=Paper=
{{Paper
|id=Vol-3282/icaiw_aiesd_13
|storemode=property
|title=Valuation of the Impact of the Covid-19 Global Pandemic on the Sector of Professional, Technical, and Administrative Activities in Ecuador for the Year 2020
|pdfUrl=https://ceur-ws.org/Vol-3282/icaiw_aiesd_13.pdf
|volume=Vol-3282
|authors=Nelson Guillermo Granja Cañizares,Pablo Ricardo San Andrés Reyes,Ivonne Elizabeth Paredes Chévez
|dblpUrl=https://dblp.org/rec/conf/icai2/CanizaresRC22
}}
==Valuation of the Impact of the Covid-19 Global Pandemic on the Sector of Professional, Technical, and Administrative Activities in Ecuador for the Year 2020==
https://ceur-ws.org/Vol-3282/icaiw_aiesd_13.pdf
Valuation of the Impact of the Covid-19 Global
Pandemic on the Sector of Professional, Technical, and
Administrative Activities in Ecuador for the Year 2020
Nelson Guillermo Granja Cañizares1 , Pablo Ricardo San Andrés Reyes1,* and
Ivonne Elizabeth Paredes Chévez2
1
Universidad Ecotec, Samborondón, Ecuador
2
Universidad Nacional del Rosario, Rosario, Argentina
Abstract
The Covid-19 pandemic has generated alert and dynamic changes in industries and companies worldwide,
and in response to the adaptation process, new ways with technological innovation have achieved
resilience, and new sectors have emerged without precedent, mainly in some Ecuadorian sectors to
promote economic reactivation, increasing the demand for new services. The objective of the research
is to assess the impact of the Covid-19 global pandemic on the sector of Professional, Technical and
Administrative activities in Ecuador for the year 2020. The research is descriptive, explanatory, and
bibliographic, with a mixed methodology and a non-experimental cross-sectional investigation, adapting
a non-probabilistic sampling, analytical method, and statistical analysis of data series. Among the most
relevant results is that the global Covid-19 pandemic produced growth in the sector mentioned before.
Keywords
Covid-19, Professional, Technical and Administrative Activities, Economic Reactivation
1. Introduction
Based on Figure 1, it is established that on September 2020, the most affected regions in the
world were Latin America, the United States, and Europe, causing health damage per million
inhabitants, and this responds to the fact that the more rapid tests are carried out, the number
of detected cases tend to be greater, which serves as a basis for making decisions regarding
confinement, citizen biosecurity, and others. Note that in the case of Ecuador, after the scourge
of March, the number of infections has improved, although there are provinces with a rebound.
On the other hand, companies are an important part of economic activity and job creation,
for the development and economic growth of a country [1]. Cepal [2] mentions that the crisis
of the eighties impacted the Latin American and Caribbean region, and this increased the
unemployment rate by 2 points, however, many households expanded employment in the
ICAIW 2022: Workshops at the 5th International Conference on Applied Informatics 2022, October 27–29, 2022, Arequipa,
Peru
*
Corresponding author
$ ggranja@ecotec.edu.ec (N. G. Granja Cañizares); psanandres@ecotec.edu.ec (P. R. San Andrés Reyes);
ivonnelizabeth.paredes@gmail.com (I. E. Paredes Chévez)
0000-0002-7619-3350 (N. G. Granja Cañizares); 0000-0003-3322-0926 (P. R. San Andrés Reyes);
0000-0002-9541-9933 (I. E. Paredes Chévez)
© 2022 Copyright for this paper by its authors. Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
CEUR
Workshop
Proceedings
http://ceur-ws.org
ISSN 1613-0073
CEUR Workshop Proceedings (CEUR-WS.org)
206
Nelson Guillermo Granja Cañizares et al. CEUR Workshop Proceedings 206–213
Figure 1: Covid-19 cases per million inhabitants reported in the last seven days by countries, territories
and areas, from August 3rd to September 6th, 2020.
informal sector in micro-enterprises, this is why there are segments in the Latin American labor
market driven by labor demand and correlated to economic growth.
In fact, SMEs are companies capable of adapting to changes due to technology and have the
ability to generate employment, promote economic development, and comply with the income
distribution policy, improving and driving the economy in times of crisis [3]. 95% of Ecuadorian
companies and businesses consider strategic planning as a managerial factor; however, 61% do
not use it [4].
Pandemics are recurring events. Countries have their borders closed, limiting society to
confinement and stopping commercial activities, in fact, there are sectors that have increased
unemployment such as tourism [5]. On the other hand, the increase in the use of the internet
and digital technologies has developed online commerce, online study, social relations through
platforms, changing consumption patterns, increasing new demands, and demonstrating that
with Covid 19, the markets are dynamic and generate value [5].
In this sense, the global Covid-19 pandemic has raised an alert in the business area, forced
to apply some type of plan in strategic management and corporate social responsibility for its
continuity. Diaz Casero et al. [1] establishes that the Institutional Economic Theory is what
generates the guideline for the study of environmental factors in the business function and
creation.
Romero Luna [6] indicates that there is a need to improve conditions in the economic and
institutional environment for SMEs and entrepreneurs so that new organizations can be born.
The Institutional Economic Theory contains the formal institutional framework such as laws,
regulations, policies, and programs to support and promote business activity, while the informal
framework considers ideas, attitudes, and cultural heritage, among other aspects to carry out
the creation analysis of companies [1].
207
Nelson Guillermo Granja Cañizares et al. CEUR Workshop Proceedings 206–213
In Ecuador, the economic impact is caused by a shock in demand, by the reduction of exports,
mainly of primary products to the United States, China, and the European Union, and on the
supply side, by the suspension of production activity and trade [7]. In fact, there is a study
where the Cash Buffer of Ecuadorian companies was analyzed by sectors in 2018, to examine the
businesses, and know how many days they could survive in times of quarantine confinement
due to a pandemic.
The Cash Buffer is an index that allows companies to know the days that can be resisted
without liquidity and is calculated by dividing the average monthly cash balance by the average
monthly outflow. It allows finding out how many days can the companies stop producing
without having incomes so that they can continue operating with the available cash balance [7].
According to Superintendencia de Compañías, Valores y Seguros, Banco Central del Ecuador,
and Instituto Nacional de Estadísticas y Censos, in 2018 the total number of formal companies
reached 27,764, emphasizing the Service sector with 11,832 formal firms, belonging to 43%
of market share. Their incomes and profits represent 13.9% and 1.3% of GDP respectively,
generating 3.8% of total employment [7].
The results of the study mentioned before indicated that SMEs have higher cash levels than
large ones in most sectors, and through the Cash Buffer they showed that 50% operate with a
median of 33 days. It means that they manage and resist without liquidity for more than one
month, while the most vulnerable sectors to suspend their activities are manufacturing (32
days), services (31 days), electricity, and water (29 days). Additionally, companies that have an
international commercial activity or access to credit have a higher level of resistance without
cash [7].
The problem of the investigation is the affectation of professional, technical, and administra-
tive activities of Ecuador, as a result of the effects of the global Covid-19 pandemic. That is why
the objective of this research is to assess its impact on this sector for the year 2020. The impor-
tance of this research is based on the post-Covid-19 global pandemic economic reactivation,
as a process of adaptation to new business reality, through the service sector in professional,
technical, and administrative activities, demanded by Ecuadorian companies and businesses. It
is relevant to complement the analysis with a quarterly variation of GDP, where according to
estimates by the Ministry of Economy, Mauricio Pozo indicates that "at the end of 2020, the
GDP will register a year-over-year decrease of 8.9%, it is a severe rate, but it is less bad -if we
compare with the hardest moment of the pandemic"
2. Theoretical Framework
Bonaglia et al. [8] indicated that the socioeconomic impact of Covid-19 is serious for people,
households, and companies if they do not have appropriate public policies. The public power
promotes support for entrepreneurship and business development strategy, mainly for SMEs
with an impact on economic growth, job creation and poverty reduction [6].
Pandemics usually occur at intervals of 10 to 50 years, due to new types of viruses. Society
has already been affected by several ones in the past. It is difficult to estimate the economic
consequences, and long-term social behavior, where investment is disinterested and saving
capital is more important [5]. The covid-19 global pandemic has forced many companies to
208
Nelson Guillermo Granja Cañizares et al. CEUR Workshop Proceedings 206–213
close, trade has been interrupted, some firms have frozen their contracts indefinitely, markets
such as tourism have fallen, and others face the permanent challenge of health, logistics chain,
workforce, sales, and cash flow. However, other sectors have grown unprecedentedly in an
extraordinary way [5].
The Covid-19 pandemic had repercussions on the economic impact of Latin America and
the Caribbean, where governments implemented public policies and plans for its immediate
reactivation [8]. In fact, labor markets were modified and adapted to the pandemic, using the
internet as a fundamental pillar for business success [5].
In this sense, businesses and companies modified their processes, using innovation and
technology tools, for the commercialization and demand of new products and services. Lana [9]
indicates those information systems collaborate in the organization to support processes and
operations, in the decision-making of officials and managers, being useful for the development
of strategies to improve competitive advantage [9].
However, Diaz Casero et al. [1] criticize neoclassical theory for focusing only on technological
development or investment in human capital, where institutions and time are not important. In
fact, institutions form the structure of society and are the political and economic institutions,
the ones that determine long-term economic performance.
The institutional theory produces employment generation, innovation, growth, and economic
development. Companies change their institutional structure to meet their objectives, and
adjustments are focused on the long-term as a result of decisions of businessmen, politicians,
and economists, who work on improvement in the short term [1].
Diaz Casero et al. [1] establish that institutional planning involves: a) the agent of change
(economic or political businessman), b) the source of change (opportunities for managers or
entrepreneurs), c) the process of change (negotiations and commitment), d) the path of change
(the path taken). Diaz Casero et al. [1] mention that despite the fact that economic change is a
consequence of decisions by the businessmen of the organizations, there are usually contractual
changes, within the regulatory framework, including new rules according to situations, causing
institutional change.
In Ecuador, measures were taken to guarantee the permanent operation of the productive
sector, such as: Food and medicines supplies, restrictive norms for vehicular movement and
curfew, a family protection bonus for the poor population for the months of April and May, labor
and tax management adjustment, financing and liquidity through Public Banking, National
Finance Corporation and direct credit to support SMEs, and international financing.
2.1. Strategic Management and Professional, Technical and Administrative
Activities
Strategic management is a tool that guides the manager with a clear vision of the business
for the performance of activities and achievement of objectives [9]. Lana [9] identifies the
strategic management process with a) analysis of the internal and external environment, b)
organizational guidelines of goals and objectives, c) strategic formulation, d) implementation of
strategies and e) strategic control.
To formulate the organizational strategy, it is important to develop a SWOT analysis (Strengths,
Weaknesses, Opportunities, and Threats), and examine critical points and growth matrix [9], but
209
Nelson Guillermo Granja Cañizares et al. CEUR Workshop Proceedings 206–213
it is necessary to coordinate actions and solve problems of different criteria within a company,
which allows the continuous fulfillment of objectives, through an adequate strategic planning
[10].
Systemic violence in capitalism is inherent to the system, because it imposes relations of
domination and exploitation, as a result of the economic and political order [11]. In this sense,
as a result of the economic and political order, the government should not only emphasize
the production of goods, but also prioritize the service sector, because some of them don´t
have enough support from state programs, and there is also a lack of credit incentive to get an
expansion to national and international level.
Araque et al. [12] indicate that business internationalization is carried out by export, foreign
direct investment, agreements between companies, and contracts. However, the relationship
between national and international forces is complicated by the intervention of each state,
because they have different structures and also in their internal relations [13].
The organizational strategies by sectors must be aligned in favor of the construction of a
cultural identity subject to the rules of hegemony, but with new guidelines for the post-covid
economic reactivation, where power relations and the rights of entrepreneurs and professionals
can be coordinated. The leaders of organizations must redesign the supply chain, rely on
technology and the internet, in order that they can get sustainable supplies, and despite the
alteration in the industries due to the crisis, adaptability to changes with innovation techniques
is considered a useful key to overcoming barriers [5].
Romero [6] indicates that there is a need to improve conditions in the economic and institu-
tional environment for SMEs and entrepreneurs so that new organizations can be born. Diaz
Casero et al. [1] emphasize that the creation of companies is a solution for unemployment,
economic development, innovation, and expansion of markets with business development
programs.
3. Methodology
The research is exploratory-descriptive, with a quantitative investigation approach, which uses
the analytical-synthetic method, supported by data series. Documentary and bibliographic
reviews were used as research techniques.
4. Results
It is important to analyze the indicators of the independent variable (Deaths registered in the
Civil Registry, and deaths during the pandemic). The first indicator shows that until September
27th, 2020, the curve had already flattened, but the interesting fact is the dispersion of the
average, where 35,227 excess deaths were recorded since March. On the other hand, Ecuador
registered 141,339 cases, of which 11,869 died from COVID on October 5th of the same year.
Comparing the number of deaths from the 2018-2019 period (Second Indicator), there was a
difference of 35,227 deaths, which shows the social and economic impact that the pandemic
brought because among those deaths were heads of households, informal merchants, professional
210
Nelson Guillermo Granja Cañizares et al. CEUR Workshop Proceedings 206–213
Table 1
Gross domestic product by industry
Professional, technical Annual Annual Percentage of
Period/
and administrative variation rate, GDP variation rate, contribution
Industries
activities percentage percentage sector/GDP
2009 3360,1 -3 54557,7 0,6 6,16%
2010 3491,8 3,9 56481,1 3,5 6,18%
2011 3764,4 7,8 60925,1 7,9 6,18%
2012 4024,2 6,9 64362,4 5,6 6,25%
2013 4255 5,7 67546,1 4,9 6,30%
2014 4445,1 4,5 70105,4 3,8 6,34%
2015 4388,3 -1,3 70174,7 0,1 6,25%
2016 4296,6 -2,1 69314,1 -1,2 6,20%
2017 4342,7 1,1 70955,7 2,4 6,12%
2018 4482,9 3,2 71870,5 1,3 6,24%
2019 4614,9 2,9 71909,1 0,1 6,42%
women, who cease to be part of the economically active population, and whose homes are
destroyed due to lack of parents or psychological effects on family members.
The first variable indicator indicates that between 2009 and 2019, this sector contributes
approximately 6.20% to the total of the Ecuadorian economy, and measured through the annual
variation rate, in some cases, it exceeds the growth rate of the Gross Domestic Product. However,
in the years of the crisis between 2015 and 2016 due to the strengthening of the dollar, the fall
in the price of a barrel of oil, and the earthquake, caused a negative effect on the economy, and
logically the demand for services such as these was influenced by those external factors.
After the recovery of the economic cycle, the sector raised in 2018 and 2019 by 3.2% and
2.9% respectively. If we consider that this reactivation goes hand in hand with the start-up of
new businesses and the increase of sales in sectors, such as commerce and construction, the
outlook becomes encouraging. The data is presented below in Table 1. All must be subjected to
denser scrutiny, and that is why the Value Added by industries is used to know how much it
contributes to the Gross Domestic Product, but on an interannual or quarterly basis, for which
the data is taken from 2016. In that year, the sector only recovered for the last two quarters.
In 2017, except for the second semester, it registered positive contributions. This explains the
dynamics of the economic cycle and how once macroeconomics starts to emerge, the effect on
the micro is gradual.
In 2018, it is evidenced as the most positive quarter, even the best year, registering 3.3%
growth and positive numbers in 3 of 4 quarters; but for the year 2019 the impact of the country’s
recovery for this sector has just been measured, but unfortunately with a pandemic, according
to the statistical data, the first quarter of 2020 starts with contraction.
In 2017, except for the second semester, it registered positive contributions. This explains the
dynamics of the economic cycle and how once macroeconomics starts to emerge, the effect on
the micro is gradual.
In 2018, it is evidenced as the most positive quarter, even the best year, registering 3.3%
211
Nelson Guillermo Granja Cañizares et al. CEUR Workshop Proceedings 206–213
growth and positive numbers in 3 of 4 quarters; but for the year 2019 the impact of the country’s
recovery for this sector has just been measured, but unfortunately with a pandemic, according
to the statistical data, the first quarter of 2020 starts with contraction.
Going deeper into the analysis of the Professional, Technical, and Administrative Activities
sector for 2019, between January and August architecture activity, represented 24.92%, below-
consulting services at 37.65%, and finally in third place legal and accounting at 15.60%. For 2020,
despite the pandemic, the results were 23.82%; 34.08%, and 17.03% respectively. Other scientific
and technical activities represented 12.73% and advertising and market research 10.94%. In total,
these activities supported the sector and are explained as follows:
People adapted to present and future constructions with biosafety standards, so they contact
architects and consultancies to find strategies to face the crisis. There were legal issues for
the liquidation of companies, and layoffs, and this relates to accounting. On the other hand,
professional activities associated with craftsmanship, new products, innovations, and investment
in advertising and marketing complete the reason why, despite the pandemic, the sector was
not harmed, but rather was enhanced.
5. Conclusions
As a result of the Covid 19 global pandemic, many sectors of the Ecuadorian economy continued
working constantly, such as the Agricultural sector, but some drastically decreased, as the
Hotel sector, and others took on value, being the Professional, Technical, and Administrative
Activities Sector of Ecuador an example, that responded to the urgent business needs to continue
operating, with an administrative plan that encourages the reactivation of the economy
Technology and platforms with innovation allow the redesign of business strategies, within
the strategic administration for globalization and economic reactivation after the global Covid-19
pandemic. The business sector demands the services of the professional, technical and adminis-
trative activities of Ecuador to improve decisions, identify problems and failures, redesign its
strategies and implementations, and the fulfillment of objectives in times of the global Covid-19
pandemic.
The critical balance of the impacts of the Covid-19 global pandemic, in the sector of Profes-
sional, Technical and Administrative Activities of Ecuador for the year 2020 determines that
this sector benefited greatly from the urgency of architects, lawyers, consultants, publicists,
and accountants, among others.
Araque et al. [12] mention that according to the characteristics of the sector and government
intervention, competition and investment can be promoted. Agriculture, Fishing, and Services
sectors should be prioritized, as well as access to financial credit for micro and SMEs to improve
liquidity levels because, in that way, they can survive exogenous variables, and on the monetary
policy side, the decrease in active interest rates and extension in collection terms are essential
for reactivation [7].
The factor and financial support are keys between multilateral, public, and private banks
and international organizations for the promotion of economic reactivation worldwide [8].
It is expected that in future research, the calculation and analysis of the Cash Buffer will be
developed in detail, focusing on a specific post-covid sector, so that the business field can be
212
Nelson Guillermo Granja Cañizares et al. CEUR Workshop Proceedings 206–213
prepared with resilience in pandemic events and/or natural disasters.
6. Acknowledgements
We thank the ECOTEC University for giving us their support in research in such a difficult
time as COVID when we stated that not all sectors should have been affected, as well as local
newspapers and government agencies, such as Banco Central del Ecuador and Servicio de
Rentas Internas for transparency in the handling of information and the availability of data.
Finally, to the different authors cited, since their studies allowed us to have a holistic view of
the subject matter.
References
[1] J. Díaz Casero, D. Urbano Pulido, R. Hernández Mogollón, Teoría económica institucional
y creación de empresas, Investigaciones europeas de dirección y economía de la empresa
11 (2005) 209–230.
[2] N. Cepal, Estudio Económico de América Latina y el Caribe 2019. El nuevo contexto
financiero mundial: efectos y mecanismos de transmisión en la región, Cepal, 2019.
[3] M. Di Ciano, Pymes–rol en la economía nacional y características particulares de fun-
cionamiento, 2018.
[4] B. Cho, Planificación estratégica en empresas familiares en
ecuador, http://brianchoec.weebly.com/crecimiento-empresarial/
planificacion-estrategica-empresas-familia-ecuador, 2017.
[5] N. Donthu, A. Gustafsson, Effects of covid-19 on business and research, Journal of business
research 117 (2020) 284–289.
[6] I. Romero Luna, Las pyme en la economía global: Hacia una estrategia de fomento
empresarial, Problemas del desarrollo 37 (2006) 31–50.
[7] P. Carrillo Maldonado, M. C. Deza, S. Camino Mogro, Una radiografía a las empresas
ecuatorianas antes del covid-19, X-pedientes Económicos 4 (2020) 83–117.
[8] F. Bonaglia, S. N. Parra, J. J. V. Zamora, Una mirada al futuro post-covid-19: hacia un
nuevo pacto social en américa latina y el caribe, Análisis Carolina (2020) 1.
[9] R. A. Lana, La administración estratégica como herramienta de gestión, Revista Científica"
Visión de Futuro" 9 (2008).
[10] E. Ogliastri, Manual de planificación estratégica: siete modelos para hacer un plan es-
tratégico, Technical Report, INCAE Business School, 2004.
[11] S. Zizek, Ensayos sobre la violencia. seis reflexiones marginales, 2006.
[12] W. E. Araque Jaramillo, A. J. Argüello Salazar, Caracterización del proceso de interna-
cionalización de las pyme ecuatorianas, FIR-FAEDPYME International Review 7 (2015)
35–46.
[13] A. Gramsci, Notas sobre maquiavelo, la política y el estado, 1975.
213