How the business world is changing due to COVID-19
Businesses that step up their social commitment now will benefit in the future, says Simon Fraser University professor Rajiv Kozhikode.
Social responsibility, such as producing healthcare supplies to fight COVID-19, is a form of corporate political activity, Kozhikode, an associate professor at SFU’s Beedie School of Business, says.
“Business can expect a bailout in the future if their good behavior now gets them in the red in the future,” he says. “But if they neglect society now, they still might end up in the red, but without any respite from the government.”
Turning beer into hand sanitizer
Many businesses are repurposing their production facilities to produce much-needed healthcare supplies in response to the federal government’s request.
Breweries are making alcohol-based hand sanitizer, clothing companies are sewing face masks and auto parts manufacturers are producing ventilators. The federal government recently signed a deal with Amazon Canada to manage the distribution of medical equipment. Hotels and convention centres are being converted into makeshift hospitals.
Kozhikode acknowledges that not all businesses are in a position to produce healthcare supplies, particularly the mom and pop small businesses, which will need support from the government.
Kozhikode says firms that are part of the gig economy, such as Uber and Lyft, should also ensure a minimum pay to keep their staff or repurpose their skills to delivering good and services.
Online versus brick and mortar stores
Grocery delivery apps such as Instacart and Instabuggy have seen a rise in business leading to longer wait times or cancelled orders due to a lack of inventory. Customers have complained of wait times up to two weeks for grocery delivery from stores such as Walmart and Real Canadian Superstore.
“The online companies are not able to keep pace with what’s happening and there are a lot of backorders,” says Kozhikode. “It is actually a welcome reality that the online world has not replaced the physical world in that sense. We still are reliant on physical stores and online has not completely transformed that.”
Opening up post-pandemic
After this crisis has passed, he says firms that retain their employees will be able to restart more quickly and benefit from increased loyalty from their workers and customers.
“It will take businesses at least a year to fully recover,” says Kozhikode, “and during that time if anyone is going to get compensation from the government, it will be the firms that step in to help right now.”