Theoretical Lenses

The Theory of Braunerhjelm (2021) deals with macro-economic stabilization

policies and discusses that targeting aggregate demand may not suffice to mitigate the
comprehensive effects of the Covid-19 crisis. Entitled “Rethinking Stabilization Policies:
Including Supply-side Effects and Entrepreneurial Processes,” it suggests that a more
active role for fiscal policies is needed and presents a modified framework for
stabilization policies, giving an extended role to supply-side measures and emphasizing
policies that can promote entrepreneurial processes and knowledge upgrading efforts.
Aligning policies at the micro and macro-levels can be expected to counteract economic
downturns more efficiently as the potential for long-term growth is enhanced. Such a
redirection of stabilization policies is argued to strengthen the competitive standing of
both firms and individuals. Changes in (the perception of) well-being, the way of
consuming, in the way of filtering out the resilient and the agile, the adoption of new
digital technologies and learning skills, and much more will all contribute to something
that some call the “new normal.”

Many small businesses operate in the retail and service sectors and serve the
end consumer through face-to-face interactions. These sectors were the most adversely
affected by the COVID-19 pandemic, due to the restrictions and closures imposed by
the authorities. As noted, small businesses often operate in niche and highly specific
markets and can provide something different from standardized products and services
offered by large companies. In the industry sectors particularly, many of them act as
specialist suppliers of parts, components and subassemblies and work as
subcontractors to large industrial companies (Yew Wong & Aspinwall, 2004), which for
the most part continued to operate during the COVID-19 period, in view of their status
as essential industrial enterprises to the economy.

References

Braunerhjelm, P. (2021). Rethinking stabilization policies: Including supply-side effects

and entrepreneurial processes. Small Business Economics, this issue.
Yew Wong K., Aspinwall E. (2004). Characterizing knowledge management in the small
business environment. Journal of Knowledge Management, 8(03), 44–61.