Caring for their own: How firm actions to protect essential workers and CEO benevolence influenced stakeholder sentiment during the COVID-19 pandemic.

ABSTRACT

Whereas many workplaces shut down following the onset of the COVID-19 pandemic, many others in essential industries had to remain operational, thus exposing their employees to COVID-19's inherent dangers. These firms were pressed to take immediate action to protect their employees' safety and financial well-being. However, firms varied considerably in the degree to which they took action, and stakeholders appeared to take notice. Leveraging attribution theory, we build theory around the impact of firm actions to protect employee safety and compensation on stakeholder sentiment toward the firm. We further examined how firm leadership helped shape stakeholder sentiment by theorizing about the joint impact of actions with Chief Executive Officer (CEO) benevolence. We built a unique, multisourced data set and tested our theory on a sample of public firms in the consumer staples sector. Our longitudinal analysis of positive stakeholder sentiment expressed on social media demonstrated the importance of these immediate firm actions on sentiment in the initial months of the pandemic. Specifically, firm compensation actions were associated with a growth in positive sentiment over these months, particularly when made by CEOs with high benevolence, whereas firm safety actions led to growth in positive sentiment but only when made by CEOs with low benevolence. We discuss the implications of these findings for our understanding of firm actions and leadership at the onset of the COVID-19 pandemic. (PsycInfo Database Record (c) 2021 APA, all rights reserved).