During the post-pandemic period, corporate entities and employers in general have been trying to adapt to new and unexpected challenges while figuring out the perspective development strategies. There are two elements affecting business by corona-virus’ pandemic stemming: a) from external factors, such as changes in global, regional and national political economy, and b) from internal factors, which include changes in the corporate policies and dynamics inspired by adjusting to diversified consumers’ preferences and other factors affected by the pandemic.
Among the main facets in drafting the survival approaches, businesses have been trying to tackle two main issues: retaining the employees and implementing digital facilities; both would last for perspective strategies while dealing with the pandemic’s negative effects.
Among the changes in the corporate internal structures, while remaining agile, the companies are going tom be increasingly sensitive in corporate social responsibility, as well as in business technology, green and digital transition issues.
Note. Within the Institute’s “post-Covid” research project, its first part has already covered the workforce and labour relations’ issues affected by the pandemic: references to the following links:
The present article covers the second aspect in the “post-covid” research concentrating on some corporate and entrepreneurship issues in modern political economy affected by the “post-Covid” implications.
More on the EII’s project in: https://www.integrin.dk/post-covids/
As it has become important in the post-pandemic time, the companies and entrepreneurship in general, have been taking into consideration contemporary challenges which were already changing peoples’ life styles and habits, as well as the consumption patterns; the latter were becoming vital for corporate strategies. Ever greater modifications occurring in consumers’ behavior are already turning the corporate strategies towards models which are more prepared for continuously changing consumers’ preferences and “tastes” guiding corporate activity.
For any business it is vital to understanding the main “features” that are driving consumers choices and “shopping instincts”: these are the key factors which businesses need to consider when formulating strategic approaches. Several key consumer types have been explored recently, stretching from lifestyle choices, buying habits and business-to-consumers interrelations, etc.
More in: Westbrook G. and Angus A. – Euromonitor International: Top 10 Global Consumer Trends 2020, in: http://go.euromonitor.com/rs/805-KOK-719/images/.
Transforming political economy, transforming business
In the EU integration, it is the Treaties that define the “general sketch” of the EU-member states’ economic coordination: the EU basic law also regulates the main political economy’s principles. Thus, the Lisbon Treaty (in effect from the end of 2009) has formulated some guiding principles in economic policy, which include:
– First, European internal market and integration as the background of the EU economic policy;
– Second, the EU’s sustainable development based on the member states’ balanced economic growth and price stability;
– Third, a competitive social market economy, aimed at full employment and social progress;
– Fourth, high level of protection and improvement of the quality of the environment;
– Fifth, promotion of scientific and technological advance; and
– Sixth, promotion of economic, social, territorial cohesion and solidarity among the EU member states. (art. 3, p.3, TEU)
Besides, for the first time in the history of European integration the Treaties acknowledged that socio-economic coordination between the EU institution and the states is regulated by the principles of division of competences. According to this “division” there are three main spheres of socio-economic cooperation between the Union and the states: a) the policy sectors involving exclusive EU competence; b) the policy sectors within shared EU and member states’ competence; and c) the policy sectors involving areas where the EU actions are having supporting, coordinating or complementary character to those of the member states.
These spheres of division, on one side reduce the states’ sovereignty in decision-making, though on another side, make the states’ political economies more coordinated and integrated.
Besides, there is an important controlling mechanism in the form of a so-called European Semester, which serves both as: a) a formal dialogue between the Commission and the member states on financial and general economic development plans; and b) as an instrument of “common integration” in socio-economic issues required by the common European integration principles and rules.
Thus, the role of political decisions on the EU and the states’ level are becoming vital: the extent of regulatory feasibility in any state depends of the states’ decision-makers and their attitude to welfare goals and business environment’s modernisation. The governments have to both identify priority’s areas of action and design reform agendas for entrepreneurship; the national business environment would serve as an important indicator of governance’s “actionable pursuit” towards optimal policy’s influence on ease of doing business.
For example, corporate situation in the Baltic States looks the following way:
– in the category “ease of doing business” among EU-27, Latvia ranks 19th (data for 2018), while Estonia is in 12th and Lithuania on the 16th place.
– in the “starting business” category: Latvia ranked 21, while Estonia 12th and Lithuania 27th.
– in the “getting credit” category, Latvia has 12th rank, while Estonia and Lithuania are on the 42nd place; and
– in “paying taxes”: Latvia ranked 13th, while Estonia is on the 14th place and Lithuania on 18th.
In corporate reform efficiency, a special World Bank’s report provides national policy makers with adequate information on implementing reforms that could serve as turning point for reaching towards successful business structures.
Source: Doing Business 2016: Measuring Regulatory Quality and Efficiency, in: “Doing Business Report”, the World Bank’s publication. 2016, – 338 pp.
Transformations in “doing business”
SMEs and start-ups are crucial for the economic recovery in all states; however, during the pandemic, they have been particularly affected by the liquidity shortage and facing greater difficulties to access financing. The EU’s officials recognized in mid-2020 that the shutdown of cross-border commerce and travel would cause the global GDP to shrink by about 8 percent in 2020, and over 10 percent in the eurozone, where all three Baltic States belong.
Besides, the EU has acknowledged that to overcome the crisis some novel and extraordinary solutions shall be made, and demonstrated not only the general concept of economic “connectivity” was vital but that the EU states can only rebuild their economic prosperity by working together.
The pandemic has sent shocks through entrepreneurship community: apart from exceptions in sectors like e-commerce and insurance, social distancing and stay-at-home orders have significantly lowered consumers’ demand. Energy and metal, which are hard commodities, as well as agricultural products, which are soft commodities, have not escaped this downturn, as shown by diminishing investment and falling prices in these markets. Crude oil prices reached a historic low in April 2020, and the average price for the year is anticipated to be 43 percent lower than a year ago. Average metal prices are expected to fall as well, although less dramatically than oil: thus metal prices are projected to drop by 13 percent compared to 2019, with industrial metals being hit the hardest. Between January and April, agricultural prices also fell compared to 2019, with corn prices lowered by 19 percent, live cattle by 30 percent, and lean hogs by 45 percent.
Source: https://www.csis.org/analysis/filled-brim-importance-flexible-and-innovative-storage-commodities-markets. Assessed: 14.08.2020.
Corporate examples from the pandemic’s effects
In Europe, inventories for liquid natural gas, LNG are 54 percent full, which is 45 percent higher than on average in the last 10 years; companies are actively trying to get out of natural gas purchases and storage. The irony of the situation is that, unlike the commodities that have slashed prices due to surpluses and demand shocks, storage prices have risen significantly.
Thus, e.g. in the beginning of the pandemic, fuel storage rates almost doubled for oil tanks in Europe; in times of crisis, such as the Covid- pandemic, adaptability is essential for industries to preserve market share and remain profitable.
Many developing economies (including the Baltic States) have not yet diversified into more resilient industries, such as e-commerce and e-trade that are currently benefiting from significant changes in consumption and shifting consumers’ behavior. This lack of diversification makes these countries dependent on commodities’ market conditions which provide certain limits to circular, sustainable, job-intensive and inclusive growth.
For example, as a pandemic’s consequence, the commodity-driven economies would face high costs in developing additional storage or reduce production with the resulting revenue loss, strained public finances and lack of investors, both local and foreign. With an apparent damage from the loss of demand and lower prices, the commodity-driven economies are lowering businesses’ ability to recoup their losses by an increased storing until prices rise; many more businesses are likely to fail, even when governments provide substantial assistance.
Some economy sectors “coordinated” by logistics and most visible at present online retail, have managed to get through the pandemic with a visual growth: for example the real estate activity will continue stimulate demand, while logistics space, science parks and transport hubs will all provide out-of-town employment and investment opportunities.
Hospitals, care homes and assisted-living facilities will also be another major area of focus for real estate development and investment. While offices will evolve, they will remain the beating hearts of the central business districts in the major European metropolitan cities, supporting a lively hinterland of retail, leisure and cultural attractions. These factors will sustain the attractiveness of urban living while shaping the future of real estate.
Governments’ targeted support
Another major direction is the government’s extensive support for SMEs and start-ups; in this regard, the purpose of the EU’s “temporary framework” (TF) plays a vital role in order to provide targeted support to viable companies that have only experienced liquidity problems as a result of the coronavirus outbreak. Thus, initially it was envisaged that companies that companies with difficulties before the end of 2019 would not be eligible for the FT’s aid but may benefit from aid under the state aid rules, in particular through the EU’s “rescue and restructuring guidelines”. The latter set conditions according to which such companies must define sound restructuring plans that will allow them to achieve long-term viability. Present EU’s amendment extended the TF to enable the states to provide public support under the TF conditions to all SMEs, even if they were already in financial difficulty on the last days in 2019.
At the same time, the SMEs (i.e. undertakings with less than 50 employees and less than € 10 million of annual turnover and/or annual balance sheet total) which have been particularly affected by the liquidity shortage caused by the economic impact of the coronavirus outbreak, exacerbating their existing difficulties to access financing compared can get support alongside the larger enterprises. If left unaddressed, these difficulties could lead to larger numbers of SMEs bankruptcies while causing serious disturbances for the entire EU economy.
Thus, the EU and the states’ support is rendered to most of SMEs, unless they are not in insolvency proceedings, receiving rescue aid that has not been repaid, or are subject to restructuring plans under state aid rules. Given their limited size and involvement in cross-border transactions, temporary state aid to SMEs is less likely to distort competition in the EU internal market than state aid to larger companies.
Reference to: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1221
It seems that the “face-to-face” business culture surrender to that of the online; besides, the process seems to dramatically weaken the spatial relationship between work and home. In the “post-pandemic”, one in six workers is projected to continue working from home or co-working at least two days a week, according to a recent survey by economists at Harvard Business School. Another survey of hiring managers by the global freelancing platform found that one-fifth of the workforce could be entirely remote after the pandemic.
Transition of huge swaths of commercial activity to the internet has huge economic implications too: e.g. public transport’s usage still hasn’t recovered in the UK and Spain by the fall in 2020, while France was back to normal. So far, employers have been a weak counterbalancing force as they must respect the government guidance and can’t pull staff back en mass before making offices safe. London has more than 2,600 high-rise buildings, compared with less than 1,000 in Frankfurt and Paris; it was hard to get people through turnstiles and up-lifts in numbers with social distancing.
The EU’s efforts to assist businesses
The European Commission’s intentions to create friendly environment for businesses in the member states are aimed generally at: reducing administrative burdens and red-tape, stimulating innovation, encouraging sustainable production and consumption, ensuring smooth functioning of the EU’s internal market for goods and services, and opening up business opportunities in various economic sectors. More in: http://ec.europa.eu/enterprise/index_en.htm
The EU-wide business development is a key component of the completion of a European single market; this involves improving the regulatory environment, enabling businesses to assume a European dimension and to be competitive on the international and European markets.
The basic EU actions in this direction (which are also in favor of business in the member states), include: harmonisation of company law (to promote a simplified legal environment with minimum red tape), modernisation of public procurement (to increase the opportunities for businesses and to guarantee better quality services for citizens) and protection of intellectual property (to encourage innovation and creativeness)
Modern European corporate and business policy priorities include such components as: two new European strategies: one for the industrial development, another strategy for European SMEs; plus comprehensive plans for sustainable and digital Europe, and the European Green Deal. These changes in policies have shown a fundamental rewind in business strategies both in the states and in the EU internal market.
Three perspectives are presently visible for the businesses in the member states: a) increased enterprises’ cross-border operations; b) support for start-ups, young entrepreneurs and SMEs, and c) corporate management, including elaborate support for advisers, service providers and accountants.
Contemporary EU measures in key corporate issues affecting business in the states, including the “green deal”, sustainability and digitalisation, can assist business continuity and contingency planning, corporate compliance and supply-chain due diligence, as well as sustainable governance and cross-border mobility.
For example, corporate social responsibility, CSR attracts particular attention in the EU’s efforts; the CSR refers to companies taking responsibility for their impact on society. The Commission believes that CSR is important for the sustainability, competitiveness, corporate innovation and the general “entrepreneurial spirit” among the EU enterprises and the economy. It brings benefits for risk management, cost savings, access to capital, customer relationships, and human resource management. Companies can become socially responsible by integrating social, environmental, ethical, consumer, and human rights concerns into their business strategy and operations.
See e.g.: ISO 26000 Guidance Standard on Social Responsibility and Commission’s link at:
Digital transformation: effect for business
Digital agenda and data processing has become the core of new digital technologies and most business processes. A huge amount of data is created, stored and processed every day. It is not always easy to know which rules apply when processing personal and non-personal data in a “mixed data-set”. This occurs very often when businesses store and process various types of data in databases and IT systems. This guidance illustrates with practical examples the rules to follow in these situations, to ensure your business complies with European law.
The Regulation on the free flow of non-personal data, which applies from May 2019, creates legal certainty for businesses to process their data wherever they want in the EU. It raises trust in data processing services and counters ‘vendor lock-in’ practices that prevent users to port their data to other service providers or IT-systems. Together with the General Data Protection Regulation (GDPR), the EU has set a stable legal environment for the free movement of all data within the European Union. More in:
The success of Europe’s digital transformation over the next five years will depend on establishing effective frameworks to ensure trustworthy technologies, and to give businesses the confidence and means to digitise. The EU’ data strategy and the White Paper on “Artificial Intelligence” are the first pillars of the new European digital strategy: these steps focus on the need to put people first in developing technology, as well as on the need to defend and promote European values and rights in design, make and deploy technology in the real economy.
The European strategy for data aims at creating a single market for data that will ensure Europe’s global competitiveness and data sovereignty. Common European data spaces will ensure that more data becomes available for use in the economy and society, while keeping companies and individuals who generate the data in control.
Data is an essential resource for economic growth, competitiveness, innovation, job creation and societal progress in general. Data driven applications will benefit citizens and businesses in many ways: they can, for example, improve health care, create safer and cleaner transport systems, generate new products and services, reduce the costs of public services, and improve the sustainability and energy efficiency.
Besides, businesses will have more data available to innovate; the move that will ease launching practical, fair and clear access to data. To ensure the EU’s leadership in the global data economy, this European strategy for data intends to:
• Adopt legislative measures on data governance, access and reuse, for example for business-to-government data sharing for the public interest;
• Make data more widely available by opening up high-value publicly held datasets across the EU and allowing their reuse for free;
• Invest €2 billion in a European High Impact Project to develop data processing infrastructures, data sharing tools, architectures and governance mechanisms for thriving data sharing and to federate energy-efficient and trustworthy cloud infrastructures and related services;
• Enable access to secure, fair and competitive cloud services by facilitating the set-up of a procurement marketplace for data processing services and creating clarity about the applicable regulatory framework on cloud framework of rules on “cloud”;
• Empower users to stay in control of their data and investing in capacity building for small and medium-sized enterprises and digital skills;
• Foster the roll out of common European data spaces in crucial sectors such as industrial manufacturing, green deal, mobility or health.
As part of the data strategy, the European Commission has published a report on Business-to-Government (B2G) data sharing (prepared by the high-level expert group), which contains a set of policy, legal and funding recommendations to contribute to making B2G data sharing in the public interest a scalable, responsible and sustainable practice in the EU. Source:
In June 209, the G-7 countries plus six other states launched the Global Partnership on Artificial Intelligence, GPAI with the goal to support the “responsible and human-centric development and use” of AI, as well as creating “global rules for artificial intelligence”. More in:
At the sub-regional level in the EU, the Nordic Business Forum (working since 2010) has become one of the world’s most significant platforms for business cooperation; one of the latest took place in Finland in September 2018. More in: https://www.nbforum.com/nbf2018/
“Green deal”: incentives for business in the states
The European “green deal” is both a European vision for a climate-neutral development by 2050 and a clear roadmap with about fifty actions to reach the goal. Therefore, the old growth-models based on fossil-fuels and pollution is out of member states’ economic policies: they have to elaborate something new. Climate change and environmental degradation present an existential threat to the EU states: to overcome these challenges they have to develop a new growth strategy to transform national economies onto modern, resource-efficient and competitive paths, e.g. with zero-green-house emissions by 2050 and with economic growth being decoupled from resource use.
This “mega trend” has two obvious facets: on one side, it is the Union’s EGD message to reconcile socio-economic development in the states with the European and global sustainability principles; on another side, it is a strong message to the corporate community to reconcile the traditional production and consumption models with something completely different. Besides, it sends the decision-makers a strong signal of “changing the course of actions” inspired by the EGD’s transforming ideas.
Practically, the member states are obliged to limit pollution and cut harmful emissions (although keeping in mind the need for creating jobs and boosting innovation); the states are, first of all to “transform” a presently dominating growth-model based on fossil-fuels into new growth strategies based on sustainable and circular patterns. Secondly, new growth strategies shall be the guidance to business in forging climate friendly companies with clean technologies and recycling, to name a few.
Most Europeans already consider that protecting environment is important (95%); almost 8 in 10 Europeans (77%) say that environmental protection can boost economic growth. The results of the Eurobarometer survey concerning environmental attitudes of EU citizens confirm the wide public support for environmental legislation and EU funding for environmentally friendly activities.
More in: https://ec.europa.eu/commission/presscorner/detail/en/IP_19_6691
At the same time, the differences in green and environmental perceptions among of the European citizens and the EU measures are substantial: e.g. the Commission proposed to the citizens at the end of 2019 a fictional €100 to spend. As a result, respondents in Germany would allocate the largest in the EU-27 share (17.5 percent) to education, research and innovation; in comparison, in the EU-2019 budget, only 9 percent is spent for this purpose. The EU citizens prefer to spend 16.5 percent of the EU funds on climate and environmental policies, though the EU-2019 budget spend only1 percent on it. Citizens are having other priorities too (e.g. security), which shows “the reality gap” as well: in November 2019 in Germany, agricultural and cohesion policies should each account for about 10 percent of the budget; however, the EU is currently spending 36 and 35 percent respectively on these issues. For example, the priorities in the Baltic States are different too – both among the three and from other EU regions due to different national priorities and approaches to the “green transition”.
As soon as the “green transition” shall be inclusive, it is supplemented with a “Just Transition Mechanism” as the EGD’s important part with about € 100 billion targeted to the most needed EU regions and economic sectors, including biodiversity, “green” agriculture and food production, green cities and circular economy.
See Commission Communication on the EGD’s “Road Map” in:
The EU institutions, on one side, are putting in place a framework and the necessary resources to chart a fair and balanced path towards; on another side, these measures have to take into account different national realities and potentials. For example, some member states (e.g. Poland, etc.) still heavily depend on coal and other fossil fuels in their energy production; the green transitions shall be included into “the EGD’s transitional costs”. The EU Multi-annual Financial Framework for 2027 proposed € 427 billion for cohesion and resilience and € 401 billion for natural resources and environment; these financial injections shall support the strategic sustainable directions with the financial priorities in the member states in different economy sectors.
There is an important legal part in EGD: a crucial EGD’s building block is the preparation of the first European “climate law”, which would set clear rules for investors and innovators in planning their long-term priorities making the transition towards climate neutrality accountable and reliable. Every country has to find its own path, though the ultimate goal must be the same for everyone and positive change must be rewarded. The member states have to change the production schemes: thus, if companies invest in clean technologies, they cannot face unfair competition from heavy polluters. In this regard, the EU will apply a Carbon Border Adjustment Mechanism, in full compliance with WTO rules. But the EGD is not only about reducing emissions: it is about numerous things, like boosting innovation, food quality, modern mobility and “green new businesses”.
More in Commission’s presentations: https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_19_6751
The Commission executive vice-president F. Timmermans, in charge of the European Green Deal, acknowledged from the start that transitions will be “a bumpy road” which needed concentration from all: the governments, citizens and businesses.
The EGD has coincided with the digital transition, which also involves the economic and social issues; the EGD’s roadmap addresses all stakeholders, businesses, NGOs, labour/trade unions, citizens, as well as cities and regions. The EGD is going to be a costly endeavor (though it is often costly not to act); the “green decisions” shall be appropriate and feasible taking into consideration the impact assessment procedures: e.g. to determine exactly what the pollution reduction by 2030 should be, and/or what sectors of economy shall be prioritised in transition.
The EGD sets out a new growth strategy by tackling some of the most important environmental and climate-related problems. By adopting a long-term vision for the environment, industries and business will get more regulatory certainty so that they can make significant investments in modernising and reducing their environmental impacts. The innovations and solutions that businesses develop first in the EU will provide a basis for commercial success internationally. Such a transformation will make the EU’s economy more resilient to climate and environment-related risks in the future.
More on EGD in the Commission communication:
The European Fund for Strategic Investments (EFSI) is the main pillar of the EU’s financing facilities in “green deal”, providing first-loss guarantees and enabling the EIB to invest in more projects that often come with greater risks. All projects and agreements approved for financing under EFSI are expected to mobilise more than €450.6 bn in investment, including €49.5 bn in Spain, and support more than one million start-ups and SMEs in the EU-27. These investments will increase the EU gross domestic product by about one percent and added 1,1 million jobs; by 2022, it is expected to increase the EU GDP by 1.8 percent and added 1.7 million jobs.
As the European Council acknowledged, achieving climate neutrality by 2050 would “require overcoming serious challenges”. The Council recognizes the need to put in place an “enabling framework” encompassing adequate instruments, incentives, support and investments to ensure a cost-effective, just, socially balanced, fair and technologically neutral transition. It has to limit disproportionate impact of policy measures especially on households and not hamper mobility taking into account different national circumstances in terms of starting points and the costs of this transition, which will be higher for less wealthy EU states than for others, concluded the Council’s draft.
Example: Spanish renewable project
During the last UN Climate Change conference COP-25at the end of 2019, the European Investment Bank announced investments of €76.5 million in one of the largest solar projects in Spain, demonstrating its commitment to promotion of clean energy production. The project co-sponsored by Spanish renewable energy producers, comprises the construction and operation of a 300 MWp photovoltaic solar plant in the cohesion region of Extremadura; the investment is supported by the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe.
The solar plant will be one of the most powerful solar projects in Europe, capable of producing enough energy to power about 150,000 households at a very competitive price. Moreover, the project will contribute to reducing CO2 emission by more than 171 kt CO2-e/year and approximately 400 people will be employed during the construction phase.
In this way, the EU institutions and the member states can resolve the renewable energy issues, meet the decarbonisation targets and increase energy independence. Besides, the “Spanish solar project” demonstrates the long-term “bankability” of large-scale projects through signing of the power-purchase agreement in September 2019 with two Europe’s largest lenders, the European Investment Bank and Deutsche Bank, DB; in addition to €76.5 million of the EIB and €165 million, from DB, the total amount reached about €228 million. The solar plant will have a significant impact on the Spanish renewable energy market, helping the country to meet its renewable target of 20% of primary energy consumption to be generated by renewable sources by 2020; moreover, the project contributes to meeting the EU’s binding renewable energy target of at least 32%of final energy consumption by 2030.
In 2018, the EIB provided almost €1.3 billion to support climate action in Spain by financing projects involving the development of cleaner means of transport and implementation of new, less polluting and more environmentally friendly production processes.
The solar power mainstream is not only for the “solar-reach” countries like Spain; modern technologies can make solar power effective even in northern countries, making business oriented towards new frontiers, including homes and commercial rooftops to utility-scale by increasing the accessibility and production of solar power across the world. Over the past 20 years, the Solarcentury’s solar projects have generated over 3.5 billion kWh of clean electricity and saved over 1.5 million tons of CO2 emissions from entering the atmosphere.
Website’s reference at: www.solarcentury.com; and https://ec.europa.eu/commission/presscorner/detail/en/IP_19_6746