COVID-19 and Short-Run Survival in the Service Sector: Evidence from the Tourism Economy

This study aims to evaluate the survival probability of small- and medium-sized enterprises (SMEs) in the service sector during the COVID-19 pandemic and empirically investigate their survival determinants. The sample group of 420 firms was analyzed utilizing the Cox proportional hazard model. The results showed that several business categories had various levels of survivability. The businesses that served exposure to tourists (e.g., travel agencies, entertainment, accommodation, and restaurant) were more likely to fail. Furthermore, business characteristics, financial statements, and government support substantially impacted the firm survival likelihood. These findings have several practical implications for businesses, governments, and policymakers in dealing with pandemics in the future.