Covid‐19 pandemic and consumer‐employee‐organization wellbeing: A dynamic capability theory approach

• Published date: 01 March 2022
• Author: Preeti Nayal,Neeraj Pandey,Justin Paul
• Date: 01 March 2022
• DOI: http://doi.org/10.1111/joca.12399

SPECIAL ISSUE

Covid-19 pandemic and consumer-employee-

organization wellbeing: A dynamic capability

theory approach

Preeti Nayal

1

| Neeraj Pandey

2

| Justin Paul

3

1

School of Business Management (SBM),

NMIMS, Mumbai, Maharashtra, India

2

Department of Marketing, National

Institute of Industrial Engineering

(NITIE), Mumbai, Maharashtra, India

3

University of Puerto Rico, San Juan,

Puerto Rico

Correspondence

Neeraj Pandey, Department of Marketing,

National Institute of Industrial

Engineering (NITIE), Vihar Lake Road,

Mumbai, Maharashtra 400087, India.

Email: npandey@nitie.ac.in

Abstract

The consumers, employees, and organizations have

been deeply impacted by Covid-19 pandemic. The pre-

sent study offers a detailed coping mechanism for orga-

nizations based on the extant literature and content

analysis of responses of senior management executives.

The study is based on semi-structured long interviews

with senior executives from various industries. Various

measures have been identified for firms as a coping

strategy for crisis management and customer well-

being. Covid-19 has changed the way individuals live.

This study suggests that firms should come forward for

well-being of their employees in this new normal. One

of the major shifts due to pandemic is in consumer

behavior and their consumption habits. Pandemic

made consumers go for digitization, think for hygiene,

sustainability, and local products. And firms should

keep the changed consumer behavior in mind while

manufacturing the products. Furthermore, present

study suggests that firms can create a positive image of

their company by doing CSR activities for society's

well-being.

KEYWORDS

consumer well-being, Covid-19, dynamic capability theory,

growth, pandemic

Received: 12 December 2020 Revised: 6 June 2021 Accepted: 8 July 2021

DOI: 10.1111/joca.12399

© 2021 American Council on Consumer Interests.

J Consum Aff. 2022;56:359–390. wileyonlinelibrary.com/journal/joca 359

1|INTRODUCTION

The organizations are facing one of the worst crises in human history in the form of covid-19

pandemic (Pandey, 2021; Sharma et al., 2021). Crisis refers to a “low probability high impact sit-

uation that is perceived by critical stakeholders to threaten the viability of the organization”

(Pearson & Clair, 1998). The crisis may occur due to natural calamity, technological disaster, or

as the current pandemic crisis which leads to severe economic slowdown apart from negatively

affecting the human life (Mandj

ak et al., 2017; Merig

o et al., 2016). Organizations often deal

with anomalous events, also known as a crisis, which leads to uncertainty and at time puts the

firm's survival at stake. Businesses have faced several crises in the past such as great depression

in the 1930s, oil shock of 1970s, the Asian crisis in 1997, and the recent 2008–2009 recession.

The crisis literature shows that there is a need for superior management of the resources for

organizational survival (Naidoo, 2010; Pandey & Jaiswal, 2014). The better management of an

organization's resources leads to firms' survival and growth (Grewal & Tansuhaj, 2001;

Patwardhan et al., 2017; Paul & Mas, 2020).

The literature has discussed various theories for the firm's survival from the crisis. An extensive

literature search was conducted to identify theories applied in managing crisis situations using dif-

ferent permutations and a combination of similar words. Extant literature stated that a firm's perfor-

mance can be explained with the help of resource-based theory (Barney et al., 2001). As per

resource-based theory, the resources of firm should be valuable, rare, inimitable, and non-

substitutable for its performance (Barney, 1991; Wernerfelt, 1984). Various authors stated that

resource-based theory consists of all the internal considerations to explain a firm's performance.

However, various authors have criticized that resource-based theory fails to explain the usage of a

resource to attain competitive advantage (Priem & Butler, 2001) as it fails to consider external envi-

ronment that keeps changing. To address such limitations, various researchers have worked in

advancement of resource-based theory and named it dynamic capability theory. Dynamic capability

theory claimed that rather than depending on only firm's resources to gain a competitive advantage

in the market, firms; should continuously scan the business environment and accordingly acquire

and deploy their resources (Teece et al., 1997). Therefore, for the current scenario, which is highly

dynamic and uncertain, we have chosen dynamic capability theory (DCT) as a core theory which is

an advanced version of resource-based theory. Moreover, DCT has been conceptualized on the con-

cepts such as market orientation, market innovation, and strategic capability.

Covid-19 has impacted consumer's mental health and well-being. The consumers are now

more mindful in consuming the products and taking care of their health more than ever before

(Oral & Thurner, 2019). Many of consumers prefer voluntary simplicity as compared to materi-

alism (Kuanr et al., 2020). As per Mckinsey report (2020), 76% of consumer stated that they

spend their money carefully and cutting back the purchase of non-essential products. Con-

sumers are spending more on hygiene products, staple products, and eco-friendly products.

And they are increasingly more inclined to connect the brands which are eco-friendly and sus-

tainable and which exhibit more responsible behavior towards well-being of society at large

(BCG, 2020). A consumer also inclined towards buying local products as they perceive them as

more sustainable option (Azmat et al., 2021). Moreover, marketers are also offering digital ser-

vices to remote locations for consumer well-being. This trend was captured by observing the

number of apps download related to grocery shopping, healthcare, entertainment, and news

(Accenture, 2020). One major change due to the covid-19 pandemic is work from home (WFH)

as a new normal. As per Gartner report (2020), a survey of CFO revealed that organizations

would permanently move approximately 74% of employees to remote location post Covid-19.

360 NAYAL ET AL.

Thus, the Covid-19 crisis has changed consumer patterns of consuming products and ways of

working.

The key objective of this study is to propose a comprehensive framework for combat the crisis

and ensuring consumer-employee-organization well-being. A comprehensive literature review and

in-depth interviews of industry professionals was conducted. The present study followed a qualita-

tive approach to collect the data from respondents. Semi-structured in-depth interviews were con-

ducted with 27 senior executives from various sectors of the industry. Consolidated transcripts of all

interviews were analyzed in NVivo. It gave seven key areas (themes) that organizations can focus

on to improve their performance in the crisis and ensure consumer well-being. The next

section elaborates on the crisis management and well-being literature review.

2|LITERATURE REVIEW

2.1 |Crisis management

In the literature, crisis management is quoted as “a set of strategies formulated to lessen crisis

and to lessen damaged induced by the crisis”(Coombs, 2014). Smith (2005) stated that

crisis management has two objectives in a row: (a) preventing harmful incidents and

(b) mitigating the effect of harmful incidents. Doern (2016) stated that crisis management is

about preventing and countering the crisis effects. During a crisis, it is crucial to respond

quickly and transparently. Crisis management is a complicated process as a business needs to

undergo various changes to find the solution for the existing problems. Buchanan and

Denyer (2013) stated that there is not a definite way to respond to crisis management as it

depends on various dynamic variables. There should be a dedicated team to respond to the cri-

sis management that can monitor the undergoing changes and accordingly guide the company

for the next steps (Ratten, 2020).

Evans and Elphick (2005) showed that crisis management can be divided into four catego-

ries: reduction, readiness, response, and recovery, which are known as 4Rs. Crisis management

is a crucial part of up-to-date strategic management for firms. This makes crisis

management important for the firm's stability and future in the dynamic business environment

(Chong, 2004). Therefore, companies should constantly change their guidelines to make them

relevant in uncertain circumstances. In the literature, various authors have proposed models to

combat the crisis scenario (Booth, 2015; Smith 2005; Smith & Sipika, 1993).

Few authors (Cortez & Johnston, 2020; Ratten, 2020) have argued that if a crisis situation is

handled carefully, it would help an organization to reach new heights of success. David (1990) said

that a crisis leads the company to follow new patterns and a lot of changes. Digital was the need

but now it has become a necessity for the organization's success both in B2C and B2B organizations

(Pandey et al., 2020). Overall, it has been observed that crisis management has not been addressed

well in the marketing literature that can offer an effective solution. The reason could be every crisis

isdifferentfromeachotherasitiscausedbydifferentsourcesanditsimpactvariesfromtimeto

time. Covid-19 crisis is one of the biggest crises that has affected not only business but also personal

lives. Therefore, it requires a unique approach to find an effective strategy.

This study reviewed the extant literature on crisis (refer Table 1) and found that networking

capabilities such as relationship management were a crucial part of business performance. End-

ing unprofitable relationships and forming new relationships is a continuous part of the busi-

ness performance in the dynamic market. The analysis (Table 1) showed that most of the

NAYAL ET AL.361