Abstract
Resilience captures firm capability to adjust to and recover from unexpected shocks in the environment. Being latent and path-dependent, the manifestation of organizational resilience is hard to be directly measured. This article assesses organizational resilience of firms in the context of the COVID-19 pandemic with pre-shock corporate social responsibility (CSR) performance as a predictor that positively influences the level of organizational resilience to the external shock caused by the pandemic. We develop three theoretical mechanisms based on stakeholder theory, resource-based theory, reputation perspective and means-end chain theory to explain how CSR fulfillment in the past could help firms maintain stability to adapt to and react flexibly to recover from the crisis. We examine the relationship in the context of the systemic shock caused by COVID-19, using a sample of 1597 listed firms in China during the time window from 20 January 2020 to 10 June 2020. We find that companies with higher CSR performance before the shock will experience fewer losses and will take a shorter time to recover from the attack.
Highlights
Since its outbreak in December 2019, the COVID-19 pandemic has hit the global economy with an unprecedented crisis with respect to its cause, scope and severity [1,2]
The World Health Organization (WHO) declared the COVID-19 pandemic as a public health emergency of international concern (PHEIC) on 30 January 2020 [4], taking into consideration the devastating threat it imposes on human health
Combined with the framework of organizational resilience which consists of stability and flexibility dimensions [10], we propose that corporate social responsibility (CSR) can contribute to firm capabilities of resisting the crisis and re-bouncing back to the normal state
Summary
Since its outbreak in December 2019, the COVID-19 pandemic has hit the global economy with an unprecedented crisis with respect to its cause, scope and severity [1,2]. Organizations need to develop a resilience capacity which enables them to (a) cope effectively with unexpected events (need to be tested in a post-shock environment where firms are recessing) and (b) bounce back from crises [11] (need to be tested in a post-shock environment where firms begin to recover) The former captures the stability dimension of resilience, which is an organization’s ability to resist adverse circumstances, indicating that systematic shocks have no severe consequences as they fall within the boundaries of a firm’s coping range. The shadow of fear and insecurity that the virus cast over the globe have made it more salient than ever The interdependence between social, environment and economic wellbeing is calling for socially and environmentally responsible behaviors of the business sector which would eventually benefit the firms themselves How such socially responsible practice would help firms sustain their resilience in an unprecedented crisis such as COVID-19 is still scarcely explored. Considering the special context of COVID-19, we conceptualize and employ the most updated data on the COVID-19 crisis in Chinese firms to empirically prove that the authentic stakeholder-company bonding resulted from the active participation in CSR will ignite its helpfulness in crisis time and contribute to both dimensions of organizational resilience, which is a key capability that helps firms out of the crisis [28,29]
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