Finalists: Essay contest on historical lessons for managers who are trying to cope with the impact of COVID-19

A Call for Submissions for the Essay contest on historical lessons for managers who are trying to cope with the impact of COVID-19 came out at the beginning of April. The committee has reached a decision and the results of the contest process have been made available.

Social scientists from different disciplines have used a wide variety of theoretical lenses and data sources to try to understand the COVID-19 crisis and to give actionable advice to policymakers, business leaders, and other decision-makers. In late March, an international committee of business historians organized a fast-response essay contest to see whether historical research could provide guidance at this time. Today, we announce the winners of this contest.
https://www.historylessonscovid.org/ContestResults

We received forty-one papers. These papers were first reviewed by a sub-committee of the Scientific Committee to determine which were suitable for publication online. We have decided to publish just  seven of the papers that were submitted to the competition (see table below), plus one additional paper by two senior scholars who did not want to be considered for the cash prize. The papers we decided not to publish included some excellent studies that developed our understanding of political decisions but did not speak to the challenges now facing managers of firms. Some of the members of a separate sub-committee then ranked essays for the purposes of allocating the two prizes. The prize winners are indicated in the table below.

In 1797, an influenza epidemic devastated the population of part of the territory that was important to the Hudson’s Bay Company, the London-based firm that then dominated the fur trade in the northern half of the North American continent. The Hudson’s Bay Company, it should be noted, is still in operation and has an archive that is open to researchers. In his paper, “Business Community Resilience while Fighting the Influenza Epidemic in the Fur Trade, 1797” Professor George Colpitts of the University of Calgary explores how inter-personal relationships between HBC officers and local people in small communities helped the company to cope with this crisis. Colpitts suggests that while in normal position, a firm’s sense of purpose and identity can be promoted by non-face-to-face communications in textual media, in periods of crisis, the inter-personal networks previously developed by employees can become crucial.  One possible managerial implication of this research is that in large firms faced with COVID, relationships between branch managers and local stakeholders will be particularly important. One lesson we derived from Colpitt’s paper is that large geographically dispersed organisations should preserve strong relations between employees and local communities by (temporarily) decentralizing authority to local managers for the duration of the crisis.

University of Toronto Professor Siobhan Nelson’s paper “Nursing Infectious Disease: a History with Three Lessons” will be of great interest to health care managers currently dealing with COVID. The three lessons she presents to such managers are: 1) re-learn basis and important hygiene practices 2) innovate to cope with risk, as blood-service managers did during the HIV-AIDS pandemic 3) prepare for staffing challenges similar to those that Britain’s National Health Service experienced in the aftermath of the Second World War.

In her paper, Professor Janice Traflet of Bucknell University drew on her earlier research on the history of the New York Stock Exchange. She explores the reasons why the so-called uptick rule was implemented in 1938 and why it was later repealed. She argues that to limit the potential negative impact of major crises, so-called “black swan” events,  stock exchanges would benefit by taking steps (such as possibly reinstating the 1938 uptick rule) to improve market fairness and orderliness, and in so doing, strengthen public trust and make exchanges more black-swan robust.

We also decided to publish the essay submitted by Joel N. E. Christoph, a graduate student on a joint degree course offered by Johns Hopkins and Tsinghua Universities. His paper, “What Lessons Can History Provide to Companies and Managers Currently Coping with the Impact of COVID-19?” is a work of synthesis based on a range of secondary sources.  From this paper, we learn about the response of businesses in New Haven to the 1918 pandemic and about the experience of Alibaba founder Jack Ma during the SARS epidemic. He observes that the 1918 epidemic caused tension between immigrant ethnic groups and Anglo-Saxon Americans and that local business leaders tried to defuse these tensions. On the basis of the historical cases he discussed, Christoph identifies several lessons for managers faced with the COVID pandemic. First, they should try to dampen any ethnic tensions that the pandemics have exacerbated. Second, they should fight the stigmatization of diseased individuals. We regard the first research finding as particularly important for managers in multicultural cities in North America and Australasia. In recent decades, the economies and cultures of these cities have been enriched by the arrival of large numbers of individuals of East Asian ethnicity. During the COVID-19 crisis, some nativist elements have “blamed” COVID-19 on Chinese migrants and have verbally attacked individuals who are perceived to be Chinese. Christoph’s research shows that it is very important for business leaders to now speak up against these nativist attacks.

Two distinguished Dutch business historians, Bram Bouwens and Keetie Slutyerman, sent us a paper that they wanted to have published on our website but did not want to be entered into the competition for the prize. Their paper “All stakeholders count: the Dutch beer industry during the First World War,” argues that managers now confronted with COVID should strongly consider collaborating with competitors, as Dutch brewing companies did the First World War. During that crisis, the Dutch brewers mitigated the uncertainties and scarcities of the war by reaching out towards their competitors and by engaging with all their stakeholders. Their paper suggests that while commercial competition is perfectly healthy in normal periods, competitors need to cooperate during crises. They also need to be seen to be serving the common good. In her paper in “Lessons From a Forgotten Pandemic,” a study of how business responded to the HIV-AIDS crisis, Valerie Mock presents recommendations to managers dealing with the impact of COVID. She shows that they need to embrace the facts and be data driven, build coalitions, and analyse the needs of stakeholders.

Japan is both an advanced economy and geologically active country with frequent earthquakes and infrequent but highly destructive tsunami. In 2011, Japan’s elaborate, JIT supply chains were disrupted by a triple disaster of earthquake, tsunami, and nuclear meltdown. In their historical research paper on how Japanese retailers have recovered from this disaster, Professors Rika Fujioka and Tatsuro Watanabe argue that having a pre-prepared Business Continuity Plan can help firms to survive natural disasters that disrupt their supply chains. They also show that it is important for firms to show solidarity with others in their communities during crises because stakeholders have long memories. Their research suggests that firms that act prosocially during crises are more likely to survive and emerge from the crisis with enhanced reputations. In our view, managers dealing with the social impact of COVID should pay particular attention to this last research finding.

Somewhat similar managerial implications are presented by Thomas DeBerge, a PhD student University of Illinois, Urbana-Champaign, in his paper “Thrift in a time of war and influenza:  American mutual life insurance companies, 1917-1920.” He examines the strategies used by the managers of US life insurance companies during a period in which death rates unexpectedly surged due to US participation the First World War and then, the 1918-1919 influenza epidemic.  He argues that the firms that went into the crisis with large cash reserves survived because their organizational cultures had previously promoted the value of thrift. Although it is too late for managers now dealing with COVID to go back in time and tell themselves to save more for this crisis, DeBerge’s research may be very useful for market actors who now need to predict which firms have the traits that suggest they are likely to survive the crisis. These actors include the lenders of last resort who now need to make tough judgement calls about which firms are worth trying to save. In the UK, and other countries, the government have ordered the large banks to give emergency loans to those SMEs that are, in the view of the bank’s employees, most likely to survive the COVID crisis. The successful execution of this policy will require the exercise of good judgement by so-called SME relationship managers in bank branches and regional offices.  These relationship managers will now need to draw on their knowledge of each firms and then make a judgement call about whether the firm has the traits needed to survive. These judgement calls will then inform the bank’s decision about whether to extend a bridging loan to the firm or let it fail.   DeBerge’s research suggests that the key traits SME relationship managers should be looking include the level of thriftiness that the firm’s organizational culture promoted before the crisis as well as the state of the firm’s balance sheet.

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General observation: Four of the eight papers argued that companies that want to survive for the long term need to temporarily suspend the pursuit of profit during major social crises. That’s because stakeholders have long memories.  Taken together, the four papers suggest to us that organisations that act prosocially during crises are more likely to survive and emerge from the crisis with enhanced reputations than are organisations that continue to focus on the pre-crisis strategic objectives (e.g. maximizing profits for shareholders). The aggressive pursuit of profit is a legitimate objective during normal conditions, but during a major crisis such as once-in-a-century pandemic or a world war, managers concerned about the long-term viability of their firms should temporarily pursue other objectives.

From this point, another managerial implication follows. The COVID-19 crisis has generated considerable debate among the public and academics about so-called price gouging (e.g., toilet paper and PPE being sold at astronomical prices). Economic theory teaches that price gouging by firms can be socially efficient and can contribute to higher GDP at a time when GDP is rapidly contracting. However, the objective of most managers is not to maximize the value of their nation’s GDP. Instead, their objective is, quite properly, to ensure the long-term viability of their firm. In the case of a family firm, the objective of the manager is to ensure that they have a company they can pass to their children, grandchildren, and then more distant descendants. Managers with this objective should pay attention to the historical research showcased by our essay contest. 

Synthesis

Professors Rika Fujioka and Tatsuro Watanabe (Osaka University of Economics). "Lessons to Learn from Japanese Retailers Response to the 2011 Natural Disaster."

  1. create a Business Continuity Plan in advance of any natural disasters 
  2. use intermediaries to manage interrupted supply chains 
  3. show solidarity and support for communities

Mr Thomas DeBerge (PhD student, University of Illinois, Urbana Champaign) Second prize. "Thrift In a Time of War and Influenza: American Mutual Life Insurance Companies, 1917-1920."

  1. Maintain large cash reserves for use in emergencies 
  2. Develop an organizational culture of thrift, as such a culture predicts survival during a crisis

Professor George Colpitts (University of Calgary). "Business Community Resilience while Fighting the Influence in the Fur Trade, 1797."

  • Large geographically dispersed organisations should preserve strong relations between employees and local communities by decentralizing authority to local managers

Professor Jan Traflet (Bucknell University). "Protecting Investors in Tumultuous Times:
How Reinstituting the 1938 Uptick Rule Can Make Markets Fairer and more “Black Swan Robust” in the face of COVID-19."

  • To limit the potential negative impact of major crises, so-called “black swan” events,  stock exchanges would benefit by taking steps (such as possibly reinstating the NYSE 1938 uptick rule) to improve market fairness and orderliness, and in so doing, strengthen public trust.

Professor Siobhan Nelson (University of Toronto). First prize. "Nursing infectious disease: a history with three lessons."

  1. Re-learn basis and important hygiene practices 2) innovate to cope with risk, as blood-service managers did during the HIV-AIDS pandemic 
  2. Prepare for staffing challenges similar to those that Britain’s National Health Service experienced in the aftermath of the Second World War. 

Mr. Joel N. E. Christoph (Johns Hopkins-Tsinghua Joint Grad Program). "What Lessons Can History Provide to Companies and Managers Currently Coping with the Social Impact of COVID-19."

  1. Managers should try to dampen any ethnic tensions that the pandemics have exacerbated, as they did in New Haven Connecticut in 1918, when the Spanish flu drove a wedge between Italian-American immigrants and Anglo-Saxon Americans.  
  2. Managers should fight the stigmatization of diseased individuals.  

Professor Bram Bouwens (University of Utrecht) and Professor Keetie Slutyerman (University of Utrecht). "All stakeholders count: the Dutch beer industry during the First World War."
During a massive crisis, consider cooperating with the firms that are normally your competitors.
Engage with stakeholders and listen to their concerns even more so than during normal times.

Dr. Valerie Mock, Consultant, Atlanta Georgia. "Lessons From a Forgotten Pandemic, Business Responses to HIV-AIDS."

  1. embrace the facts/be data driven 
  2. analyze what your company and its stakeholders need
  3. determine what assistance is already available
  4. build coalitions and educate