By Asegid Getachew, Yilma Geletu, Tsegaye Mathewos
The COVID-19 pandemic is ravaging the world like no other thing in our living memory. The virus started in December of 2019 in Wuhan, a city in the Chinse Hubei province. In a dramatic shift of events WHO declared the virus as a pandemic in March 2020. At the time of writing this, the WHO resource center dashboard displays that close to 61.8 million people have been infected with the virus globally and a staggering 1.445 million people have succumbed to the pandemic.
Although the pandemic is disproportionate in its geographic distribution, it has been attacking everyone in its reach indiscriminately. The pandemic has crippled the economies of developed and developing countries and has plunged them into an unprecedented recession. As Schwab (2020) rightly opines, the pandemic has “triggered a public health and economic crisis on a scale unseen in generations and has exacerbated systemic problems such as inequality and great-power posturing”. The repercussion from the virus is so profound that nothing other than the impact that resulted from WWII compares to it . He & Harris (2020) argue that the pandemic has totally changed our perception of the world and how we get along.
They posit that ”notwithstanding the human tragedy of lost lives, broken families, and scarred communities, the economic and social changes caused by a pandemic-driven lockdown will constitute a cultural legacy which will live long in our memories and those of future generations” and that the emotional psychological, economic and cultural scars it has caused will persist for longer than we might expect.
The worldwide lockdown enacted to contain the further spread of the virus has been felt as a devastating blow to the continued operation of some industries.
Businesses in the airlines, hotel and tourism sectors have had a very rough year as they are forced to close their operations and furlough their workers. Some businesses, however, have seen their wealth surge amidst a pandemic that has turned the word up in its heads. Typical examples in this category include tech giants (like Amazon, Microsoft.etc) , whose wealth has increased by tens of billions of dollars during the pandemic.
Despite the lopsided nature of the effect of the pandemic on the operation of business organizations Schwab (2020) argues that the pandemic has triggered the re-emergence of “a stakeholder model of capitalism”. And this is evident in the fact that companies are being, more than ever, engaged in corporate social responsibility practices. Manuel & Herron (2020) in their investigation of ethical responses of US businesses to the pandemic indicates that business were mainly giving a helping hand through philanthropic and transformational responses. The philanthropic activities they identified include donations that business made to support ongoing medical research and support for frontline medical workers; financial and product support food banks that take care of /feed those affected by the pandemic; and support in the form of laptops and other technology product for schools aimed at fascinating online learning.
The transformational responses identified include efforts made by businesses to operate under “a transformed business model”. These businesses, repurposed their existing machineries or added new capacity to produce products essential for fighting the pandemic.
He & Harris (2020) posit that the “genuine and authentic” CSR undertaking by firms during the pandemic has the potential to send a favorable signal to its customers, employees, suppliers and other stakeholders. The CSR investment (in terms of philanthropy and other generous outlays) will make these stakeholders to take pride in the company and establish a strong bond to their brand. They further state that as a result of the CSR responses during the pandemic companies would be able to create a more meaningful and a very strong connection between their brand and consumers, even “more meaningful and lasting than during “peaceful” times”. Needless to say that the pandemic is here to stay. It will keep on disrupting the livelihood of people and the economy. Be this as it may, as Noa (2020) rightly argues “The corporate sector can move the needle during this crisis by implementing strategies and initiatives that benefit society – as well as their long-term success – by supporting their employees, customers and the economy at large”.
Research Issues
Before the pandemic corporate social responsibility issues have been considered as the major focus of organizational and academic researchers.
The literature is replete with research outputs linking CSR with financial performance, corporate governance, business reputation etc. However, researchers seem to have shifted their focus to other areas as the pandemic progresses and CSR issues are somehow being left in the shadows.
For example, research by Verma & Gustafsson, (2020) undertaken to investigate the growth trajectories of research in the early days of the pandemic and the main focus of research relating to COVID-19 and business, affirms this fact. Their study indicates that the emerging research issues during the pandemic relate to the impacts of COVID-19 on the economy, value chain, supply chain management, innovation, service industry, and employment. This piece, to this effect, is intended to unravel the potential research areas and questions related to the practice of CSR in the time of the pandemic. By doing so the authors, on the one hand, intend to rekindle researcher’s interest in the area and on the other intend to develop a set of researchable issues related to the dynamics of CSR practice during and after the pandemic.
Research Issues during the pandemic
Carroll (1991) posits that CSR, as practiced by business organizations embraces a wider set of responsibilities that can be arranged along the height of a pyramid. These responsibilities according to him include, economic, legal, ethical, and philanthropic components’ full-blown system of CSR is then defined by the extent to which it incorporates all these crucial components. However, the emphasis and level of importance attached to each one of these responsibilities may vary depending on the motives of firms. Graafland & Mazereeuw-Van der Duijn Schouten, (2012) argue that the motives behind can be extrinsic ( based on the notion that CSR contributes to long-term financial performance) or intrinsic( moral or ethical judgments of CEO’s and managers).
Against the above background, the following research questions seem to be worth the attention of researchers:
- What predominant motive is driving the CSR practice (philanthropic, and other forms) of organization during the different stages of the pandemic?
- Is there any variation in motives pursued across business firms?
Newton (2020) reports that tech giants ( such as Google, Apple, Twitter, Facebook, etc.) are taking the center stage in the effort to fight the pandemic. His investigation indicates that giant corporations were actively participating in numerous activities aimed at combating the pandemic. The activities he identified include: developing applications that are playing a crucial role in the task of tracking and contact tracing countering and removing contents aimed at spreading disinformation, and contributing billions of dollars to help the ongoing endeavors to develop a vaccine for the virus. However, the same companies, as the reports of Wakabayashi et al. (2020) indicates, have reported a surge in wealth as the pandemic is progressing. This reality can then be a rationale to pose the following research questions:
- Is the pandemic turning out to be a silver lining for business to generate even more profits in the name of corporate social responsibility?
- Is the surge in wealth only related to the shift in behavior of customers and not the outcome of the CSR gestures of these firms?
- Assuming the surge in wealth is solely due to the change in the buying habit of consumers, will this have any effect on the future CSR engagement of firms?
Post pandemic Research Issues
The pre-pandemic literature is replete with studies that associate CSR engagement with different outcomes. In their study assessing the business case for CSR Fatma et al., (2015), for example, found out that CSR engagement has a direct bearing on the reputation of businesses and also contributes to the enhancement of their brand equity.
Weber (2008) also posits that companies that indulge in CSR activities get returns in the form of different financial and non-financial benefits.
The financial benefit, as per his assessment include an increase in revenue, decline in cost and risk, and increase in brand value. The non-financial benefits he identified include enhancement in companies capacity to attract new and retain its existing customers; better opportunity to become an employer of choice, motivation and retention of employees, and improved corporate reputation. In the post-pandemic era, therefore the following issues need to be investigated by researchers:
- Are organizations that are significantly engaged in CSR during the pandemic better off in terms of financial returns than those with no or little CSR engagement?
- Has CSR investment during the pandemic helped firms to:
- Retain their employees?
- Enhance the productivity and motivation of their employees?
- Attract new customers and increase their market share?
- Retain their existing customers?
- Build a strong corporate reputation?
There is also evidence that indicates customers have a preconceived expectation regarding the CSR contribution of companies and make their purchase decision based on how the actual reality fits to their expectations. To this effect, Schwab (2020) argues that “Today’s consumers do not want more and better goods and services for a reasonable price rather, they increasingly expect companies to contribute to social welfare and the common good. And if they fail to do that, customers might shift to other businesses, eventually rendering them to go bankrupt” (Manuel & Herron 2020).
So it seems reasonable to investigate the following:
- Have businesses with little or no CSR involvement lost their customers and sales to those who were actively engaged in CSR activities?
Concluding Remark
The world is reeling from the devastating impact of the pandemic. COVID-19 has become a phenomenon beyond the control of even the sophisticated health care systems that advanced nations boast to have developed. As the pandemic progresses millions around the world have lost their lives and tens of millions have lost their job. Businesses (especially smaller ones) have either found it very difficult to weather the storm or have closed their operation for good.
Those businesses who have managed to carry on amid the turbulence and the topsy-turvy situation are shouldering two sets of responsibility: economic and CSR.
These businesses have been involved in various CSR engagements aimed at helping the effort to control the virus and to helping those who have been severely affected by the pandemic.
Despite such an involvement by businesses, academic and organizational researchers have somehow been reserved from investigating the multidimensional issues related to CSR in the time of the pandemic.
About the Authors
- Asegid Getachew - Assistant Professor, Department of Accounting and Finance, Hawassa University, Ethiopia.
- Yilma Geletu - Lecturer, Department of Marketing Management, Hawassa University, Ethiopia.
- Tsegaye Mathewos (PhD) - Dean, Shallom Business and Technology College, Hawassa, Ethiopia.
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Image: African Union Headquarters in Addis Ababa, Ethiopia by Solen Feyissa on Unsplash