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Small Business Economics

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30-08-2022

Digital economic activity and resilience for metros and small businesses during Covid-19

Authors: Karen Mossberger, Nicholas F. Martini, Meredith McCullough, Caroline J. Tolbert

Published in: Small Business Economics | Issue 4/2023

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Abstract

The Covid-19 pandemic had an unequal impact across businesses and communities and rapidly accelerated digital trends in the economy. What role, then, did website use play in community resilience and small business outcomes? This article examines a new source of population data on domain name hosts to provide a unique measure of digital economic activity within communities. Seventy-five percent are commercial, including online-only, brick-and-mortar, small, and microbusinesses. With geolocated data on 20 million US domain name hosts, we investigate how their density (per 100 people) affected economic outcomes in the nation’s largest metros during the pandemic. Using monthly time series data for the 50 largest metropolitan areas, the domain host data is merged with the US Census Small Business Pulse Surveys and Chetty et al.’s Opportunity Insights data. Results indicate metros with higher concentrations of businesses with an online presence experienced more positive economic perceptions and outcomes from April to December 2020. This high-frequency, granular data on digital economic activity suggests that digitally enabled small and microbusinesses played an important role in local economic resilience and demonstrates how commercial data can be used to generate new insights in a fast-changing environment.

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A venture is the term used by GoDaddy to describe unique domain name hosts and their redirects to a single domain name (website/email/ssl). Metrics from Data Provider (Netherlands) indicate there are roughly 40 million ventures in the USA.

Fairlie found a 25% decline in business activity among women-owned businesses between February and April 2020, compared to a 20% decline among male-owned businesses.

https://opportunityinsights.org/

https://www.census.gov/data/experimental-data-products/small-business-pulse-survey.html

Similar results were found using other cross-sectional time series panel regression models. Given the use of time variant and invariant variables, fixed effects models were inappropriate.

Opportunity Insights. https://opportunityinsights.org/

We collapsed the following survey weeks into the following months: April (week 1), May (weeks 2–5), June (weeks 6–9), July (no surveys conducted), August (weeks 10–12), September (weeks 13–16), October (weeks 17–18), November (weeks 19–21), December (weeks 22–25). See https://www.census.gov/data/experimental-data-products/small-business-pulse-survey.html for full information about the Small Business Pulse Survey. Different waves of the SBPS were not continuous so there were some gaps within the analysis. Specifically, the survey began near the end of April, no surveys were conducted in July, and there were some weekly gaps between the various waves of the survey.

Question wording changed slightly between waves but overall, they were nearly identical. The question wording supplied above was from waves 2 and 3. For the first few weeks of wave 1, the question wording read: “In the last week, did this business have a change in operating revenues?” For the second half of the first wave, it asked: “In the last week, did this business experience a change in operating revenues/sales/receipts, not including any financial assistance or loans?”.

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The surveys were conducted online, with respondents contacted with an email invitation. In August 2019, there were 2006 respondents, and in July 2020, 2330 complete using similar methods. Participants were given a $10 Amazon gift card as an incentive. Respondents were restricted to website owners or employees responsible for the site, and contractors were excluded in an initial screening question.

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This stability continues into the latest month for which we have data, November 2020. Venture density correlates at more than .95 across all time periods, including from November 2018 to November 2020.

The 2019 Census ACS provides annual measures for these variables. They vary across CBSAs but do not vary over time in our analysis. Please see Appendixes 2 and 3 for variable descriptions and summary statistics.

We omit median income from our models due to high collinearity and correlation with a variety of our controls; such as educational attainment. When replacing these measures with median income, we attain similar results.

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Title: Digital economic activity and resilience for metros and small businesses during Covid-19
Authors: Karen Mossberger
Nicholas F. Martini
Meredith McCullough
Caroline J. Tolbert
Publication date: 30-08-2022
Publisher: Springer US
Published in: Small Business Economics / Issue 4/2023
Print ISSN: 0921-898X
Electronic ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-022-00674-x

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