Effects of quick response to COVID-19 with change in corporate governance principles on SMEs’ business continuity: evidence in Vietnam

• DOI: https://doi.org/10.1108/CG-09-2021-0334
• Published date: 01 February 2022
• Date: 01 February 2022
• Pages: 1112-1132
• Subject Matter: Strategy,Corporate governance
• Author: Thanh Tiep Le,Van Kha Nguyen

Effects of quick response to COVID-19

with change in corporate governance

principles on SMEs’business continuity:

evidence in Vietnam

Thanh Tiep Le and Van Kha Nguyen

Abstract

Purpose –The purpose of this paper is to evaluatethe negative impacts of the Coronavirus Disease-

2019 (COVID-19) emergencyon small- and medium-sized enterprises’(SMEs) business continuity (BC)

by examining the moderatingrole of corporate governance principles(CGP) on SMEs’ BC in the context

of an emergingmarket.

Design/methodology/approach –Based on an extended literaturereview on the negative impacts of

the COVID-19 emergency,CGP and BC studies, the authors evaluate the impact of theseconstructs on

SMEs’ BC in an emerging market. This paper follows a quantitative approach. The study sample was

composed of 334 responses covering directors, managers and owners of enterprises. The Smart PLS

SEM version3.3.2 was used to analyse the data from SMEs of Vietnam in the year 2021.

Findings –The findings of this study clarify the areas of the COVID-19 consequences that negatively

affect the BC. In addition,this study reveals that CGP moderates the links betweenCOVID-19 outcomes

and BC, whereby goodCGP can facilitate a business to reduce theadverse effects of COVID-19 on BC.

In addition to this, good CGP can help a firm to enhanceits capability to respond to fluctuations in the

externalenvironment of the business.

Originality/value –To the best of the authors’ knowledge, this is the first research that examines the

moderating role of CGP. The originality of this study is that it gives an insight into how SMEs in an

emerging economy overcome the adverse effects of the COVID-19 emergency on BC to keep their

business going, and moreover, have the ability to move towards sustainability in today’s challenging

context. This study providesthe theoretical and managerial implicationsthat may be of great interest to

the academics,business practitioners and policymakers.

Keywords Business continuity, Emerging markets, Corporate governance principles, COVID-19

Paper type Research paper

1. Introduction

The outbreak of a global epidemic (or pandemic) poses enormous threats to human well-

being, prosperity and sustainability. Indeed, the development of human history has

experienced many epidemics/pandemics that killed millions of people and destroyed the

global economy, environmentand politics (Khan et al.,2021). The ongoing pandemiccalled

Coronavirus Disease-2019 (COVID-19) is said to be the most terrible ever because its

spreading mechanism is dangerous and unprecedented. As Al-Fadly (2020) states, “The

virus spread rapidly around the globe and WHO declared the virus a public health

emergency on 30th January, 2020” (p. 631). COVID-19 started its journey to becoming a

worldwide pandemic in early 2020 following world health organisations (WHO’s) official

declaration. Although its origin was a subject of controversy among the most influential

Thanh Tiep Le is based at

the Ho Chi Minh City

University of Economics

and Finance, Ho Chi Minh

City, Vietnam.

Van Kha Nguyen is based

at the HCMC University of

Food Industry, Ho Chi Minh

City, Vietnam.

Received 9 September 2021

Revised 17 October 2021

15 December 2021

23 December 2021

Accepted 6 January 2022

PAGE 1112 jCORPORATE GOVERNANCE jVOL. 22 NO. 5 2022,pp. 1112-1132, ©Emerald Publishing Limited, ISSN 1472-0701 DOI 10.1108/CG-09-2021-0334

countries in the world, its terrible impacts on the economy, society, environment and the

effects on humans and businesses globally have been seen by the whole world. Over 200

countries have been suffering serious losses due to the outbreaks of COVID-19

(Chakraborty and Maity, 2020). It has been over a year since WHO declared it as the

world’s pandemic, and COVID-19 is still tormenting countries around the world by repeated

waves of transmission in the pattern of the later the more danger. Besides the negative

influence on the business continuation, the COVID-19 emergency also led to increased

uncertainties and negative impacts on various aspects of the socio-economic life of

humankind (Margherita and Heikkila

¨,2021;Nicola et al., 2020).

In the context of the COVID-19 pandemic emergency, socio-economic life has been

disrupted, and businesses are strugglingwith the risk of closing down or discontinuing their

operations. Therefore, understanding how to retain business continuity (BC) is an urgent

need, especially for small- and medium-sized enterprises (SMEs) in underdeveloped

regions because they are more vulnerable and are hit harder than largerbusinesses (Fabeil

et al.,2020

;Adian et al.,2020), particularly businesses related to import and export

activities (Lee et al.,2020). At the same time, they have a great contribution to the national

economy [gross domestic product (GDP)] and employment (Tuan, 2020). Therefore, this

reaffirms that in-depth research into the impact of COVID-19 on BC and an understanding

of how these factors help businesses to overcome these challenges is very important both

at the enterprise level and also at the national economic level. However, current literature

shows that, to date, there has been limited empirical research on this domain for SMEs

(Fabeil et al., 2020). Moreover, this study examines corporate governance in its moderating

role in helping businesses to overcome the challenges posed by the COVID-19 pandemic.

This adds a novel point to this study because current literature shows that corporate

governance was widely explored in different settings (Kabwe et al.,2021;Rehman and

Hashim, 2021, 2020; Aslam and Haron,2021;Su

¨si and Jaakson, 2020;Adedeji et al.,2020;

Shahar et al., 2020;Al Maqtari et al., 2020;Sadiq et al.,2020;Usman, 2020;Wang et al.,

2019), although very few studies haveexplored it in a moderating role as can be seen in the

present research. Furthermore, this study focusses on corporate governance principles

(CGP) towards a sustainable and competitive advantage, while most current studies mainly

study corporate governance mechanisms and characteristics, such as board components

and ownership structure. This further contributes to the diversity of current literature on

corporate governance approaches.

In addition, the current literature demonstrates the growing academic interest in

investigating the impacts of COVID-19 on various aspects of the economy, society, the

environment and business operation situations (Margherita and Heikkila

¨,2021;

Nueangnong et al.,2020;Nicola et al.,2020;Chakraborty and Maity, 2020). Moreover, the

strategic decisions that businesses have made to respond to the crisis caused by COVID-

19 are also of high interest to both academics and business practitioners. The unusual and

unprecedented outbreak of COVID-19 has generated a wide range of current literature on

topics relating to COVID-19 that focus on various aspects of management (Margherita and

Heikkila

¨,2021

). However, the intensive study on the core strategic elements regarding the

corporate governance and responding to such challenges has not yet been examined.

Based on the above discussions, this paper aims to fill this void. Specifically, this study

purposefully sheds light on the possibleimpacts of COVID-19 on the BC in the perspectives

of SMEs in an emerging economy.

The focus of this study will be to clarify the consequences that COVID-19 has been causing

to the macro- and micro-environments and their influence on the ability of businesses to

continue operating (Margherita and Heikkila

¨, 2021;Nicola et al.,2020). Furthermore, this

research examines how SMEs can overcome such challenges to maintain their business in

the context of such a volatile environment by considering the moderating effects of CGP in

the relations between COVID-19’s consequences and BC. In addition, this study focusses

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