Doing good right: building resilience through donations during the pandemic

PurposeWhile researchers recognize the significance of philanthropic donations in disaster relief and recovery, the benefits that firms derive from such donations remain unclear, particularly when firms are adversely impacted by the disaster. To address this gap, this study seeks to elucidate the impact of various donation strategies on firm resilience in the context of the COVID-19 pandemic.Design/methodology/approachBased on the hand-collected data on donations, the authors employ ordinary least squares regressions to investigate the effectiveness of various donation strategies - including type, timing and location - in enhancing firm resilience in terms of the severity of stock price losses during the pandemic. To address potential endogeneity concerns, the authors use a two-stage least squares regression with instrumental variables.FindingsThis study finds robust evidence that certain donation strategies are more effective at mitigating stock price losses during the pandemic. Specifically, the authors find that in-kind donations (compared to monetary ones), earlier donations (compared to later ones) and donations targeting severely impacted areas (Hubei province vs. other places) are more effective methods to reduce the severity of stock price losses.Originality/valueThis study points out an alternative mechanism through which donations influence firm resilience during a crisis context and provides important managerial implications for firms to better engage in disaster donations.

The effect of customer and supplier concentrations on firm resilience during the COVID-19 pandemic: Resource dependence and power balancing

The COVID-19 pandemic has created significant disruptions in both demand and supply. Our study makes use of such dramatic changes in demand and supply during the pandemic to examine resource dependence and power balancing/unbalancing issues in buyer-supplier relationships. Specifically, we investigate the effect of customer and supplier concentrations on firm resilience during the pandemic. Drawing on resource-dependence theory (RDT), we theorize that shifts in demand and supply in different pandemic stages influence the effect of customer and supplier concentrations on firm resilience by altering the power dynamics between focal firms and their concentrated customers and suppliers. Central to our theorizing is that the worsening power imbalance is more detrimental. Measuring firm resilience by loss and recovery (i.e., change) in productivity, our analysis of 23,440 Chinese listed firms' quarter observations from 2019 to 2020 shows that customer concentration is negatively related to firm resilience in the disruption stage but has no effect in the restoration stage. Supplier concentration is positively related to firm resilience in the disruption stage but undermines firm resilience in the restoration stage. These findings largely confirm our theoretical propositions. We discuss the theoretical and managerial implications.