Internal substitution in the tourism market: Effects of the Covid-19 pandemic

Purpose: The effects of the global COVID-19 pandemic are difficult to estimate, but the impact on the tourism industry is undeniable. This also applies to consumers’ behavior in the tourism market, whose attitudes towards travel may change radically. The aim of this chapter is to analyze substitution processes in the tourism market caused by the COVID-19 pandemic. Design/methodology/approach: This paper is a review in nature and includes papers on tourism economics, particularly the tourism market, as well as secondary data on changes in tourism (tourism participation and consumer behavior) due to the COVID-19 pandemic. Findings: The Covid-19 pandemic does not have to be the factor slowing travels, as it may affect internal substitution on the tourism market. In the situation of the Covid-19 pandemic, all internal substitution options listed in the chapter were noticed on the tourism market in Poland. Research limitations/implications: As long as the emergency situation restricting the functioning of the tourism market continues, the results of the study cannot be definitive. Practical implications: The results can be useful for tour operators, especially in the process of planning tourism development after the crisis caused by the pandemic. Social implications: The chapter indicates changes in consumer behavior on the tourism market caused by COVID-19 pandemic, which may characterize tourists after the end of the pandemic. Originality and value: The article identifies types of internal substitution that occurred in the tourism market in Poland as a result of the COVID-19 pandemic.

Foreign direct investment and the Covid-19 pandemic: The real economy perspective and theoretical implications

Purpose: The objective of this chapter is to discuss the effects of the Covid-19 pandemic on the international operations of firms, with a particular focus on foreign direct investment. Design/methodology/approach: The real economy perspective was adopted, whereby basic relationships in terms of the development of FDI flows and transactions worldwide were analyzed. In addition, primary data from a survey of internationally operating Polish firms were analyzed in order to shed additional light on the influence of the pandemic on international economic activity. In addition to formulating observations with regard to general patterns emerging from the data, an attempt has been made to outline the likely theoretical implications of the pandemic for FDI research. Findings: In the short term, there was a significant limitation of FDI, caused mainly by the introduction of lockdowns. In the middle and long run, the current crisis will likely translate into acontinued slowdown in FDI flows. On the other hand, as we may see from the early evidence analyzed in the chapter, the impacts on the international economic activity vary across locations at different levels of economic development, but also between different industries and business models. Research implications: From a theoretical perspective, we must note that in the short run the existing theoretical concepts can be helpful in explaining the present phenomena. However, in the long-term perspective a number of fundamental assumptions may require several revisions outlined in the chapter. Originality and value: The chapter includes an analysis of recent macro- and micro-level data on the effects of the pandemic on international business, along with forecasts for the post-pandemic period. Apart from the practical dimension of the analyzed primary and secondary data, the chapter also offers a number of theoretical implications.

Effects of the Covid-19 pandemic on sport, video game, and tourism industry: Sentiment analysis of press, internet articles, and Twitter data

Purpose: The chapter examines the extent and level of the pandemic impact on sport, video game, and tourism industry by analyzing the emotional narration of articles related to Covid-19 effects on these industries so as to assess and predict the situation of industries during the pandemic and in the following years, but also to explain sources of positive sentiment for a given industry. Design/methodology/approach: The study provides a sentiment analysis of the global disclosure of the Covid-19 pandemic in the press, online articles, and social media (Twitter) with the use of three independent R packages. The final sample consisted of 142 articles; the oldest was published on January 23, 2020, whereas the newest one on October 14, 2020. Findings: Sentiment analysis revealed that the emotional tinge of the articles is much more positive for video games and soccer than in the case of tourism. In the case of video games and soccer, positive emotions such as “trust” or “anticipation” prevailed over much more common emotions of “fear” and “sadness” used about tourism. The impact of the pandemic was similar for video games and soccer, which was a mixture of negative and positive events. Research limitations/implications: Further research should use other resources such as the mass media or other data sources in addition to social media information and include a long-term analysis divided into stages of the pandemic as reactions and moods have been changing over time. Moreover, the factors influencing the perception of situations in different sectors of the economy should be identified in future research. Practical implications: The use of sentiment analysis shows that such quantification may be performed for new social phenomena before any hard (e.g., financial) data are available. Social implications: An approximation was obtained for quantifying the societal “general feeling” with regards to specific sectors affected by the pandemic. Originality and value: The chapter compares the response to the pandemic crisis of different sectors that reveal the sentiment contributing to the growth or difficulties of a given industry. The use of sentiment analysis enabled us to assess and predict the situation of industries during the pandemic before the hard and comprehensive data will occur.

The economy battling Covid-19. A macroeconomic approach

Purpose: The chapter identifies the complexities of Covid-19’s impact on the economy. The empirical part presents and assesses initial reactions of inflation, industrial production, unemployment rate, Gross Domestic Product (GDP) growth rate, and shifts in the GDP expenditure structure. Design/methodology/approach: Acomplete Keynesian macroeconomic model is used to outline how the negative shock hit the economies. The model shows potential implications of the use of reactive economic policy measures. Based on the model, the empirical part provides comparative analyses of reactions of four economies of the European Monetary Union (EMU) – namely France, Germany, Italy and Spain – two non-EMU economies of Hungary and Poland, and two major large open economies: the USA and Japan. Findings: The Covid-19 pandemic has sent a universal, global shockwave with asymmetric outcomes in individual economies. Covid-19 hit all economies and struck both the demand side and – after ashort time lag – the supply side. Although interconnected, the economies have maintained notable structural differences and, therefore their autonomous reactions to negative demand and supply shocks were diverse. Practical implications: The complete macroeconomic Keynesian model allows for the conceptualization of the transmission of the Covid-19 shock on the economy’s supply and demand sides. The model is also a helpful tool in the analysis of the potential role of economic policy in reaction to the supply and demand shocks triggered by the pandemic. Originality and value: The empirical analyses unveil the eight economies’ differentiated reactions to similar counter-crisis policy measures. Their scale in all cases pushed the state back to the center of economic life. This structural shift requires attention and systematic theoretical and empirical studies.

How Covid-19 impacted the European integration processes? The case of EU Cohesion Policy and budget

Purpose: The current pandemic crisis caused by Covid-19 significantly impacted the processes of European integration. The European Union decided to act within and beyond existing competences and instruments to support the efforts of its Member States, along with regional and local authorities, in the fight against Covid-19. Our study sheds light on the instruments and solutions proposed within the framework of the cohesion and budget policy to tackle the problems related to Covid-19 in Europe. The analysis focuses on two strands: 1) EU assistance offered through cohesion policy (CP) instruments toward above areas; 2) the future evolution of EU budget, and therefore integration shifts, provoked by the Covid-19 crisis. Design/methodology/approach: The study analyzes statistical data with regard to the use of instruments of the Cohesion Policy under the Covid-19 pandemic, but also the amendments introduced to legal acts and decision-making processes that refer to the multiannual financial framework (MFF) for 2021–2027. Findings: We notice a strong shift of priorities regarding environment transformation, digitalization, and health protection, reflected in the MFF. The coordinative role of European institutions and the redirection of different financial instruments to health care follows the neofunctionalist paradigm and represents a spillover effect resulting from integration. The crisis analyzed from the institutional perspective is seen as a chance to reform the decision-making process, while on the other hand, as a threat to the inclusive integration of all Member States. Originality and value: The paper is an original contribution on the overall use of both financial and legislative instruments in the times of unprecedented health and economic crisis caused by Covid-19 in the European Union. The text can be a valuable insight for both researchers and practitioners in the field of broadly understood European studies.

Challenges in currency derivatives management in the OTC market in Poland during the Covid-19 pandemic

Purpose: The aim of the chapter is to analyze the impact of the Covid-19 pandemic and market volatility increase on risk management in the OTC derivatives market in Poland. Design/methodology/approach: The chapter describes the legal background of derivatives trading with non-financial enterprises, then identifies the main risks, and discusses possible actions of market participants. In this regard, the study conducts volatility analysis based on selected market data. Findings: Due to volatility increase and the resulting negative valuation of non-matured currency derivatives by Polish exporters, margin call clauses were triggered, entailing the need to post additional collateral or prematurely close contracts. The described situation is particularly difficult when the pre-settlement limit is fully utilized on deal date, usually in the case of long-lasting large open exposures in non-flexible transactions. Research implications: To determine market risk, studies often apply the VaR approach. Inthis way, the specific amount of risk is analyzed on adaily basis and used by banks both to determine the maximum amount of the contract and to control pre-settlement risk. Apart from many advantages of the VaR approach, there are some drawbacks, especially related to volatility estimation, which usually relies on historical market fluctuations. It may cause that the risk will not be properly valued under crisis conditions. In such situations, supplementary methods should be also implemented (stresstests). Practical implications: Under high market volatility, preventive actions should be prepared in advance, including treasury limit increase, additional funds for collaterals, or contracts modification (flexible products should be considered).Originality and value: The study covers a challenge that banks face, which is rarely described in professional literature but very serious for bank management. Under normal market conditions, if the margin call clause appears and no additional collateral is posted, the transaction should be closed to limit the counterparty’s loss. However, this type of action during the pandemic may impose the risk of force majeure. From the company perspective, using such instruments threatens their early settlement and the need to finance closeout amount.

Donation crowdfunding as a source of relief for small businesses

Purpose: The purpose of this chapter is to examine advantages and limitations of donation crowdfunding as away of providing relief for small businesses and assessing its potential development in that field in the post-pandemic future. Design/methodology/approach: The chapter is based on critical literature analysis, supported by empirical examples for illustrative purposes. Findings: Donation crowdfunding can be aviable way of providing relief to small companies during the times of crisis, by positioning companies as beneficiaries of charitable endeavors carried out by consumers. Practical implications: Companies ability to trigger altruistic responses in their consumers is an important information in times of crises. Moreover, the information serves as an additional argument for building meaningful relationships with consumers and establishing locally embedded or virtual communities, which make securing relief through donation crowdfunding easier. Originality and value: The subject of using donation crowdfunding by companies to secure relief funds has seen very limited elaboration in the current literature.

The adoption of Industry 4.0 solutions as a remedy against the pandemic crisis– the case of Polish companies

Purpose: The authors aim to briefly present the adoption of Industry 4.0 technologies among Polish companies in the realm of the VUCA world. These solutions may work as measures that increase the resilience of companies against the Covid-19 crisis and support the recovery in “the new normal” reality. Design/methodology/approach: The paper combines literature studies with an empirical investigation in the form of computer-assisted telephone interviews conducted among 400 Polish manufacturing companies. Findings: Polish industrial manufacturing firms lag in implementing I4.0 technologies compared to their Western European counterparts. Research limitations/implications: The empirical part of the study was conducted among Polish companies. Similar studies among firms from other CEE countries will be necessary to conclude about this part of the world’s readiness to adopt 4.0 technologies. Practical implications: The pandemic era and increasing I4.0 adoption pose particular tasks for companies. They should revise their contractual arrangements with IT service providers and focus on data privacy and security topics, but also industry-specific regulations. Triggered by the Covid-19 crisis, these actions may contribute to developing companies’ comprehensive digital strategy in the “new normal” reality. Originality and value: The chapter contributes to the discussion on the readiness of companies and economies to adopt the Industry 4.0 technologies. It also provides the level of the adoption of these solutions in the context of a post-transition economy.

Women’s entrepreneurship in the Covid-19 pandemic

Purpose: The main goal of the chapter was to shed light on the challenges that women entrepreneurs face during the Covid-19 pandemic and answer how women entrepreneurs reorient their businesses in this situation. Design/methodology/approach: The study used secondary data (literature and reports), along with direct interviews with women entrepreneurs located in Poland. Findings: The Covid-19 pandemic and the ensuing disruption have disproportionately impacted women. In the near future, women will experience increased unemployment and household responsibilities, along with the exacerbation of social injustice. At the same time, the Covid-19 pandemic catalyzed changes. The findings indicate that some women entrepreneurs aggressively adapted their businesses to resist the short-term impact of the Covid-19 pandemic. There appeared acceptance for remote work models, acceleration in the use of digital channels on both the demand and the supply side, and a shift toward digital over physical interactions, all of which have the potential to level the playing field, especially for women entrepreneurs. Research limitations/implications: Further research in this area should focus on the effects of protracted restrictions on doing business and the growing problems associated with managing a pandemic. Originality and value: The study adds anew dimension to entrepreneurship considerations by recognizing that gender issues are rarely considered in times of crises of economies.

Central Bank Policy toward the Covid-19 pandemic: Seeking patterns among the most powerful central banks

Purpose: The main objective of this chapter is to identify the role of central banks in managing the crisis created by the Covid-19 pandemic. In order to explore this subject, the chapter attempts to identify similarities and differences in the behavior of selected central banks, those most important from the viewpoint of the global economy. Design/methodology/approach: The study encompassed 29 countries, mostly European economies (16) and other economies that bear the impact on the global output. The empirical analysis was based on k-means clustering analysis, which enabled us to identify groups of countries that followed similar solutions in response to the Covid-19 crisis. Findings: The analysis conducted in this chapter indicates the diverse nature of central banks’ policies and, in many cases, to aspecific bias toward an increase in monetary or financial policies. The intensification of the use of the tools of certain policies must be seen from the perspective of the purpose of those policies, but also in the context of the legal or statutory constraints imposed on central banks. Research limitations/implications: An interesting direction of research into the diverse nature of central bank policies will undoubtedly be to seek answers to the question of the effectiveness of these policies in the context of crisis. Such astudy, carried out ex post, may provide astarting point for designing future central bank crisis policy and implementing institutional solutions of anational or even supranational nature. Originality and value: The chapter shed some light on the regulatory and statutory sphere of central banking. We may clearly state that key central banks of the world do not operate within the framework of asingle universal rule and that there simultaneously is no optimal combination of crisis policy tools even for the same crisis. Therefore, when looking for regulatory and legal solutions, we should treat each case individually by designing regulations in away that corresponds to the specific features and conditions prevailing in the given financial and economic system.