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Survival Analysis of Small Business during COVID-19 Pandemic, a Brazilian Case Study

Author

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  • Jorge Luis Tonetto

    (Business School, Pontifícia Universidade Católica do Rio Grande do Sul, Porto Alegre 90610-970, Brazil)

  • Josep Miquel Pique

    (La Salle Campus Barcelona, Ramon Llull University, 08022 Barcelona, Spain)

  • Adelar Fochezatto

    (Business School, Pontifícia Universidade Católica do Rio Grande do Sul, Porto Alegre 90610-970, Brazil)

  • Carina Rapetti

    (La Salle Campus Barcelona, Ramon Llull University, 08022 Barcelona, Spain)

Abstract

The impact of COVID-19 on the economy was devastating. Small businesses typically have few resources to fight against such adversity. Many businesses remained closed for some time during the pandemic period, resulting in significant consequences for people in terms of jobs, income and life. The objective of this research is to identify the factors that contributed to increasing company failures during the pandemic. Furthermore, this study aims to verify whether the size of the companies, the sectors of economic activity in which they operate and their geographic location influence enterprise failure. This article analyzes the survival of 8931 small businesses from 2017 to 2023, in Rio Grande do Sul, Brazil. The study applied a survival analysis using the Kaplan–Meier procedure, complemented with the Cox procedure, to determine the effects of the size of companies, sector activity and location on the survival time. The results indicate that survival is much higher in small companies with large revenues that are located in the Campaign and West Frontier regions, as well as in the Northeast, North, Production, South, Taquari, and Rio Pardo Valleys regions, whereas the survival rates were extremely lower in the commercial sector and in financial intermediation activities. In the second analysis restricted to the commerce sector, the data highlighted the retail activities, accommodation and food activities sectors as the most affected in terms of overall survival. The results indicated that the survival of small business remained relatively strong during the COVID-19 pandemic, signaling the pertinent support from the government. The smallest business with revenues under USD 15,576 (BRL 81,000) per year were the most affected, with only 39% survival after 7 years. Some activities and some regions suffered more than others, emphasizing the need for special attention from authorities in future catastrophes.

Suggested Citation

  • Jorge Luis Tonetto & Josep Miquel Pique & Adelar Fochezatto & Carina Rapetti, 2024. "Survival Analysis of Small Business during COVID-19 Pandemic, a Brazilian Case Study," Economies, MDPI, vol. 12(7), pages 1-21, July.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:7:p:184-:d:1433562
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    References listed on IDEAS

    as
    1. Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 227-245, September.
    2. Nawal Abdalla Adam & Ghadah Alarifi, 2021. "Innovation practices for survival of small and medium enterprises (SMEs) in the COVID-19 times: the role of external support," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-22, December.
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    4. Mariana Mazzucato & Rainer Kattel, 2020. "COVID-19 and public-sector capacity," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 36(Supplemen), pages 256-269.
    5. Fotopoulos, Georgios & Louri, Helen, 2000. "Location and Survival of New Entry," Small Business Economics, Springer, vol. 14(4), pages 311-321, June.
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