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Research - 29.04.2020 - 00:00

Companies should monitor the corona crisis from space

National statistics are gradually revealing the extent of the economic damage caused by the corona crisis to date. This ex-post information usually arrives too late for companies, without sufficient detail to be useful in decision-making, or is even unreliable. The Global Center for Entrepreneurship & Innovation at the University of St.Gallen (GCEI-HSG) is therefore recommending that managers take a different perspective.

29 April 2020. In mid March, the Chinese government announced that its country’s industrial production for January and February 2020 shrank by 13.5 per cent compared to the same period last year. Prof. Dr. Dietmar Grichnik from GCEI-HSG knew the approximate extent of the crisis in China before this announcement was made public, however. He and his team found a way to monitor the pandemic’s economic impact in real time. They did this by evaluating publicly available data released by the European Space Agency (ESA) on air pollution in China and comparing it to the emissions and economic data from a reference period. This gave them a more detailed picture of the situation than that provided by the official statistics. The analysis reveals a reduction in pollution of 85 per cent between January 24 and February 21, 2020, in the area around Wuhan City, the region worst affected by coronavirus. Emissions across China fell by 38 per cent on average. Based on this information, the GCEI-HSG calculated a loss of approximately USD 216 billion over this period for the Chinese industrial sector.

Mobility: Let there be light 

Viewing light emissions from space provides another opportunity for independent economic monitoring. So Grichnik and his team evaluated data from the VIIRS satellite radiometer (Visible/Infrared Imager Radiometer Suite), which records the intensity of light pollution across the world on an almost daily basis. “Measuring light intensity allows even non-transport-related processes to be captured in real-time,” explains Mike Hudecheck, Ph.D. student at GCEI-HSG. As expected, the corresponding values for all major cities across China and on all intersecting major highways fell during January and February. “We were surprised to find that in some regions people were already starting to restrict their mobility a week before the lockdown was ordered on 23 January.” It was also observed that people living in the northern cities stayed home more than the rest of China did.

Building-up skills in the company pays off

“Our work shows how companies can monitor their own business’s economic development almost in real time, unbiased, inexpensively, and independent of national statistics,” explains Grichnik. Business-relevant hotspots and surprising effects of the crisis could thus be identified, which would not be picked up by official statistics. 

Evaluating the data does of course require the company to possess certain technical and analytical skills. “For many companies, accessing appropriate personnel shouldn’t be impossible however,” says Grichnik. Furthermore, after monitoring has been implemented by the company, it can be automated using a data cockpit, and this reduces costs even further.

ABOUT THE AUTHORS
Michael Hudecheck is a research associate at the chair of entrepreneurship at the University of St. Gallen. Charlotta Sirén is professor of management at the University of St.Gallen. Dietmar Grichnik is director of the Institute of Technology Management and the chair of entrepreneurship at the University of St. Gallen. Joakim Wincent is a professor of entrepreneurship, management, and organization at the Hanken School of Economics in Helsinki and at the University of St. Gallen.

Photo: Adobe Stock / NicoElNino

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