By Anna Jasinenko, Patrick Haack, & Derek Harmon
The full version of this contribution was published on 21st July at the Enterprise for Society Center
Our current economic system is facing challenges that pose increasing doubts about its legitimacy. The global economy is being harshly criticized for its contribution to environmental damage, the neglect of human rights, and growing levels of social and economic inequality. As a result, societal trust in business firms and the free market economy is declining. Yet, little has changed in the past decades. Most citizens continue to support the current system and do little to actively challenge the status quo. Although fair trade and sustainable products are more fashionable, consumption in these segments remains low and most consumers still seem to value low prices over human rights and environmental sustainability.
The COVID-19 pandemic, with its tremendous effects on the economy and psychology, may result in a significant shift in the status quo, and turn out to be a game changer for business responsibility. Yet, the anticipated consequences of the pandemic on business responsibility are by no means clear. On the one hand, the pandemic seems to be accelerating the transition towards a sustainable economy and creating alternative forms of doing business. If this continues, the pandemic might break old routines and ultimately generate new ways of thinking. On the other hand, the pandemic seems to be slowing down and even preventing support for business responsibility. In fact, the pandemic and its social and economic consequences seem like it is making it harder to mobilize the necessary resources to facilitate change, leading to a perpetuation of the status quo.
Which outcome is more likely? What will citizens, consumers and employees expect from businesses as we move through this pandemic and into the future?
Case in point: the responsible business initiative
Potential answers to this question could be obtained by studying opinions on the responsible business initiative in Switzerland in the wake of the pandemic. Switzerland’s direct democracy allows its citizens to vote for or against changes in federal regulations that are brought up by popular initiatives. The responsible business initiative proposes that Swiss-based firms should conduct due diligence and be liable for human rights abuses and environmental violations caused abroad. In November 2020, Swiss citizens will be asked to vote on these regulatory changes. Thus, for Switzerland in particular, and the rest of the globe more generally, the COVID-19 pandemic is coinciding with imminent decisions that have the potential to change the business responsibility landscape. An examination of how the pandemic has already started shifting opinions on this topic may lend insight into what the future holds.
Consequently, we conducted a survey to explore how COVID-19 has affected the way Swiss citizens see business responsibility. This was done in two waves, once before the COVID-19 pandemic (January 2020) and another one during the pandemic (May 2020). We recruited 266 Swiss participants, of which approximately half was initially in favor of the initiative and the other half against it.
Our results reveal that the pandemic has led to an overall increase in the initiative’s legitimacy. Interestingly, this shift was driven almost entirely by the participants who initially opposed the initiative but became more supportive during the pandemic (see Figure 1). Opponents chose also relatively less negative arguments. Especially, the popular argument that the initiative would endanger the Swiss economy and jobs was chosen significantly less often. However, the more opponents were concerned about losing their job or having difficulties finding new employment during the pandemic, the more negative was their opinion about the initiative.
Managerial takeaways
Our research demonstrates that the COVID-19 pandemic has increased support for business responsibility, and it has done so by shifting the opinions of its original opponents. With less polarized opinions on business responsibility, there may be now a window of opportunity to regain social trust in business firms and the economic system. Managers developing and implementing transformative business strategies which acknowledge that companies have a responsibility that goes beyond making a profit could be all the more rewarded and supported by employees and society as a whole. Surely the COVID-19 pandemic bears many risks, but solutions to grand societal challenges will never be easy. The time may be now ripe to spearhead the transition toward a more inclusive, environmentally responsible and resilient economy.