Business strategies responding to COVID-19: experience of Chinese corporations

• DOI: https://doi.org/10.1108/CG-10-2020-0475
• Published date: 01 July 2021
• Date: 01 July 2021
• Pages: 1072-1099
• Subject Matter: Strategy,Corporate governance
• Author: Minyu Wu,Kun Kong

Business strategies responding to

COVID-19: experience of Chinese

corporations

Minyu Wu and Kun Kong

Abstract

Purpose –This paperaims to investigate thecorporate social responsibility (CSR)initiatives adoptedby

Chinese firms during the outbreak of COVID-19. Facing this unknown, unexpected and devastating

disease,Chinese corporationsdemonstratedtheir CSR in differentapproaches. Thepurpose of this paper

is to explorehow CSR influences the decisions of the corporations that respond to a severe incidentand

howcorporationscan achieve theirmission or strategicobjectivesby respondingto a serious incident.

Design/methodology/approach –Based on secondary data and thematic analysis, this paper

examinessix Chinese corporations whichare the leading firms in their respectiveindustries.

Findings –This paper finds that firms adopted a mixed approach to conducting their CSR initiatives,

including altruistic,strategic and citizenship CSR initiatives.This paper also confirms that strategic CSR

initiativeswere in line with the five dimensionsof strategic CSR including centrality,specificity, proactivity,

visibility and voluntarism.In addition, this paper also shows thata company could create its competitive

advantage by carrying out CSR initiatives that are able to strengthen its value chain activities or the

competitive context. This is based on the partnership built by the firms with their stakeholders to

recognizethe shared value.

Practical implications –This paper shows the implication that business leaders should understood the role

of a business in society and the importance of stakeholders’ expectations. The underlying philosophy is that

CSR could strengthen the resilience of society; business organizations need to operate in a healthy society.

Originality/value –This paper provides insightsof Chinese corporations responding to a severe social

incident. It highlightsthe strategic perspective of CSR initiatives and the linkage betweenCSR activities

and a firm’scompetitive advantage.

Keywords Corporate social responsibility, Competitive advantage, Stakeholdermanagement

Paper type Research paper

Introduction

The current concept of corporate social responsibility (CSR) posits that firms voluntarily

include social and environmental concerns in their economic operations (Branco and

Rodrigues, 2006;Robins, 2008). It could be defined as the process of integrating

economic, social and environmental issues into the daily operations and long-term

strategies of corporations to achieve corporate citizenship. The social performance of

businesses and concerns about business ethics have raised public awareness and have

become critical topics in boardroom discussions (Mellema, 2003;Fombrun and Foss,

2004). CSR is not only an abstract concept; but also it affects the decisions in business

organizations (Kakabadse et al.,2009;Mostovicz et al.,2009). Just as individuals are

different in how they make decisions while facing ethical dilemmas, organizations may vary

considerably in their response to social issues. Corporations have been increasingly held

accountable for their corporate social or environmental performance in different areas. An

organization’s social performance is mainly determined by how it deals with stakeholder

Minyu Wu is based at the

Division of Business and

Management, BNU-HKBU

United International

College, Zhuhai, China.

Kun Kong is based at the

Department of Business

and Management,

BNU-HKBU United

International College,

Zhuhai, China.

Received 23 October 2020

Revised 30 March 2021

7 May 2021

Accepted 11 May 2021

PAGE 1072 jCORPORATE GOVERNANCE jVOL. 21 NO. 6 2021, pp. 1072-1099, ©Emerald Publishing Limited, ISSN 1472-0701 DOI 10.1108/CG-10-2020-0475

relationships and issues (Logsdon and Yuthas, 1997). As considerable pressure has been

put on business organizations by multiple stakeholders, many of them have taken the

initiative to address diverse social issues and CSR in a systematic approach (Sethi, 1979;

Drews, 2010;Adib et al., 2020). The motivation of business organizations to engagein CSR

activities may be based on corporate reputation and the managers’ own reputation

concerns (Tucker and Melewar,2005;Carter and Dukerich, 1998). Some research indicates

that CSR could strengthen a firm’s sources of competitive advantage because of enhanced

stakeholder engagement (Wu,2012).

In the literature, researchers have investigated the concept of strategic CSR and the

relationship between CSR activities and organizational strategies (Samy et al.,2010;Vitolla

et al.,2017

). Generally, organizational strategies are related to long term issues. How a

company responds to a crisis displays its immediate reaction to an unexpected incident.

The CSR initiatives of the corporations during the crisis can be regarded as a real test of a

company’s commitment to society and its underlying philosophy or strategy. To our

knowledge, few studies have addressed how corporations respond to a tremendous

incident in terms of its CSR initiativesand the implications on their strategies.

In late December 2019, mysterious pneumonia characterized by fever, dry cough and

fatigue symptoms emerged in a seafood wholesale wet market, in Wuhan, China; in the

following month, thousands of people in China, including many provinces and cities were

severely influenced by the fast-spreading of the disease. The disease is officially named as

Coronavirus Disease-2019 (COVID-19) by The World Health Organization (WHO) after

spreading to more than 25 countries (Wu et al.,2020). The COVID-19 global pandemic is

arguably the most extensive incident that afflicts humanity in a century (The State Council

Information Office of the People’s Republic of China, 2020). As a serious global crisis, it

creates not only a threat to human life and health but also a huge barrier to economic

activities, such as production and consumption and trade, especially small- and medium-

sized firms (Rababah et al., 2020). Facing this unknown, unexpected and devastating

disease, Chinese corporations demonstrated their CSR performance in different

approaches. Hence, in this study, we attempted to explore CSR initiatives that had been

adopted by large Chinese corporationsduring the COVID-19 pandemic period in 2020.

This study adds to stakeholder theory, CSR literature and competitive advantage literature by

addressing the CSR initiatives during the challenging period of the COVID-19. Integrating CSR

to the company’s resources and organizational strategies reflected the performance of the six

Chinese corporations’ response to the incident such as COVID-19. This study showed that

firms adopted a mixed approach to conducting its CSR initiatives, including altruistic, strategic

and citizenship CSR initiatives. The findings of this study revealed that strategic CSR initiatives

were in line with the five dimensions of strategic CSR proposed by Burke and Logsdon (1996).

The comprehensive approach to strategic CSR aligned itself with business missions and

strategic objectives and effectively used the organization’s resources advantages, especially

in expertise and technology. The paper also showed that a company can create its competitive

advantage by carrying out CSR initiatives that are able to strengthen its value chain activities or

the competitive context. We argue that in a changing environment, firms need to adopt a

dynamic approach to stakeholder management to address changing stakeholders and

changing expectations of them. In particular, CSR initiatives helped corporations discover

business opportunities by being committed to social issues, such as COVID-19.

Literature review

The concept of corporate social responsibility

CSR is a very popular term in both academia and business. The concept of CSR emerged

in the 1950s (Carroll, 1999); it could be attributed largely to the awareness by the public of

the actions of large corporations and their substantial impacts on society. Generally, CSR

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