WHY ARE SOME FIRMS BECOMING MORE SUCCESSFUL DURING THE COVID-19 PANDEMIC?

The COVID-19 pandemic has led to a worldwide recession of immense proportions. Many companies are closing down, either for good or temporarily. The firms affected are largely those who were heavily dependent on the “old” way of doing business, with the physical presence of workers, as well as interaction between other groups, such as suppliers or clients. Examples of companies that seem to be particularly hard hit are firms in the transportation sector (airlines, cruise lines, etc.), hospitality (restaurants, bars, hotels), health studios, and manufacturing firms where social distancing is more difficult to organise (assembly plant types of business, including automotive, meat-packing, etc.).

However, there are some winners and, perhaps unexpectedly, we see that the advent of the COVID-19 pandemic has led to extraordinary economic benefits for some, including individual investors and corporations.

Statistics, primarily from the US, tell us that the relatively few “super-rich” have become significantly relatively richer compared to the rest of us, who tend to be more directly affected by the adverse economic fallout from the pandemic.

When it comes to the corporate sector, too, we see a similar phenomenon: some firms seem to be doing exceptionally well these days. Why?

In the rest of this note, we discuss this phenomenon. Let me hasten to add that my findings are not founded