The Coronavirus (COVID-19) Crisis and Leadership in Business

The Coronavirus (COVID-19) Crisis and Leadership in Business

The Coronavirus (COVID-19) Crisis and Leadership in Business

The Coronavirus (COVID-19) Crisis and Leadership in Business

May 03, 2022


The coronavirus outbreak and its economic consequences occur on the 50th anniversary of Milton Friedman's influential claim that a company's social responsibility was to increase profits within the law. With a fierce focus on the short term, this mantra has taken root in much of business practice. The effects of the coronavirus crisis will be addressed in this context by business leaders.

The World Health Organization has declared the Covid-19 coronavirus outbreak a pandemic, and lots of firms are taking strict measures against the impact and unfold of the virus.

The corona outbreak is first and foremost a human disaster, affecting thousands of people across the world. It is additionally resulting in a growing impact on the global economy.

With all businesses and industries across the world in huge chaos, there has been the grave economic impact of coronavirus across various sectors from tourism to airline; from entertainment to education; from finance to healthcare; from retail to hospitality; from cruises to cars; from food to fashion; Luxury industry; staffing and recruitment and so on. Marketers across industries are attempting to revamp their business models.


Self-interest had been increasingly at the forefront of organizational behavior even before it struck. And what are the ramifications? The casualization of employment has reached previously unimaginable levels. In 2017, 2.8 million people in the UK worked in the gig economy. One in every four of these employees was paid less than £7.50 per hour. These workers are the ones who will be hardest hit by the economic consequences of the coronavirus outbreak.

The right of business leaders to pursue whatever purpose they have in mind is largely taken for granted in mainstream leadership theory. Leadership research's goal is to create theories that will assist them in doing so in the most effective and efficient manner possible. I don't think this approach has ever had much going for it, and it has even less now.


There is no denying that difficult decisions lie ahead. However, if these decisions are primarily guided by the short-term interests of a few, the disenchantment with business leaders that already exists will grow. Feelings of relative deprivation will increase, destabilizing society as a whole. When billionaires like Richard Branson respond to the crisis by asking for government assistance, the resulting cynicism is amplified. As a result, many people are wondering what types of leadership businesses should use now.


This, in my opinion, is the incorrect question. It implies that those who work in organizations are invariably dedicated to a common goal and are united by a set of unitarian interests. Organizational actors, of course, share some common interests and goals. Organization would be impossible if they didn't. However, tensions exist between the immediate short-term interest of shareholder value and the long-term welfare of those who work for companies and the customers they serve.

Pretending otherwise is pointless. The actions of leaders will undoubtedly be influenced by how businesses are structured, how power is distributed within them, and the various perspectives on the primary importance of shareholder value – what is known as the underlying theory of the business.

It's still early days. Morgan Stanley and Bank of America, for example, have stated that they will not be making any layoffs this year. These organizations, of course, have a lot of money. Others have demonstrated that they have deep pockets but short arms. Assume that many people's main business theory is still the primacy of shareholder value, and that they have fewer resources than the examples just given. Transferring the crisis' costs to labor rather than capital will appear to be a perfectly reasonable solution, and the sooner the better.


We must return to "the reciprocity norm" in order to comprehend the consequences. "A norm of reciprocity... makes two interrelated... demands: (1) people should help those who have helped them, and (2) people should not injure those who have helped them," Alvin Gouldner wrote many years ago. 1 This norm has been activated in a purely negative sense by the promotion of shareholder value as the primary, and often only, true purpose of business. People have already learned to reciprocate the callous and dismissive attitudes that many business leaders have demonstrated toward them. Actions that are perceived as primarily concerned with increasing shareholder value at the expense of employees are likely to exacerbate these attitudes.

They'll also arouse fears of what Al Goethals (2018) refers to as "procedural justice," in which people believe they're not getting what they deserve. 2 Few cries are more deafening than "It's not fair." Such agitation stokes the flames of populism even more. Populism, in a familiar spiral where cause and effect become polar opposites, creates a crisis for business leaders, whose responses strengthen populist leaders' divisive agenda. Unless and until other forces intervene, this leads to more economic woes (and so on).

One issue is that the strongman leadership model that we see in populism also exists in business, fueled by conventional theorizing and adoring tributes to celebrity CEOs in publications like Harvard Business Review. Scholars of leadership should do more to question the concentration of power in the hands of business elites, challenge self-serving business theories that guide much leadership decision-making, and examine the organizational practices that many of them use to silence dissent and crush opposition.

We must take part in the discussions about how businesses can be restructured to meet the needs of a broader range of stakeholders, including long-term rather than short-term shareholders. As I've argued elsewhere, far too much of our scholarship is preoccupied with tinkering with minor variables as part of an introspective "game" in which publication has become an end in itself.3 The impact of the vast majority of such publications is nil.

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