out and entrepreneurship: Evidence from Spain. BRQ Business Research Quarterly, 21(3), 153-167.
- Latham, S. (2009). Contrasting strategic response to economic recession in start‐up versus established software firms. Journal of Small Business Management, 47(2), 180-201.
- Nabi, G., & Liñán, F. (2013). Considering business start-up in recession time: The role of risk perception and economic context in shaping the entrepreneurial intent. International Journal of Entrepreneurial Behavior & Research, 19(6), 633-655.
- Smallbone, D., Deakins, D., Battisti, M., & Kitching, J. (2012). Small business responses to a major economic downturn: Empirical perspectives from New Zealand and the United Kingdom. International Small Business Journal, 30(7), 754-777.
- Stangler, D. (2009). The Economic Future Just Happened (report). Kauffman Foundation.