Social contagions in business resilience: Evidence from the U.S. restaurant industry in the COVID-19 pandemic

Abstract

The unprecedented COVID-19 has led to the collapse of numerous businesses, notably within the tourism and hospitality sectors. Despite the burgeoning research on resilience, few studies have embraced a theoretical lens, particularly from a social network perspective. In addition, most extant resilience studies have not explicitly considered the geographic accessibility prerequisite inherent to tourism and hospitality products. In this study, leveraging the social contagion theory, we present a holistic research framework to investigate the influence of geographic and social proximities, two pivotal social contagion mechanisms, on business resilience. We also delve into moderating factors to discern the conditions under which contagion effects are amplified or attenuated. To validate our theoretical model, we select the restaurant industry as our research context, given its severe impact from COVID-19. Utilizing an extensive dataset from Yelp, encompassing ten U.S. cities varying in sizes and geolocations, our findings indicate that both geographic and social influences exert significant direct effects on resilience. Additionally, these effects exhibit considerable variations contingent upon product attributes, customer characteristics, and geographic factors. Theoretically, we are the first to substantiate the role of social contagion theory in examining resilience, enriching our understanding of the social network mechanism of behavioral contagion among customers during the COVID-19 pandemic. We also offer valuable practical implications for various stakeholders in supporting their management strategies and decision-making in developing effective plans and preparations, minimizing adverse impacts, and ensuring sustainability in the face of future disruptions.