FIRM’S ENTREPRENEURIAL STRATEGY TO SURVIVE AND GROW

DURING PANDEMIC

Authors:

Manongi Cliff Ntimbwa

College of Business Education
[email protected]

Paul Jeconiah Ondiek

College of Business Education
[email protected]

Electronic copy available at: https://ssrn.com/abstract=4178101

 Abstract
Purpose of this study is to investigate entrepreneurial strategy employed by identified firms to
survive and grow during pandemic times. The secondary data was used to understand how firms
across the world have used different strategies to survive during catastrophes with the aim of
developing guiding tool to be used qualitatively. Resource based view theory was adapted in the
study. Therefore, the study identified entrepreneurial strategies used by selected firms to survive
and grow in corona virus era. The model developed illustrated relationships between variables
based on the resource-based theory as it serves more business companies. The findings were
disseminated to research and business community for them to adopt during the crisis.

Introduction

COVID-19 is an infectious disease that is caused by a newly discovered virus namely coronavirus.
The most common symptoms are fever, dry cough and tiredness. Other symptoms include aches
and pains, sore throat, diarrhea, conjunctivitis, headache, loss of taste or smell, a rash on skin or
discoloration of fingers or toes. According to the WHO (2020), the advanced stage of the disease
is characterized by serious symptoms such as difficult breathing or shortness of breath, chest pain
or pressure and loss of speech or movement. Since the explosion of COVID-19, several countries
and research-based institutions across the world have put substantial efforts to contain the disease
and bring lives to normal. For example, Harvard Medical School advocates to avoid close contact
with the already affected people, avoiding touching eyes, nose and mouth, stay home when sick,
cover your cough or sneeze with tissue then throw the tissue in the trash, clean and disinfect
touched objects, wash hands often with soap and water, maintain social distance, and wear a face
mask (Harvard, 2020).

According to the WHO COVID-19 Dashboard, globally, there have been 497,960,492 confirmed
cases of COVID-19, including 6,181,850 deaths while 250,782,214 vaccine doses have been
administered as early of April 2022. Some of its effects include mass layoffs and closure (Bartic,
Alexander W., et al, 2020); change of workplaces as commonly referred to as zoomshock (Bloom,
Fletcher, & Yeh, 2021); co-operative societies experiencing limited loan recovery, increase of non-

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performing loans, decrease in membership savings and increased membership withdrawals
(Mgema, & Komba, 2020). Other adverse effects are disruption of global supply chain which
affects jobs and collapse of companies (Fernandes, 2020). According to Cortez et al (2020),
COVID - 19 has severely affected B2B firms around the world as well. The exercise of lockdown
affects the sales and provokes tensions among the firms.

However, certain businesses have positively survived and grown. Several reasons account for such
scenario though technological use fits to be a major reason in different ways. Munjal (2021) argues
that digital strategy allows business to reach their customers regardless of lock down, social
distancing and even distance. Also, understanding customer behaviour stands to be a reason for
successful business organization (Vale, 2021). The producer had to keep in mind that consumer
demand is not static but keep on changing to suit the needs. As Vale (2021) observes, competition
and new consumer behavior are additional force towards need for change from traditional way of
doing business to omni-channel retailing. NOKIA Company stipulates that digital transformation
should be applied in all industries world-wide as impact will be seen even in labour markets.

Several firms have benefited from the pandemic by identifying and strategically take advantages
of business opportunities that results from the pandemic. As a result, such firms have either
increased sales (Kim & Wang, 2021), or experienced other similar positive results such as business
resilience (Ilinova, Dmitrieva, & Kraslawski, 2021). It is from this paradox of mixed experiences
from effects of COVID - 19 that this study aims to identify entrepreneurial related strategies that
have saved as springboard for those firms which benefited amid all the challenges of COVID - 19
pandemic.

Literature Review

The business performance can be influenced by factors from both inside and outside the
organization. The factors can either cause business to fall, stagnate or grow and develop. The
factors from within the organization includes management competency and skills, financial
capabilities knowledge and technological capabilities. Of all internal resources, literature finds
strong support for the notion that human capital—knowledge, skills, and social and personal
attributes—matter fundamentally for sustainable success of business (Lucas 1988; Mankiw et al.

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1992; Barro 2001). This is due to the fact that an entrepreneurial society or any firm in business
requires a diverse range of skills and knowledge, to address environmental challenges while taking
advantage of opportunities which other firms can be easily done by any other competitors. Internal
resources, capabilities and competences are the primary source of competitive advantage much
more than tangible resources (Hitt et al., 2001). Additionally, Wang and Changa (2005)
acknowledge that competences are a fundamental determinant of firm’s current and future
competitiveness as well as firm’s value growth.

Strategy

It is difficult to write about the subject of strategy and whatever that is linked to it such as strategic
human resource management, strategic leadership and sustainable competitive advantage of the
firm without acknowledging the seminal publications of the scholars such as Furrer, Thomas, &
Goussevskaia, (2007); Chandler‟s “Strategy and Structure” (1962) and Ansoff‟s “Corporate
Strategy” (1965).
The concept of strategy that is used in the science of management in time refers to "the ways to
follow to reach the purpose of an organization" (Aktan, 2008: 6), and as "composition of final
result-oriented, long-term and dynamic decisions determined to reach a purpose by examining the
activities of rivals" (Ülgen and Mirze, 2004: 33). Strategies followed firms in the science of
management against their rivals have caused a discipline firstly called strategic planning and then
strategic management (Aktan, 2008: 6). Various scholars have defined strategic management from
different perspectives. However, the most contemporary definition of strategic management refers
to the use of current firm’s production resources (natural sources, human sources, capital,
infrastructure, raw material etc.) efficiently and effectively in order to maintain the firm’s lifetime
in the long-run, to gain competitive advantage and profit higher than average" (Ülgen and Mirze,
2004: 26).
Strategic management deals with how enterprises develop sustainable competitive advantages
resulting in the creation of value (Ramachandran et al., 2006). Porter (2000) points out that
competitive advantage relates to the company's performance in competitive markets. It means low
costs, a differentiation advantage, or a successful focus strategy. Organization will only be able to
achieve sustainable competitive advantage if those resources are not easily imitable or duplicated
by competitors; not substitutable and cannot be easily transferable (Barney, 1997). In that case

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when the organization develops and/or acquires such rare attributes it can easily outperform other
competing organizations in the market. It is in this basis that the proposed study analyses/assesses
the contribution/relevance of Resource Based Theory used by organization which survived, grew
during COVID-19 pandemic, in other words are those companies which have been resilient.

Entrepreneurship

Entrepreneurial strategy according to Murray (1984) is a turn – around of an organization which

is in constrained and competitive environment through developing new products and approach. In
recent years research has shown that entrepreneurs use different strategy to make sure that they
start or survive or grow their business ventures. Five factors to be in place for entrepreneurial
strategy to be in place include; stay focused, build the right team, don’t be afraid of change, ensure
proper funding and believe on yourself (Osborne et al, 1997, Drucker, 1985). Zhou et al (2020)
argue that individuals selected to run and manage family business use entrepreneurial strategy to
meet entrepreneurial and family demands in this way they also address family conflicts. Lin et al
(2016) states that corporate entrepreneurial organizations use political networking strategy to
achieve their goals. Kuratko et al (2004) add that corporative entrepreneurship behaviour is a
strategy which can be used corporate organization in challenging environment to enhance
performance. An innovation has relationship with firm’s performance on strategy; marketing and
organization structure (Chen et al, 2009). Jahanshahi et al (2018) establish fact that culture
intelligence practiced by top management in an organization becomes effective which might be
also adapted by SME’s.

Effective entrepreneurial strategies must take into consideration and control ecosystem which
refers to interdependent systems and actors who creates a favorable environment for new venture
formation and growth of existing ones provided that the social and economic environment are in
place. That is entrepreneurial ecosystem is an environment which favors business activities
equally; starting, managing and running an entrepreneurial venture (Shwetzer et al, 2019).

Therefore, the current study is going to analyse Tanzanian business environment during pandemic
and identify the venture firms which have grown. The aim is to identify the entrepreneurial
strategies used by those ventures. The entrepreneurial strategies theories will guide this study. And
how were entrepreneurs able to overcome the pandemic catastrophe and grow? What are
similarities and difference between the firms?

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Resource Based Theory

The theory suggests that resources that are valuable, rare, difficult to imitate, and non-substitutable
have ability to make firm more successful (Barney, 1991). These includes the resources such as
human, finances, knowledge, skills, competences, and regulations which are within the range of
organizations and are important in order to attain its goals. After COVID-19 if you like to call it
in that way some organizations became resilient because of their ability to be entrepreneurial in
utilizing the opportunities, innovative in using resource to serve consumer interest competitively
and forward-looking (Barney, 1991, Hu et al, 2021).

Methodology

The nature of this study forced the researchers to use secondary data from scientific research
journals articles and reports from reputable organizations in order to have validated information
as it reflects the objectives of this study (Johnstone, 2014; Snyder, 2019). The study adapted the
qualitative multiple case study (Vale et al, 2021). The descriptive analysis of data from reports and
articles will be made in order to have a meaningful understanding of facts and phenomena. The
aim of this methodology is to examine entrepreneurial related strategies that have enabled some
firms to grow amid all the challenges of COVID – 19 pandemic.

Findings

The selection of reports and journal articles identified several sectors of which regardless of
pandemic had stable business operations, growth was observed and profit increased. The business
organization which let IT to surge are leading. These includes mobile money services, IT
technology services associated mobile phones.

Mobile Money

As the world is experiencing COVID-19 pandemic, total lockdown, social distancing and other
protocols have been established to save the human kind, good number of business have been
affected but also some business have flourished these includes mobile money services (WHO,
2021). Mobile money is a recent technology where people receive, store and spend money using a
mobile phone. In the world currently there are more than 270 different mobile money services.

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 The services is a popular alternative to both cash and banks as it is easy to use, secure and can be
used anywhere provided that there is a mobile phone signal (WorldRemit, 2021).

According to GSMA data of 2021 which covered the period during initial stages of pandemic to 2021 has
indicated that the mobile money business has grown as table below indicates.

REGIONAL GROWTH GLOBAL IN 2020

TRANSACTION
LIVE REGISTERED ACTIVE TRANSACTION VALUE IN
SERVICES ACC. ACC. VALUE (USD)

Global 310 1.2bn(13%) 300m(17%) 41.4bn(15%) 767bn(22%(

East Asia and
Pacific 49 243m (24%) 52m(20%) 5.4bn(26%) 111bn(34%)
Europe and
E.Asia 9 21m(6%) 4m(11%) 234m(15%) 4.0bn(13%)
Latin
America&The
Carr 30 39m(38) 16m(67%) 701m(35%) 19.8bn(30%)

Midd.East&N.Ant 29 56m(9%) 3m(35%) 146m(-63%) 10.5bn(26%)

South Asia 36 305m(5%) 66m(5%) 7.5bn(8%) 131bn(10%)

SubSaharan
Africa 157 548m(12%) 159m(18%) 27.4bn(15%) 490bn(23%)
Source: GSMA 2021
The occurrence of COVID-19 pandemic shows that individual’s perception of handling money in
cash was risk so users changed to mobile money as a fare option. As a result the number of
registered accounts grew by 12.7 % globally to 1.21 billion accounts which is twice as predicted
growth. This shows that there is an increase of 300 million monthly active mobile money accounts
which is an increase of 17%. From history it took a decade for the industry to reach its first 100
million monthly accounts but it has taken just over five years to reach another 200 million (GSMA,
2021).

The total transaction values grew by 22% in 2020 to reach $ 767 billion. Suggesting the industry
is processing over $ 2 billion a day and has more than doubled in value since 2017. Predicting the
value to exceed $ 3 billion a day by 2022 (GSMA, 2021).

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NOKIA

Nokia Corporation is a technological company based in Finland which like other organizations is
affected by COVID-19 pandemic. The continuous innovation and use of technology 5G made the
organization net sales rose by 2% to 5.4% billion euros ($ 6.27 billion) from 5.3 billion a year ago,
these a quarterly profits as the NOKIA grow in addressing the demand of network when it was
more demanded. As pandemic spreads the internet traffic surge since most of the people were at
home using the internet, thus, what could have been done in years was achieved in weeks as the
table below indicates:

- 30 – 50% increase
- 50 – 100% increase in video streaming traffic
- 350% increase in video conferencing traffic
- 100 – 150% increase in gaming traffic
- 40 – 50% increase in provision of website and online services

Source: NOKIA

In dealing with COVI-19 pandemic, the organization applied the proposed pandemic protocols as
almost all employees worked from offsite, even after countries eased restrictions still most of
operations were done from home with only few working onsite but maintaining hygienic
conditions such as social distancing, traveling restrictions and undergo quarantine but still the
profit grew (NOKIA, 2021). Also online services spread fast and enabled to address human needs
in USA, India, Algeria, Chile, Sri Lanka and Philippines. The introduction of 5G has increased
NOKIA performance during pandemic over the competitors and innovation has increased the
number of patents, after investing Euro 4.1 billion in research and development 1500 new patents
(NOKIA, 2021).

The thought that maintaining proposed pandemic protocols affects all business organization
negatively has been proved different with NOKIA. It depends on the nature of business,
innovations and strategic adopted by leaders of the said organization. The strategy of working at
home adopted by NOKIA had impactful and significantly improved the organizational
performance but also societal wellbeing.

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ZOOM Video Communication

The second quarter report 2021 of the company has shown that net profit rose to 70.6%,
shareholders profit climbed to $ 316.9 million, almost $ 131.2 million, more than the same period
last year. Revenue during the three month period to July 31 increased 54% on an annualized basis
to $ 1.02 billion, it was nearly 6.8 % up on a quarterly basis. ZOOM success has been driven by
acquiring new customers and expanding across existing customers as nearly 504,900 paid
customers with more than 10 employees up by almost 36 % from the same period last year (ZOOM,
2021).

Regardless the strategies applied by ZOOM and its achievement in short time, the company
continued to expand in different activities; invested $ 82.3m in research and development in three
months to July 31, almost 93% more than the prior year period, purchase cloud call centre software
provider Five9 for $ 14.7, alliance with translation soft maker Karlsruhe Information Technology
Solution lines, securing messaging and file sharing services from Keybase Financial Group
(ZOOM, 2021). The achievements occurring while the COVID-19 pandemic continues to surge.

Discussions

Strategic Actions

In order to address the challenge of COVID-19 pandemic actors opted to form strong partnership
which are accelerating the shift to cashless society through digital. The strategic partnership to
expand the horizons of digital payments and developing new and robust interoperable payment
systems which offered flexible and alternative channel for users especially in COVID-19 era as
people had to maintain the hygienic protocols as suggested by WHO (Rafdinal et al,2021).
Government to private sector or NGO’s to effect payment to the needs. As the following evidence
indicates; $ 68 billion transacted between mobile money platforms and banks, 43% increase in the
value of monthly merchant payment in a year. $ 12.7 billion the total value of money enabled
international remittances processed (GSMA, 2021).

The mobile money user continue to use the technological channels because it is easy to use, flexible
and leads to positive attitude towards mobile money technology. This predicts the type of the
technology to come (Rafdinal et al, 2021)). This suggest more that the mobile money technology
as it continue to address customer demands will keep on changing. The lower level the distribution

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is done by small entrepreneurial firms have faster ability of adding more knowledge and change
than bigger firms (Maiti et al, 2020).

Technological Networking is another strategy used by mobile money companies, technological

companies such ZOOO and NOKIA. For example, the use of agents in mobile money networking
increased by 14 percent yearly. The agents had to follow all COVID-19 protocols still there was
50 to 50 impact to agents. The impact was $ 500 million digitized by agents on a daily basis. The
interoperability actions seen in technological industry brings more people into the formal economy
who had been rejected or ignored with other systems including banking. This includes progress
made by merchant payment and it has developed to add more users in mobile money networking.

Resources adapted

The regulatory landscape is shifting. The trend of technology and COVID-19 has observed more
actors involved and integrating across the globe. This has made regulatory worldwide to adapt
different payment system in their countries in order to make the system work. As a result, there
are uniformity seen in transfer, bill payment, bulk payments, airtime top-up, merchant payment,
international transactions, technological partnership and bank partnership. This has got cost
implications, knowledge transfer as well as technological adaptability and exchange of which
needs regulations and policy shift. Moreover, infrastructure and investment environment; interest
payment, inclusion strategy, affordability and ID verification.

Model: The illustration indicating the flow of steps for entrepreneurial firm to grow.

Technological Innovation
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 Innovative Firm

Product Development

Agencies

Consumer
Source: Authors

The model indicates that at the top level technological innovation is developed of which for it to
happen internal environment must be favorable, that is skilled manpower and technological
resources. The second level is where the Innovative Firms hibernate by redesigning, organizing,
accumulating resources, matching before spinning on from smaller to bigger accepted innovation.
It is from this stage where the innovation moves beyond boarders. The third stage is product
developments; where different products are being developed. Money services in different names
and actors are invited just like how ZOOM does to address markets demand through partnerships
and buyout. The fourth is distribution/agencies; different actors with their mandate participate in
disrupting the new formed products. It is destructing because new innovation is created by
eliminating the existing, Schumpeterian. The last is consumer of which innovation is embraced
because of its ability to address the consumer needs.

The above process is possible because of country ability to create a favorable environment;
policies, laws, regulations, skilled human resources, financial services and technological services.

The existence of COVID-19 pandemic has affected business in the world in a negative way. But
certain business have positively survived and grown. Several reasons account for such scenario

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nevertheless technological use fits to be a major reason in different ways. Munjal (2021) is of the
opinion that digital strategy allows business to reach their customers regardless of lock down,
social distancing and even distance. Also understanding customer behaviour stands to be a reason
of successful business organization (Vale, 2021). The producer had to keep in mind that consumer
demand are not static but keep on changing to suit the needs. As Vale (2021) observes, competition
and new consumer behavior are additional force towards need for change from traditional way of
doing business to omni-channel retailing. NOKIA Company stipulates that digital transformation
should be applied in all industries world-wide as impacts will be seen even in labour markets.

Conclusion

The study confirms that regardless the mixed experiences from the effects of COVID – 19
entrepreneurial strategies with use of technological resources in production, marketing,
distribution, management and managing networking has made firms to survive and grow during
the pandemic era. The developed study model suggest that technological innovation, innovative
firm, product development, agencies and existence of consumers in enabled environment the
business firms will survive and grow in any circumstance.

Implication

The findings from this will serve as a reference for similar firms that are doing similar businesses
globally. Based on this study, other organizations can strategically identify, mobilize, deploy and
retain rare resources for sustainable business competitiveness amid environmental challenges that
cause other businesses to fall, or completely close. Also, findings from this study strongly affirm
relevance of resource based theory and competitive strategies make organizations survive and
grow in difficulty times.

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