Corporate Resilience and Response During COVID-19

Alex  Cheema-Fox; Bridget  LaPerla; George  Serafeim; Hui (Stacie)  Wang

Working Paper | HBS Working Paper Series | 2020

Corporate Resilience and Response During COVID-19

by Alex Cheema-Fox, Bridget LaPerla, George Serafeim and Hui (Stacie) Wang

Abstract

The coronavirus pandemic caused a sharp market decline while raising heterogeneous responses across companies related to their employees, supply chain, and repurposing of operations to provide needed products and services. We study whether during the 2020 COVID-19 induced market crash, investors differentiated across companies based on their human capital, supply chain, and products and service response. Using data derived from natural language processing applied to news coverage of corporate responses to the coronavirus crisis for 3,023 companies around the world, we find that more positive sentiment around a company’s response is associated with less negative returns. This is especially true for companies with more salient responses and in industries that those responses are more likely to represent a credible commitment to their stakeholders.

Keywords: human capital; supply chain; crisis management; operations; ESG; COVID-19; coronavirus; crisis response plans; crisis; ESG (environmental, social, governance) performance; ESG ratings; Leadership & Corporate Accountability; big data; Machine learning; investor behavior; Institutional investors; Corporate performance; Health Pandemics; Crisis Management; Corporate Social Responsibility and Impact; Human Capital; Supply Chain; Operations; Leadership; Corporate Accountability; Performance; United States; Europe; Asia; North America; Latin America;

Language: English

Format: Print

42 pages

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Citation:

Cheema-Fox, Alex, Bridget LaPerla, George Serafeim, and Hui (Stacie) Wang. "Corporate Resilience and Response During COVID-19." Harvard Business School Working Paper, No. 20-108, April 2020. (Revised September 2020.)

Organizations create significant positive and negative impacts through their employment practices. This paper builds on the substantial body of research regarding job quality and impact measurement to present a framework for monetized analysis of employment impact. We identify and propose a framework for measuring the four most salient dimensions of impact for employees, including wage quality, career advancement, opportunity, and health and wellbeing, as well as two principle impacts, diversity and employment location, for the broader labor community. The framework and methodology for calculating employment impact-weighted accounting figures is applied to several large corporations, resulting in positive impacts that range between 25 and 249% of their EBITDA suggesting significant heterogeneity in employment practices across organizations. These results demonstrate the feasibility of calculating employment impact in monetary terms, and provide a foundation for future application across additional geographies and contexts.

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Corporate Resilience and Response During COVID-19

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