Firms’ responses to the COVID-19 pandemic

• Published in: Journal of business research 2023-03, Vol.158, p.113664-113664, Article 113664
• Main Authors: Klöckner, Maximilian, Schmidt, Christoph G., Wagner, Stephan M., Swink, Morgan
• Format: Article
• Language: English
• Subjects: COVID-19; Crisis response management; Event study; Pandemic
• ISSN: 0148-2963; 1873-7978; 0148-2963
• DOI: 10.1016/j.jbusres.2023.113664

The COVID-19 pandemic requires firms to adequately respond. In this study, we first explore in our empirical data how firms responded to the COVID-19 crisis and identify five tactical response types, operational, digitalization, financial, supportive, and organizational responses. Furthermore, our findings indicate that responses vary in scope; Some firms act on their own, while others engage in collaborations. Finally, we find that the response angle is different across firms, as some firms leverage potential and others primarily mitigate risk. Second, we follow an event study design to measure the financial implications of these responses. We find that responses to the COVID-19 pandemic generally entail a positive stock market reaction. Financial and digitalization responses, as well as risk mitigation responses, are consistently evaluated positively. We discuss our findings in context of different theoretical lenses, substantiating the emerging literature on the COVID-19 crisis, and the established literature on crisis response management. •Firm responses to the COVID-19 crisis differ across type, scope, and angle.•Investors evaluate tactical responses to the COVID-19 positively.•Financial and digitalization responses are consistently evaluated positively.•Mitigating downside risk is more worthwhile than leveraging upside potential.•The COVID-19 crisis severity affects the valuation of different responses.