Entrepreneurial Activity after a Disaster
There are various hypotheses on why there is an increase in economic activities after a disaster. In this paper, I examine the phenomena and factors that contribute to the increase in the number of entrepreneurs in post-disaster struck areas. Why is there such a phenomenon areas after it has been struck by a natural disaster? I would study three major aspects of the mechanism that causes this phenomenon by using a case study of Sendai city which affected the Great East Japan Earthquake in 2011. First, I examine the economic factors that encourage entrepreneurial activities in Sendai city. Second, I would try to find out the cause of interests to start a business in post-disaster areas are motivated by prosocial behavior which often accompanies reactions to unexpected events such as a natural disaster. Finally, I observe that, following a disaster, the social network among potential entrepreneurs tend to improve and expand. It appears that, with a network of supporting groups which lend help to businesses, the rise in the value of the above-entioned social network consequently increases. In conclusion, this study indicates that disaster-struck areas do get an influx of businesses and that is mainly brought about by prosocial behavior. I conclude that economic factors, psychological factors as well as social factors can all contribute to the increases in entrepreneurial activities in major disaster-affected cities such as Sendai.