Business Ethics and Irrationality in SME During COVID-19: Does It Impact on Sustainable Business Resilience?

Abstract

The COVID-19 pandemic has serious economic consequences, such as rising unemployment, and these consequences can be managed by sustaining economic activities by spurring the creation of new businesses. In this study, we examine the current state of business ethics in China, as well as the challenges, success factors, and obstacles in implementing such ethics in order to improve organizational development and business management in China. Cross-sectional data and quantitative survey were collected from 288 SMEs in China. According to structural equation modeling results, herd behavior and endowment effect have a strong relationship with business resilience. Additionally, this study found that altruism has an optimistic correlation with business resilience, and it has positively mediated China’s small business irrational behavior. The findings of this study suggest that business ethics and irrationality in SMEs can be promoted using this study’s model of SMEs, which may provide practical guidelines or implications for Chinese SMEs. Based on the findings from this study, it is recommended that business ethics can be incorporated into policies and practices of SME owners and entrepreneurs whose communities, stakeholders, and employees are committed to moral values such as decent governance and social corporate responsibilities.