Producing Masks Amid COVID-19? How A Pandemic Imprint Affects Firm's New Medical Production

Abstract

Listen

Translate article

We examine how corporate leaders’ prior pandemic experience influences their response to a later and similar pandemic. Drawing on imprinting theory, we argue that corporate leaders that experienced Severe Acute Respiratory Syndrome (SARS) are more likely to be aware of the severity of a new and similar infectious disease (i.e., COVID-19) and so are quicker to respond to COVID-19 by producing personal protective equipment (PPE). We theorize that this imprinting effect can vary in intensity and so the effect of the pandemic imprint is stronger if the corporate leader experienced the SARS during a more susceptible life stage (i.e., early adulthood). Furthermore, a series of environment-triggered processes will also shape the imprinting intensity. Specifically, population mobility from the epicenter and local COVID-19 spread tend to strengthen the effect of a SARS imprint, whereas local quarantine rate and the abundance of local medical resources likely weaken the effect of a SARS imprint. Using a large sample of publicly traded firms in China, we find evidence that mostly supports our theory. Our study contributes to imprinting theory by highlighting how imprinting intensity can vary depending on individual-level susceptibility and environment-level triggered processes. We also contribute to literature on organizational responses to public crises and provide fresh insights on corporate diversification decisions.