The Effect of Business Legal Form on the Perception of COVID-19-Related Disruptions by Households Running a Business

Abstract

Recent studies uncover the lack of symmetry in COVID-19-related economic shock distributions among households. Thus, questions arise about the appropriateness of diverse risk-coping mechanisms by households. We add to this strand of research by focusing on households running a business. In particular, we analyze the role of basic legal aspects of running a business by individuals, specifically a legal form of business activity in shaping COVID-19-related business risk perception. We posit that the different legal forms allow for different risk-coping mechanisms. We incorporate analysis of variance (ANOVA) on data obtained via a survey distributed among households running a business in Poland, a country where the pandemic threatens poverty-reducing growth. We confirm that between the groups of households running a business in various legal forms, there are statistically significant differences regarding the impact of COVID-19. Thus, we conclude that the choice of business legal form affects vulnerability to COVID-19-related interruptions among households running a business.

Keywords

• business resilience
• risk sharing
• risk limiting
• household finance