The effect of COVID-19 on the performance of Ethnic-minority firms in the UK and worldwide

Call for papers for: International Journal of Entrepreneurial Behavior & Research

Guest editors
Professor George Saridakis
Kent University Business School
Parkwood Road, Kent, CT2 7FS
[email protected]

Dr Bochra Idris
Aston University Business School
Birmingham, B4 7ET
[email protected]

What is the topic of the call ?

The global pandemic (COVID-19) has severely hit the United Kingdom (UK) - European Union (EU) and other global economies. The US, along with several European countries - e.g. Belgium, France, Italy, Netherlands and Spain - are among the worst hit countries worldwide with a high number of deaths per capita. The economic consequences of this pandemic are estimated to be severe for the global economy. The drop in global Gross Domestic Product (GDP) is predicted to be above 6 per cent from the International Monetary Fund (IMF), with the decline for EU countries estimated at between 6 to 10 per cent. However, the lockdown, as a necessary measure to control and limit the spread of the virus, may lead to a sharper drop in GDP in the range between 15-35 per cent according to an Organisation for Economic Cooperation and Development (OECD) report (OECD, 2020a).  
The International Monetary Fund (IMF) estimates a drop of 7 per cent in the UK GDP, whereas the OECD suggests a potential drop of more than double of the IMF figure due to lockdown measures. In addition, the recent Business Impact of Coronavirus Survey (BICS) suggests that 24 per cent of the firms have temporarily closed or paused trading since the lockdown, and the remaining ones that continue to trade tend to underperform (OFNS, 2020). To fight a potential economic meltdown and rising unemployment (with significant social and health implications along with the economic ones), the UK has responded by adopting various instruments related to employment support (e.g., job retention schemes), debt financing (e.g. grants, subsidies, loan guarantees, lending) and tax relief for small businesses (OECD, 2020b). Similar approaches have been adopted by other OECD countries, which a few of them only adopting more structural changes, such as new markets, digitalization and innovation. 

In the UK, for example, government has announced a Coronavirus Business Interruption Loan Scheme (CBILS) in order to support small and medium-sized (SMEs) firms and the Self-Employment Income Support Scheme (SEISS) to support self-employed individuals. To be eligible for CBILS, firms should have an annual turnover of less than £45 million and have to ‘self-certify’ that the business has been adversely impacted by the recent pandemic. As of the 12th of April 2020, however, only 1.4 per cent of firms that applied for the scheme has been successful in securing a loan. Additionally, to be eligible for SEISS self-employed individuals or members of a partnership should have submitted a tax return for the tax year 18/19, traded in the same tax year, and have lost trading profits because of the pandemic. Recent evidence suggests that ‘nearly 1 in 5 of the self-employed are excluded’ from the SEISS proposed by the government (Rouse et al., 2020: 6). This can lead to a substantial threat to SMEs performance in terms of lifespan and growth potential. Some preliminary findings which would enable an understanding of the potential magnitude on survivability of the firms can be extracted from the recent study by Prashar et al. (2020), which shows a 70% increase in the number of company dissolutions in March this year compared to the same month last year.

To this end, this call for papers focuses on a much less investigated aspect, so far, but with significant policy implications, which is related to ethnic minority businesses (EMBs). EMBs play an essential role in the UK economy, as well as in other economies, and previous studies show that self-employment and business ownership among ethnic minority groups is higher than the white population. The latest figures from the UK Longitudinal Small Business Survey (LSBS) shows that five per cent of SMEs employers were minority-ethnic group led (MEG-led) and four per cent of SMEs with no employees were also MEG-led. These groups are most likely to be in the health sector (9 per cent), retail and wholesale, accommodation and food service, and administration and support (all 7 per cent). Moreover, they are mostly found in London (16 per cent) and the West Midlands (8 per cent) (DBEIS, 2019). 
Recent studies show that EMBs are 15 per cent more likely to have experienced a crisis that threatened their survival, than their counterparts (Wishart et al., 2018). However, ethnic minority firms are more likely to operate as sole traders and have a lower turnover than their counterparts (Ram & Jones, 2009). Hence, they are more vulnerable to external shocks than non-ethnic minority firms. In addition, recent literature identified a number of factors that impact EMBs’ survival and resilience to external shocks, such as a lack of financial capital, a low level of education, absence of assets to be used for collateral (e.g., Ram & Jones, 2009; Bruder et al., 2011; Bewaji et al., 2015) and management competencies and practices (Carter et al., 2015). In addition, recent research evidence suggests that there are significant barriers faced by EMBs compared to their counterparts especially in getting access to external finance (e.g., Smallbone et al., 2005; Ram et al., 2008). Ethnic minority businesses are often found to be discouraged from applying for finance for fear of rejection or because the terms and conditions attached to the external finance might be of a greater risk (Freel et al., 2012). Research showed that ethnic minority firms often do not seek external finance due to a limited credit history (Levie & Hart, 2011) and actual or perceived discrimination (Cavalluszzo et al., 2002).  

The work by Rouse et al. (2020) highlights the fact that the current policies from the government will have an unequal effect on ethnic minority businesses because these firms usually lack the capital and will face significant hardships under the current lockdown measures. Based on previous research into ethnic minority firms and for the above mentioned argument, it is believed that EMBs will face more challenges during the current pandemic which will affect their survival. This becomes even more essential since data (see Centers for Disease Control and Prevention, 2020; Devakumar et al., 2020; Rimmer, 2020) tend to suggest that ethnic minority groups are more likely to face higher risks under COVID-19, perhaps due to the sectors in which they operate and underlying living conditions, than non-ethnic minority group.   

Therefore, in contrast to most existing work, this call for papers seeks to investigate and examine the following themes, although our call is not restricted to these areas: 

  • The organisational challenges and obstacles faced by EMBs as a result of the COVID19 pandemic 
  • Awareness of and accessibility to governmental and institutional COVID-19 schemes and support tailored for EMBs
  • The survival and growth prospects of EMBs under the COVID-19 pandemic
  • Comparing and contrasting policy responses for COVID-19 and EMBs performances worldwide
  • Organisational innovation and adaptability of EMBs under the COVID-19 pandemic
  • Wellbeing of business owners and workers in EMBs under the COVID-19 pandemic
  • Work life and family balance for ethnic minority groups during COVID-19 pandemic 

The Special Issue editors call for empirical and theoretical papers (including literature reviews) in the area that make significant contribution to answering important questions with important policy implications.  
Our Special Issue aims to contribute to our economic and social understanding and implications of the magnitude of COVID-19 on EMBs, which are an important part of our economies, and which can lead to serious economic implications with social dimensions, if full attention is not paid to understanding their needs, struggles and performance potential. Organisational support and contribution of EMBs in fighting COVID-19 pandemic.

Submissions and deadlines

  • Submission of the papers can be made through the journal manuscript portal and should be submitted under the section of special issue with the title of “The effect of COVID-19 on the performance of Ethnic-minority firms in the UK and worldwide”.
  • Please submit your papers by the 31st of May 2021

Referencesthe 31st of May 2021
Bewaji, T., Yang, Q., & Han, Y. (2015). Funding accessibility for minority entrepreneurs: an empirical analysis. Journal of Small Business and Enterprise Development, 22(4), 716–733.
Bruder, J., Neuberger, D., & Räthke‐Döppner, S. (2011). Financial constraints of ethnic entrepreneurship: evidence from Germany. International Journal of Entrepreneurial Behavior & Research, 17(3), 296–313.
Carter, S., Mwaura, S., Ram, M., Trehan, K., & Jones, T. (2015). Barriers to ethnic minority and women’s enterprise: Existing evidence, policy tensions and unsettled questions. International Small Business Journal, 33(1), 49–69. 
Cavalluzzo, K.S., Cavalluzzo, L.C., & Wolken, J.D. (2002). Competition, small business financing, and discrimination: Evidence from a new survey. The Journal of Business, 75(4), 641–679. 
Centers for Disease Control and Prevention (2020). COVID-19 in Racial and Ethnic Minority Groups.
Department for Business, Energy & Industrial Strategy (2019). Longitudinal Small Business Survey (LSBS): SME employers - UK, 2018. 
Devakumar, D., Shannon, G.,  Bhopal, S. S. and Abubakara, I.. Racism and discrimination in COVID-19 responses, Lancet, https://doi.org/10.1016/S0140-6736(20)30792-3.
Freel, M., Carter, S., Tagg, S., & Mason, C. (2012). The latent demand for bank debt: Characterizing discouraged borrowers. Small Business Economics, 38(4), 399–418. 
Levie, J., & Hart, M. (2011). Global Entrepreneurship Monitor: United Kingdom 2011 Monitoring Report, Birmingham: Aston Business School. 
OECD. (2020a). Evaluating the initial impact of COVID-19 containment measures on economic activity.
OECD. (2020b). SME Policy Responses.
OFNS. (2020). Business Impact of Coronavirus (COVID-19) Survey questions: 23 March 2020 to 5 April 2020.
Prashar, N., Ri, A., Hart, M., & Roper, S. (April, 2020). Business Dynamism and COVID-19 – An Early Assessment. ERC Insight Paper, Enterprise Research Centre. 
Ram, M., & Jones, T. (2009). Ethnic-minority businesses in the UK: a review of research and policy developments. Paper presented at the 29th Annual Conference of the Institute for Small Business and Entrepreneurship, Cardiff, WALES.
Ram, M., Theodorakopoulos, N., & Jones, T. (2008). Forms of capital, mixed embeddedness and Somali enterprises. Work, Employment & Society, 22(3), 427–446. 
Rouse, J., Hart, M., Parshar, N., Kumar, A. (April, 2020). COVID19: Critique and proposals to develop more comprehensive and inclusive support for the self-employed. Enterprise Research Centre. 
Rimmer, A. (2020). COVID-19: Disproportionate impact on ethnic minority healthcare workers will be explored by government. The BJM. 
Smallbone, D., Bertotti, M., & Ekanem, I. (2005). Diversification in ethnic minority business: The case of Asians in London’s creative industries. Journal of Small Business and Enterprise Development, 12(1), 41–56. .