Are there new business opportunities

The corona virus as an entrepreneurship opportunity

April 15, 2020

Why the shock effect of the corona virus also has positive side effects

The Covid-19 pandemic threatens the globalized world economy. Supply chains are at risk, events are canceled and millions of people around the world have lost their jobs. It is obvious that the virus brings problems and severe suffering. But does it also open up business opportunities at the same time? Prof. Nikolaus Franke, Scientific Director of the Professional MBA Entrepreneurship & Innovation, got to the bottom of this question below.

The Austrian management guru Peter Drucker believes that change is the most important source of business opportunities. In a world without change, supply and demand converge into equilibrium. In other words: entrepreneurial opportunities then gradually exhaust themselves. Changes, on the other hand, destroy the equilibrium. Suddenly new needs arise. It suddenly becomes apparent that the relevant offers are missing.

First and foremost, of course, you think of technological changes. The introduction of the Internet since the 1990s, for example, has opened up many new entrepreneurship opportunities. The complex interplay of new possibilities and new offers constantly gives rise to new products, new services and new business models. Search engines, online commerce, and social networks are examples of such business opportunities. They were discovered and used by entrepreneurs such as Sergey Brin, Larry Page, Jeff Bezos and Mark Zuckerberg.

Every crisis is a business opportunity

But also catastrophes, crises and accidents can be changes that dissolve a temporary equilibrium between supply and demand. The conquest of Constantinople by the Ottomans, for example, led to the emigration of many Greek scholars to the Latin West. The sudden supply of knowledge made a decisive contribution to the emergence of the Renaissance. Flood disasters and the urgent need for safety and protection (new demand) have not only led to the invention of countermeasures. The idea for the systematic use of water energy arose from the new offer, the dams. Major fires resulted in the development of the construction industry and new types of materials. The First World War brought about the spread of inventions such as zippers, sanitary towels, blood banks, wristwatches and tanning beds. In general, it can be said that disasters, crises and accidents inspire people's ingenuity and thus entrepreneurship. Because humans are problem-solvers by nature.

Changes and opportunities due to the corona virus

What is the corona virus changing? What kind of change does the media reporting on it open up? Of course, these questions cannot be answered or only partially answered at the present time, and of course their lives will change tragically for those affected. But even for people who are not directly affected - fortunately the vast majority of humanity - a lot has changed. It is already clear, for example, that the demand for protective masks has skyrocketed. The same goes for disinfectants. The quick reaction and creation of a corresponding offer is an opportunity for entrepreneurship that did not exist a few weeks ago. Maybe soon we will have cheaper and more powerful protective agents? The development of more reliable rapid tests and vaccines is also a new opportunity. In the medium term, the virus may lead to emergency plans and security measures being improved so that the next pandemic can be better dealt with. Perhaps vaccination fatigue will also decrease for diseases that large parts of the population have previously shrugged off? For example, not even one in ten people in Austria is vaccinated against influenza. With around 1,500 deaths annually, a change would certainly be welcome. The shock effect of the corona virus may also have positive side effects, with plenty of room for business opportunities.

Social benefit or reprehensible greed?

The successful use of an entrepreneurial opportunity usually generates profit for entrepreneurs. The top list of the richest people in the world is headed by entrepreneurs. The fact that entrepreneurs' motives are not always altruistic does not mean, however, that they cannot create great social benefits. Adam Smith already recognized that butchers, brewers and bakers pursue their activities out of their own interests - and still use it to create useful products.

Does this also apply to the business activities that the corona virus triggers? Certainly not for everyone. For example, anyone who takes advantage of the uncertainty and sells largely useless respirators with a low protection factor as a means against Covid-19 is acting unethically. Self-interest and social benefit fall apart. Speculative acquisitions do not create any social benefit either. The case of the entrepreneur Timo Klingler is known from Germany, for example. He had correctly foreseen in January that the demand for masks would increase. He bought them on a large scale for 60 cents and now sells them for 20 euros - each. It is not easy to find a business with a return of over 3,000% within two months. This form of entrepreneurship is of course not ethical - investments in increased production would undoubtedly have been more helpful to society. In general, it can be said that not all new offers that arise from changes are socially useful. Disasters create a climate of uncertainty. Panic can be capitalized on, and those who fuel panic sometimes do so out of self-interest. Innovations as solutions to artificial problems are not useful because there are enough real problems.

But it makes sense to see crises and accidents as business opportunities. The problems are real and we need new solutions. Accordingly, we need the skills of entrepreneurial people to create new problem solutions with courage, willingness to take risks, creativity and personal commitment - real entrepreneurship. Only they can help us to keep the consequences of the corona epidemic small - and perhaps even to generate positive social benefits from it in the long term.

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