COVID-19 and the Evolving Business Environment in Asia: The Hidden Impact on the Economy, Business and Society 9811927480, 9789811927485

Table of contents :
Acknowledgements
About This Book
Contents
Introduction
COVID-19 and the Transformation of the Business Environment
1 Introduction
1.1 Aim of the Book and the Approach to the Research
1.2 Main Themes
2 Conclusion
References
Industries and the Economy
Japanese Prefer to Have Face-to-Face Communication in the Workplace Even During the Pandemic
1 Introduction
2 External Incentive Hypothesis—From Meyer (2017)
3 Internal Motivation Hypothesis—From Maslow's Hierarchy of Needs
4 Integration Through Cultural Self Theory
5 Conclusion
References
COVID-19 Implications for Tourism: Shifts, Trends, Challenges, and Opportunities
1 Introduction
1.1 The Severity of the pandemic’s Impact on the Tourism Industry
1.2 Theoretical Consideration: COVID-19-Induced Chaos and Complexity?
2 Methodology
2.1 Journal Selection
2.2 Summative-Inductive Content Analysis
3 Data Analysis
3.1 Level 1 Co-Occurrence Analysis: Subthemes of COVID-19 Tourism Research
3.2 Level 2 Co-Occurrence Analysis: Main Themes of COVID-19 Tourism Research
4 Discussion and Findings
5 Conclusion
Appendix: Thematic Analysis and the Corresponding Examples
References
COVID-19 and India’s Flirtation with Localism
1 Introduction
2 Context
2.1 Swadeshi and Neo-Swadeshi
3 Research Questions and Research Objectives
4 Theoretical Background
4.1 The Discourse-Theoretical Approach
4.2 Discursive-Material Knot
4.3 Antagonism, the Logic of Equivalence, and the Logic of Difference
4.4 Dislocation and Invitation
5 Methodology
5.1 Data Collection and Coding
5.2 Data Analysis
6 Findings
6.1 The Swadeshi Discourse
6.2 Localist Discourse
7 Discussion
7.1 COVID-19 as an Event, and Its Materiality
7.2 The COVID-19 Pandemic and the Dislocatory Moment of the Swadeshi Discourse
8 Conclusion
References
FDI in the Era of the Pandemic: Public Health as a New Country Risk Measure
1 Introduction
2 Conceptual Background: Country Risk
2.1 Political Risk
2.2 Financial Risk
2.3 Economic Risk
2.4 Natural Risk
3 Research Context: COVID-19 and Foreign Direct Investment
4 Data and Methodology
4.1 Data
4.2 Methodology
5 Findings
5.1 FDI Inflow and COVID Mortality
5.2 FDI Inflow and Regulatory Quality
5.3 FDI Inflow and Healthcare Expenditure
5.4 Healthcare Expenditure and Regulatory Quality
5.5 COVID Mortality and Health Expenditure
5.6 COVID Mortality and GDP Per Capita
6 Discussion
6.1 Contribution to the Literature
6.2 Contribution to Policy Formulation
7 Limitations and Directions for Future Research
References
Business Innovation and Strategy
E-Commerce Adoption by Women Microentrepreneurs in Malaysia
1 Introduction
2 Conceptual Framework and Hypotheses Development
2.1 Technology Acceptance Model (TAM)
2.2 The Perceived Usefulness (PU) and Perceived Ease of Use (PEOU) of ICT
2.3 Fixed Versus Growth Mindsets and Technology Acceptance
2.4 Growth Mindset as a Determinant of the Perceived Ease of ICT Use
3 Data Collection and Empirical Results Analysis
3.1 Questionnaire Design and Sample Description
3.2 Data Analysis and Methodology
3.3 Determination of the Number of Factors
4 Results
4.1 Hypotheses Testing Results
5 Discussion and Practical Implications
6 Limitations and Future Directions for Research
7 Conclusion
Appendix
References
COVID-19 and the Metamorphosis of the F&B Industry in Malaysia
1 Introduction
2 Literature Review
2.1 Business Model
2.2 Sensing
2.3 Seizing
2.4 Transforming
2.5 The Impact of Digitalization and COVID-19 on  the F&B Business Model
3 Study Context and Methodology
4 Findings
4.1 Sensing
4.2 Seizing
4.3 Transforming
5 Discussion
References
The Perfect Storm: Navigating and Surviving the COVID-19 Crisis
1 Introduction
2 Literature Review
3 Research Method
4 Results, Discussion, and Implications
4.1 How the COVID-19 Pandemic Has Affected Six Tourism Sub-Sectors in Bali
4.2 A Typology of Survival and Recovery Strategies
4.3 Implications
5 Limitations and Future Research Directions
References
China’s Digital Commerce: The Recovery Strategies of Hospitality and Tourism Businesses During the COVID-19 Crisis
1 An Overview of China’s Digital Commerce Landscape
2 A Shift in Travel Patterns Due to Safety Concerns
3 Dynamic Capabilities as the New Competitive Advantage
3.1 Business Resumption and the Recovery of Digital Commerce Activities at Different Touchpoints
3.2 Other Determinants Contributing to a Fast Recovery
4 Key Implications and Learnings
4.1 Challenges Resulting From Digital Commerce Activities
4.2 Learnings
References
Socio-Economic Change
Effects of COVID-19 on Mental Health in Business: Increasing the Hikikomori-Like Workers in Japan
1 Introduction
2 Online Surveys to Analyze the Impact of COVID-19 Among Workers in Japan
3 Mental Health Associated with Hikikomori
4 Does COVID-19 Increase the Number of Hikikomori?
5 Conclusion
Appendix A: Hikikomori Questionnaire (HQ-25) [English Version]
Appendix B: The 22-item Tarumi’s Modern-Type Depression Trait Scale (TACS-22): English Version
References
Consumer Behavior During and Post-COVID-19 in Indonesia and Malaysia
1 Introduction
2 Consumer Behavior During the COVID-19 Pandemic: The Early Stage
2.1 Indonesia
2.2 Malaysia
3 Consumer Behavior in the New Normal
3.1 The New Normal in Indonesia
3.2 The New Normal in Malaysia
4 Concluding Remarks: Key Insights and Implications
References
Responses to the COVID-19 Pandemic: Exploring Leakage and Opportunities Along the Maldives’ Tourism Value Chain
1 Introduction
2 Background of Tourism Development in the Maldives
3 The Tourism Value Chain
4 Endogenous Growth Theories
5 Economic Leakage and Opportunities
5.1 The Construction Sector
5.2 The Agriculture Sector
5.3 The Handicraft Sector
6 Conclusion
References
Transformation of Personal Selling During and After the COVID-19 Pandemic
1 Introduction
2 How Has the COVID-19 Pandemic Changed the PSP?
2.1 Political Changes
2.2 Economic Changes
2.3 Social-Cultural Changes
2.4 Technological Changes
3 The Personal Selling Transformation Framework
4 Components of the Personal Selling Transformation Framework
4.1 Psychological Capital (PsyCap)
4.2 Learning Orientation (LO)
4.3 Work Process
4.4 The Use of Technology
5 Implications
6 Conclusion
References
COVID-19 and the Evolving Business Environment: From the Lens of Three Innovation Theories
1 Introduction
2 Schumpeter’s Theory of Innovation
3 Barney’s Resource-Based View Theory
4 Roger’s Diffusion of Innovation Theory
5 Conclusion
References
Correction to: COVID-19 and the Evolving Business Environment in Asia
Correction to: A. O. J. Kwok et al. (eds.), COVID-19 and the Evolving Business Environment in Asia, https://doi.org/10.1007/978-981-19-2749-2

Citation preview

Andrei O. J. Kwok Motoki Watabe Sharon G. M. Koh   Editors

COVID-19 and the Evolving Business Environment in Asia The Hidden Impact on the Economy, Business and Society

COVID-19 and the Evolving Business Environment in Asia

Andrei O. J. Kwok · Motoki Watabe · Sharon G. M. Koh Editors

COVID-19 and the Evolving Business Environment in Asia The Hidden Impact on the Economy, Business and Society

Editors Andrei O. J. Kwok Department of Management School of Business Monash University Malaysia Bandar Sunway, Malaysia Sharon G. M. Koh Department of Economics School of Business Monash University Malaysia Bandar Sunway, Malaysia

Motoki Watabe School of Business Monash University Malaysia Bandar Sunway, Malaysia Sunway University Business School Sunway University Bandar Sunway, Malaysia

ISBN 978-981-19-2748-5 ISBN 978-981-19-2749-2 (eBook) https://doi.org/10.1007/978-981-19-2749-2 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022, corrected publication 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Acknowledgements

This publication is funded by Monash University Malaysia Global Asia in the twenty first Century (GA21) Multidisciplinary Funding Platform. The editors are grateful to all the authors for contributing their chapters to this book. Special thanks to all reviewers who provided valuable comments to the authors. We also thank all at Springer who assisted in publishing the book.

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About This Book

This book brings together valuable insights about the impact of the COVID-19 pandemic on the business environment from an Asian perspective. While some businesses in Asia have been swift to embrace the new normal, others have found the disruption to the traditional way of doing business challenging. Businesses are striving to respond, adapt, and thrive under the shadow of the unprecedented upheaval to the business environment that has forced them to rethink their strategies, processes, and operating models. There seems to be a consensus among business scholars and stakeholders that the continuous embrace of change and transformation of business models will assist businesses to sustain a long-term competitive advantage. The chapters in this book explore shifts in business innovation and strategies linked to the “new normal” of doing business during the pandemic, bringing to light issues, challenges, and opportunities that firms can expect to face in their need to ensure sustainability post-pandemic and beyond.

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Contents

Introduction COVID-19 and the Transformation of the Business Environment . . . . . . Andrei O. J. Kwok, Motoki Watabe, and Sharon G. M. Koh

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Industries and the Economy Japanese Prefer to Have Face-to-Face Communication in the Workplace Even During the Pandemic . . . . . . . . . . . . . . . . . . . . . . . . . Motoki Watabe, Tomoya Murakami, and Minoru Nagata

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COVID-19 Implications for Tourism: Shifts, Trends, Challenges, and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Andrei O. J. Kwok and Sharon G. M. Koh

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COVID-19 and India’s Flirtation with Localism . . . . . . . . . . . . . . . . . . . . . . Shafiullah Anis and Juliana A. French FDI in the Era of the Pandemic: Public Health as a New Country Risk Measure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lianne M. Q. Lee, I-Chieh Michelle Yang, and Motoki Watabe

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Business Innovation and Strategy E-Commerce Adoption by Women Microentrepreneurs in Malaysia . . . . Grace H. Y. Lee and Mohd Haidir Anuar Bin Zubir

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COVID-19 and the Metamorphosis of the F&B Industry in Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Siti Aqilah Jahari, Juliana Angeline French, and Aminath Shaba Ismail The Perfect Storm: Navigating and Surviving the COVID-19 Crisis . . . . 145 Fandy Tjiptono, Ida Bagus Gede Adi Permana, Andhy Setyawan, and I. Putu Esa Widaharthana

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China’s Digital Commerce: The Recovery Strategies of Hospitality and Tourism Businesses During the COVID-19 Crisis . . . . . . . . . . . . . . . . . 173 Yean Shan Beh, Yit Sean Chong, and Xinyi Li Socio-Economic Change Effects of COVID-19 on Mental Health in Business: Increasing the Hikikomori-Like Workers in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 Motoki Watabe, Hiroaki Kubo, Kazumasa Horie, Ryoko Katsuki, Itsuki Yamakawa, Shinji Sakamoto, and Takahiro A. Kato Consumer Behavior During and Post-COVID-19 in Indonesia and Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 Fandy Tjiptono, Ghazala Khan, Soo Yeong Ewe, and Maria Dharmesti Responses to the COVID-19 Pandemic: Exploring Leakage and Opportunities Along the Maldives’ Tourism Value Chain . . . . . . . . . . 235 Audrey K. L. Siah and Lilian M. L. Chan Transformation of Personal Selling During and After the COVID-19 Pandemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 Soo Yeong Ewe and Helen Hui Ping Ho COVID-19 and the Evolving Business Environment: From the Lens of Three Innovation Theories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281 Andrei O. J. Kwok, Motoki Watabe, and Sharon G. M. Koh Correction to: COVID-19 and the Evolving Business Environment in Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Andrei O. J. Kwok, Motoki Watabe, and Sharon G. M. Koh

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Introduction

COVID-19 and the Transformation of the Business Environment Andrei O. J. Kwok , Motoki Watabe , and Sharon G. M. Koh

Abstract In this chapter, the editors introduce this book of valuable insights about the impacts of the COVID-19 pandemic on the business environment from an Asian perspective. While some businesses in Asia have been swift to embrace the new normal, others have found the disruption to the traditional way of doing business challenging. Businesses have been struggling to respond, adapt, and thrive under the shadow of the unprecedented upheaval to the business environment that has forced them to rethink their strategies, processes, and operating models. There seems to be a consensus among business scholars and stakeholders that the continuous embrace of change and transformation of business models will assist businesses to sustain a long-term competitive advantage. The chapters in this book explore shifts in business innovation and strategies linked to the “new normal” of doing business during the pandemic, bringing to light issues, challenges, and opportunities that firms can expect to face in their need to ensure sustainability post-pandemic and beyond. Keywords Business transformation · Industry and economy · Innovation and strategy · Socio-economic change

The original version of this chapter was revised: Textual correction has been updated in abstract. The correction to this chapter is available at https://doi.org/10.1007/978-981-19-2749-2_15 A. O. J. Kwok (B) Department of Management, School of Business, Monash University Malaysia, 47500 Bandar Sunway, Malaysia e-mail: [email protected] M. Watabe School of Business, Monash University Malaysia, 47500 Bandar Sunway, Malaysia e-mail: [email protected] Sunway University Business School, Sunway University, 47500 Bandar Sunway, Malaysia S. G. M. Koh Department of Economics, School of Business, Monash University Malaysia, 47500 Bandar Sunway, Malaysia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022, corrected publication 2022 A. O. J. Kwok et al. (eds.), COVID-19 and the Evolving Business Environment in Asia, https://doi.org/10.1007/978-981-19-2749-2_1

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1 Introduction The advent of the twenty-first century heralded an increasingly fluid and interactive global business landscape. However, the arrival of the COVID-19 pandemic in March 2020 has disrupted the status quo for businesses, economies, and society as a whole. Approaches to responding to the pandemic and its effects have varied widely between Asia and the West according to their unique geographic, political, social, and cultural differences. This book offers a collection of interdisciplinary contributions that document some of the hidden impacts faced by businesses and societies in Asia from the impacts of the pandemic. The chapters capture business and societal responses to an evolving Asian business landscape and describe how businesses and society are adapting or transforming to meet the challenges and opportunities of the new normal arising from the pandemic.

1.1 Aim of the Book and the Approach to the Research Although the evolution of the global business landscape due to the effects of the COVID-19 pandemic has affected all industries, particularly travel and tourism, hospitality, the media and communications, marketing, and information and communications technology (Donthu & Gustafsson, 2020), several questions about the pandemic’s effects remain unanswered, such as: 1. How are the exponential changes resulting from the pandemic impacting Asian economies, businesses, and societies? 2. What are the underlying business responses to the pandemic? 3. How can businesses thrive in an evolving landscape that is creating a new normal? 4. What solutions or strategies can businesses, governments, and policymakers enact to counter the disruption caused by the pandemic during and after it? 5. How has the pandemic affected individuals, and how have they responded to the changes brought about by it? To answer these overarching questions, this book provides conceptual case studies or empirical evidence that blend inter-disciplinary perspectives to document how the business environment has evolved and how businesses in emerging and developed economies in Asia have responded to the evolution. By drawing from theoretical lenses of their respective disciplines, the authors of each chapter have captured the nuances of the changing business environment through their contributions. Their insights and findings are generalizable to both Asian and Western contexts, and all chapters were subjected to a rigorous double-blind peer review.

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1.2 Main Themes This book is structured around three major themes of industries and the economy, business innovation and strategy, and socio-economic change. Descriptions of the content of chapters within each theme are provided in the sub-sections below.

1.2.1

Theme 1: Industries and the Economy

The first theme focuses on industries and the economy and encompasses insights into the impact of the pandemic on various Asian countries. In this section, Chap. 2: Japanese Prefer to Have Face-to-Face Communication in the Workplace Even During the Pandemic by Watabe, et al. (2022b), explores the concept of “loyalty to work” among Japanese workers. The office culture in Japan is unique in that Japanese workers opted to continue commuting to the office despite the health risks posed by the pandemic. Watabe et al. (2022b) observed that Japanese workers viewed going to the workplace as meaningful behavior. While this behavior may appear to strengthen the collectivist work culture, the authors offer a different explanation by combining insights from three prominent theories: Maslow’s hierarchy of needs theory, the theory of cultural-self, and cultural leadership theory. Chapter 3: COVID-19 Implications for Tourism: Shifts, Trends, Challenges, and Opportunities by Kwok and Koh (2022) draws from the chaos and complexity theory to examine the shifts, trends, challenges, and opportunities arising from the pandemic. Globally, the risk of infection from travel, and the measures taken to mitigate the risk of infection (i.e., lockdowns and closed international borders), made tourism almost impossible. The authors perform a systematic review of the literature and analyze the content of COVID-19-specific studies in twenty-four leading hospitality and tourism journals. Their findings reveal three main and five associated sub-thematic knowledge areas based on scholarly work that document the immediate impact of the pandemic. By identifying knowledge gaps in the research, this chapter paves the way for other studies on subjects that need further attention. The following chapter, Chap. 4: COVID-19 and India’s Flirtation With Localism by Anis and French (2022), draws from the discourse theory and studies how India has struggled with a rise in right-wing sentiments (neo-Swadeshi) over left-wing progressive localism policies (Swadeshi) advocated by the government amidst the pandemic. The authors identify an ideological clash whereby, on the one hand, the government has tried to reduce reliance on Chinese companies by substituting them with Western multinational companies and by shifting supply bases from China to India using localism policies. These localism policies are rooted in an anti-industrial and anti-modern worldview that focuses on a self-reliant moral economy. On the other hand, the neo-Swadeshi attitudes embraced by the right-wing are religionationalist, anti-multinationalist, and anti-globalization. Learning from India, the findings demonstrate how a significant event such as the COVID-19 pandemic can have immense implications on government policies.

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One path to economic recovery from the pandemic is through foreign direct investment (FDI). The spillover effects from FDI include technological infrastructure, technical know-how, and human capital development. The discussion surrounding FDI in Asia provides the setting for Chap. 5: FDI in the Era of a Pandemic: Public Health as A New Country Risk Measure by Lee et al. (2022). According to the authors, as most Asian economies are dependent on FDI, how a country’s risk is assessed will significantly change after the pandemic, influencing their respective attractiveness to foreign investors. Foreign investors are becoming more attuned to the vulnerability of countries in handling public health crises from the lessons learned from the COVID-19 pandemic and this is engendering a new way of assessing country risk before making an investment decision. Thus, Lee et al. (2022) propose new country risk measures to complement existing socio-political and economic risk measures, which is timely since it contributes to the scholarly understanding of international finance.

1.2.2

Theme 2: Business Innovation and Strategy

The second theme of the book focuses on business innovation and strategy. The theme incorporates insights into how businesses have responded and adapted to the pandemic by shifting their existing approach and embracing innovation. Section 2 provides four chapters that look at the strategies that businesses have employed to overcome the adverse effects of the pandemic. These strategies consist of a combination of product, process, and technological innovations, as well as business model changes. Chapter 6: E-Commerce Adoption by Women Micro-Entrepreneurs in Malaysia by Lee and Zubir (2022) reveals that the pandemic drove women microentrepreneurs to adopt e-commerce. Micro-entrepreneurs have been severely affected by the pandemic and many have struggled to stay afloat. Lee and Zubir (2022) noted that e-commerce platforms have seen an enormous surge in transactions and this trend is expected to stay post-pandemic. It is a crucial time to beef up digital transformation efforts among women micro-entrepreneurs to build a more inclusive economy. To do so, the authors seek to understand the determinants of business resilience during the pandemic and the major challenges facing women micro-entrepreneurs in adopting e-commerce By combining theoretical insights from the technology acceptance model (TAM) and literature covering the growth mindset, the authors suggest that a belief change among women micro-entrepreneurs would help them to embrace digital technology. Chapter 7, COVID-19 and the Metamorphosis of the F&B Industry in Malaysia by Jahari et al. (2022), investigates the transformation of Malaysia’s food and beverage (F&B) industry by offering an array of discussions on innovative digitalization strategies. Based on the concept of dynamic capabilities, this chapter demonstrates how F&B businesses continue to remain resilient in coping with the challenges and constraints posed by the COVID-19 pandemic. The authors undertook a thorough investigation of media and online reports to understand the role of dynamic capabilities in helping businesses sense and seize new opportunities through digitalization.

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Their findings identify several endeavors of food operators, ranging from making changes to traditional bricks-and-mortar dine-in practices to integrating digital servitization, as they seek to reshape their customer value propositions by changing their service methods and processes and product portfolio to engage better with their customers. For example, some F&B companies have remodeled their business operations by forming partnerships with delivery super app companies, while others became more cost-effective and profitable by transforming themselves into cloud kitchens. Chapter 8: The Perfect Storm: Navigating and Surviving the COVID-19 Crisis by Tjiptono et al. (2022b) explores the strategies that tourism and hospitality companies in Bali have adopted to help them navigate through and survive the pandemic. As Indonesia’s leading tourism destination, Bali has been especially hard hit by the pandemic since most businesses on the island are reliant on tourism. The authors interviewed sixteen prominent representatives from fifteen companies in six leading hospitality and tourism sub-sectors. From an analysis of the interviews and archival data, the authors suggest that businesses in Bali’s tourism sector adopted four types of survival and recovery strategies, namely: (1) efficiency (cost control and organizational restructuring), (2) adaptation (changing and realigning business processes and service delivery, and ensuring compliance with health protocols, (3) retargeting (shifting and extending target markets), and (4) innovation (exploring and exploiting new opportunities). The chapter concludes by proposing that tourism and hospitality businesses benchmark the formulation and implementation of their strategies according to the chapter’s findings. Chapter 9: China’s Digital Commerce: The Recovery Strategies of the Hospitality and Tourism Businesses During the COVID-19 crisis by Beh et al. (2022) provides a discourse on business recovery strategies in China’s tourism sector from a digital commerce perspective. Following a detailed discussion on the digital commerce landscape in Asia, the chapter recommends enhancing the dynamic capabilities of firms and encouraging greater reliance on digitalization and social commerce. Like most chapters in this book, Beh et al. (2022) highlight the need for appropriate infrastructure and strategic directives from the government to aid the industry’s postpandemic revitalization and recovery.

1.2.3

Theme Three: Socio-Economic Change

The final theme of the book explores socio-economic change. The theme comprises examinations of how societies have responded to the pandemic. Within this theme, five studies offer perceptions into the cognitive or behavioral changes that have occurred in societies during the pandemic. Chapter 10, Effects of COVID-19 on mental health in business: Increasing the hikikomori-like workers among workers in Japan by Watabe et al. (2022a), analyzes the mental health of workers, which has become an alarming issue related to the pandemic. The chapter is one of the few COVID-19 studies that have examined the mental health of Japanese workers and that have proposed methods for the early detection of mental health issues. The authors

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review recent literature and data to argue the possibility that the Japanese government’s policy of restricting leaving home would increase the number of severe social withdrawal (hikikomori). Consequently, hikikomori has become a significant social problem not only in Japan but also in other parts of the world. The authors conclude the chapter by proposing lifestyle changes that incorporate the post-pandemic new norm for better mental health. They also highlight the chapter’s contribution to knowledge in the areas of business and medical science. The study by Tjiptono et al. (2022a) on Consumer Behavior During and PostCOVID-19 in Indonesia and Malaysia in Chap. 11 is a comparative study that uses documentary analysis to examine changes in consumer behavior. The authors document four specific consumer behaviors spurred by the partial or complete lockdowns at distinct phases of the pandemic. These are reacting behavior, resisting behavior, adapting behavior, and entrepreneurial behavior. The chapter provides insights into innovative marketing opportunities that tap into modern technologies and social media. The pandemic offers prospects for businesses to discover and implement innovative product handling and delivery processes due to health and safety concerns. Chapter 12, Responses to the COVID-19 Pandemic: Exploring Leakage and Opportunities Along the Maldives’ Tourism Value Chain by Siah and Chan (2022), analyzes the Maldivian tourism industry by drawing from the endogenous growth theory. The authors discuss the implications of COVID-19 on the economy before and after the pandemic. Due to a lack of factor endowments and natural resources, the Maldivian economy is heavily dependent on tourism and is therefore vulnerable to external shocks. The authors identify three areas of economic leakage along the tourism value chain (i.e., in the construction, agriculture, and local handicrafts sectors) where the dependency on foreign labor and imports is highest. The authors suggest retaining as much post-pandemic tourism revenue as possible by shifting from dependency on foreign workers and imports to increasing local participation through training, human capital development, and adopting and innovating vertical farming methods to increase food self-sufficiency and security. Another area dramatically affected by the pandemic is personal or direct selling. As personal selling has traditionally relied on face-to-face interactions, the pandemic has increased the vulnerability of the personal selling process. Chapter 13: Transformation of Personal Selling During and After the COVID-19 Pandemic by Ewe and Ho (2022) investigates how the pandemic has changed personal selling. According to the authors, the pandemic has considerably impacted conventional personal selling and business practices in the financial services sector. The authors propose a transformational framework for personal selling to help sales personnel overcome the challenges posed by the COVID-19 pandemic. The framework consists of the four interconnected components of psychological capital, learning orientation, work processes, and the use of technology. The concluding chapter, Chap. 14, COVID-19 and the Evolving Business Environment: From the Lens of Three Innovation Theories, by the book’s editors Kwok et al. (2022), examines the evolving business environment and the new normal using three innovation theories. The editors first assessed how businesses are driven to innovate based on Schumpeter’s (1942) innovation theory. With the COVID-19 pandemic

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catalyzing the creative destruction of inefficient businesses, a rethink of existing business models is necessary to stimulate innovation for survival. Next, drawing from Barney’s (1991) resource-based view theory, the editors presented the case for businesses to innovate by utilizing available resources and incorporating technologies to develop a sustained competitive advantage. Rogers’ (2003) diffusion of innovation theory then explores how the pandemic has increased the rate of diffusion of innovation, thereby stimulating social changes at the organizational and country level. The realizations from this chapter offer policymakers an understanding of how to ensure that digital transformation contributes to the economy in the post-pandemic era.

2 Conclusion This introductory chapter reviewed the issues related to the changing business environment linked to the COVID-19 pandemic. We also outlined and presented an overview of the thirteen chapters based on three major themes. The chapters consequently address several research questions arising from the impacts of the COVID-19 pandemic on businesses in Asia: how have businesses responded to the pandemic?, how have they thrived in the evolving environment?, and what strategies have they used to overcome the disruption brought on by the pandemic?. The chapters covered in this book will be of interest to students, academicians, researchers, and policymakers that are keen on understanding the impact of the COVID-19 pandemic from an Asian perspective. In particular, interdisciplinary and multidisciplinary scholars and researchers who are keen to explore the impact of the pandemic on businesses and societies in Asia will benefit from the book.

References Anis, S., & French, J. (2022). COVID-19 and India’s flirtation with localism. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-98119-2749-2 Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108 Beh, Y. S., Chong, Y. S., & Li, X. (2022). China’s digital commerce: The recovery strategies of the hospitality and tourism businesses during the COVID-19 crisis. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2 Donthu, N., & Gustafsson, A. (2020). Effects of COVID-19 on business and research. Journal of Business Research, 117, 284. https://doi.org/10.1016/j.jbusres.2020.06.008 Ewe, S. Y., & Ho, H. H. P. (2022). Transformation of personal selling during and post COVID-19 pandemic. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2

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Jahari, S. A., French, J., & Ismail, A. S. (2022). COVID-19 and the metamorphosis of the F&B industry in Malaysia. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2 Kwok, A. O. J., & Koh, S. G. M. (2022). COVID-19 implications for tourism: Shifts, trends, challenges and opportunities. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2 Kwok, A. O. J., Watabe, M., & Koh, S. G. M. (2022). COVID-19 and the evolving business environment: From the lens of three innovation theories. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2 Lee, G. H. Y., & Zubir, M. H. A. (2022). E-Commerce adoption by women micro-entrepreneurs in Malaysia. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2 Lee, L. M. Q., Yang, I. C. M., & Watabe, M. (2022). FDI in the era of a pandemic: Public health as a new country risk measure. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2 Rogers, E. (2003). Diffusion of innovations (5th ed.). Free Press. Schumpeter, J. (1942). Capitalism, socialism, and democracy. Allen and Unwin. Siah, A. K. L., & Chan, L. (2022). Responses to the COVID-19 pandemic: Exploring leakage and opportunities along the Maldives’ tourism value chain. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2 Tjiptono, F., Khan, G., Ewe, S. Y., & Dharmesti, M. (2022a). Consumer behavior during and postCOVID-19 in Indonesia and Malaysia. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2 Tjiptono, F., Pernama I. B. G. A., Setyawan, A., & Widaharthana, I. P. E. (2022b). The perfect storm: Navigating and surviving the COVID-19 crisis. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2 Watabe, M., Kubo, H., Horie, K., Katsuki, R., Yamakawa, I., Sakamoto, S., & Kato, T. A. (2022a). Effects of COVID-19 on mental health in business: Increasing the hikikomori-like workers among workers in Japan. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2 Watabe, M., Murakami, T., & Nagata, M. (2022b). Japanese prefer to have face-to-face communication in the workplace even during the pandemic. In A. O. J. Kwok, M. Watabe, & S. G. M. Koh (Eds.), COVID-19 and the evolving business environment in Asia: The hidden impact on the economy, business and society. Springer. https://doi.org/10.1007/978-981-19-2749-2

Dr. Andrei Kwok is a Senior Lecturer at the Department of Management, School of Business, Monash University Malaysia. He holds a Ph.D. in Management from Monash University Malaysia. His research focuses on decision-making behavior (trust and cooperation) and emerging/frontier technologies (blockchain, XR, A.I., etc). Andrei has published multidisciplinary and interdisciplinary papers in several leading international journals. Before joining academia, he has managed international R&D teams in global technology firms.

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Professor Motoki Watabe After graduated and obtained MA in Hokkaido University, Japan, Motoki obtained Ph.D. in sociology at University of California, Los Angeles. Specific major was social psychology and organizational behavior. He started his academic career at Kyoto University, Japan, and he moved to Waseda University in 2007. He joined Monash University, Malaysia in 2013 as an associate professor at Department of Management, School of Business, and served as the vice-director of Neurobusiness Behavioural Laboratory from 2014–2018, the director of Graduate Research from 2015–2018 and the director of Neurobusiness Behavioural Laboratory from 2018–2022. He joined Sunway University, as a professor and the head of Department in Management, Sunway Business School. He has been working on the emergence of trust, fairness, and cooperation in organization and society with behavioral experimental and neuroscientific methods. Dr. Sharon Koh currently lectures at Monash University Malaysia. She holds a Ph.D. in Economics from Monash University. Her research lies in the impact of globalization on societies in Asia, particularly on inclusiveness, growth, and income inequality. She was a visiting research fellow at Harvard University (Fall, 2015), and a recipient of an Education Excellence award in Melbourne. She has also obtained an international travel grant from the Asian Development Bank Institute to present her research in Tokyo.

Industries and the Economy

Japanese Prefer to Have Face-to-Face Communication in the Workplace Even During the Pandemic Motoki Watabe , Tomoya Murakami, and Minoru Nagata

Abstract Even under the Covid-19 pandemic, Japanese workers prefer to go to their workplaces physically, engaging in face-to-face communication rather than online. We provide a hypothetical explanation for this “irrational appearing” phenomenon from two theoretical perspectives. From the view of cultural leader decision making, we argue that Japanese leaders’ decision-making style would require more face-toface rather than online communication for efficient business practices. Form the view of Maslow’s hierarchy of needs, we show that Japanese workers also have internal motivation to have face-to-face communication for fulfilling their lower levels of needs. Finally, we discuss that these two explanations are complimentary and mutual reinforcing through the lens of cultural psychology theory. Keywords Culture · Leadership Decision Making · Japanese organization · Cultural Self · Maslow’s hierarchy of needs

1 Introduction The purpose of this paper is to provide a systematic analysis of the characteristics of Japanese work culture based on the ways Japanese people worked during the pandemic. The global pandemic of Covid-19 has given a major impact on many aspects of our life styles, and the way we do business is no exception. There has been an increase of online work and a significant decrease of face-to-face meetings M. Watabe (B) School of Business, Monash University Malaysia, 47500 Bandar Sunway, Malaysia e-mail: [email protected] Sunway University Business School, Sunway University, 47500 Bandar Sunway, Malaysia T. Murakami Hitolab.JP Inc., Tokyo, Japan e-mail: [email protected] M. Nagata Ritsumeikan University Business School, Ritsumeikan University, Kyoto, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 A. O. J. Kwok et al. (eds.), COVID-19 and the Evolving Business Environment in Asia, https://doi.org/10.1007/978-981-19-2749-2_2

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that involve physical contacts. Although this trend had already started before the pandemic in the U.S. and other developed countries, it has been accelerated by the global pandemic. A number of research have reported on how business and the workplace have changed since the pandemic (e.g., Ahmad, 2020; Atkeson, 2020; Basu et al., 2020; Kaushik & Guleria, 2020; Singh & Singh, 2020). Whereas we agree that these studies have great significance, this chapter takes a contrasting perspective to them. Our study is an analysis of what remains the same even under the pandemic with such a large impact. Especially, since “what remains the same” varies across different cultures, it would demonstrate the existence of a very strong cultural trait that deserves consideration. This method of analysis has been used in sociology and cultural anthropology. For example, Tilly (1995) studied the regions that did not participate in the French Revolution and found that they were resistant to the revolution because civilization process had unmatured in those regions. Similarly, we intend to find the reasons specific to a certain region by analyzing what people do not want to change. Whereas Tilly’s analysis was a comparison within France, this pandemic is happening on a global scale. Therefore, we will use culture as our unit of analysis. We will focus on the cultural psychological mechanisms by which cultural characteristics influence people’s behavior and policy decisions during a pandemic and interact with each other (Kitayama et al., 2022). From this point of view, this study examines the “Japanese way of working.” As mentioned earlier, online work has become the standard way in the world with the pandemic, especially in developed countries. According to a survey by Japanese government, as of December 2020, the implementation rate of online work in the U.S. is 53.8%, while in Japan it is only 23.2% (Ministry of Land, Infrastructure, Transport and Tourism, Japan, 2020). Another survey (Brynjolfsson et al., 2020) reveals that the member of remote workers in the U.S. have increased four times during pandemic (2019–2020 May). On the other hand, those in Japan increased only twice during the same period (Ministry of Land, Infrastructure, Transport and Tourism, Japan, 2021). In addition, a comparative study of telework penetration rates in Japan, China, the U.S., South Korea, Sweden, the U.K., Italy, and Germany reports that Japan has the lowest penetration rate (Mori, 2020). These comparisons suggest that Japanese workers are less willing to work remotely than other countries’ workers. The evaluation of remote work also differs greatly between the U.S. and Japan. According to a survey conducted by Japanese government, 42.1% of Americans think that remote work has increased their productivity, while only 3.9% of Japanese think so. (Cabinet Secretariat, & Ministry of Economy, Trade, and Industry, Japan, 2020). In fact, many Japanese have wanted to go to work even during the pandemic, and it was often reported in the news that major stations in Tokyo were crowded with a vast number of business persons (Mizokami, 2021; Persol Research & Consulting, 2020). In their review paper on various surveys in Japan, Goto and Hamano (2020) also concluded that majority of Japanese workers have negative evaluation against online work than positive evaluation. Online work has been becoming more common in North America, Europe, and many Asian countries. These countries have been trying to promote online work,

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and the pandemic has facilitated it. Thus, many studies have focused not on the pros and cons of online work, but rather discuss how to make it more efficient (e.g., Ozimek, 2020; Sull et al., 2020). It is an exceptional phenomenon in Japan that people choose to physically go to work for face-to-face communication even under the pandemic. Why does it happen? In this chapter, we examine this question from the perspective of cultural and psychological characteristics of Japan. Here, we propose two hypotheses for our analysis. One is that there are external incentives unique to Japan for workers to go to work and engage in face-to-face communication. More specifically, in terms of cultural characteristics of leadership decision, we believe that incentives are generated by the decision-making style of Japanese leaders as indicated by Meyer (2017). The other hypothesis is that Japanese workers have internal/psychological motivations. We will discuss this based on Maslow’s Hierarchy of Needs theory. This will show that the Japanese work environment requires for Japanese people to fulfil their lower level needs. Furthermore, we argue that these hypotheses are not mutually exclusive and rather both complementarily explain this phenomenon. We thus argue that both of these hypotheses can explain this phenomenon, because what they share in common is a characteristic of Japanese people’s form of their “cultural self.” We will discuss this from the theoretical point of view of cultural psychology as represented by Markus and Kitayama (1991).

2 External Incentive Hypothesis—From Meyer (2017) One possible reason why Japanese people do not like to work remotely and do prefer face-to-face communication would be that Japanese organizational culture has incentives to require face-to-face work. The cultural mapping of leadership decision-making presented by Meyer (2017) supports this explanation. Mayer (2017) categorized leaders’ decision making in two dimensions (Fig. 1). One is the Top Down-Consensual dimension, which indicates who makes decisions. This specifies whether decisions are made independently by individuals in high positions or whether they tend to be made through consensus building by multiple people. The other dimension indicates the attitude in decision making, meaning whether it tends to be Egalitarian or Hierarchical. According to the mapping in Fig. 1, countries fall into one of four categories (2 × 2). The U.S., Canada, the U.K., and Australia fall into the Top Down-Egalitarian category; the Netherlands and Nordic countries fall into the Consensual-Egalitarian category; China, India, Russia, the Middle East, and some South American countries fall into the Top Down-Hierarchical category; and Japan, Germany, and Belgium fall into the Consensual-Hierarchical category. We particularly focus on the ConsensualHierarchical category in this chapter. First, we note that Germany and Belgium are mild in these characteristics, while only Japan is quite extreme. Hierarchical decision making itself has been common not

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Fig. 1 Mapping Leadership Cultures. Source Authors recreated based on Meyer (2017)

only in Japan but also in East Asia such as China and South Korea. If an organization have a hierarchical decision system, business will move faster with a Top-Down type decision makings. However, Japanese decision making is rather consensual. Why did Japan become the only country to become Consensual? Mayer (2017) does not provide the answer. Top-down decision making tends to increase the dissatisfaction of workers, especially subordinates, whereas this decision-making makes it possible quick and speedy business practices. Typically, Western business has tried to solve this problem by shifting to an Egalitarian approach, but in East Asia, due to the influence of Confucianism, Egalitarian thinking has not historically been prevalent. Therefore, China maintains Top Down-Hierarchical decision making by strengthening the power of leaders and maintaining an authoritarian culture. According to Chiba (2003), who studied the transition of decision-making styles in Japanese business, after World War II, mainly in manufacturing industries, the decision-making style of Japanese leaders was also Top Down-Hierarchical. However, in the 1970s, as companies tried to respond to the diversification of consumers’ needs and expanded into the global market, it became difficult to solve the branch-specific problems by the top-down instructions. As a solution, top managers began to delegate decision-making itself to middle management and the field leaders, rather than making decisions by themselves (Chiba, 2003). This trend can be seen

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not only in the manufacturing industries but also in many other Japanese companies. After a major failure due to the excessive power of the military at World War II, Japan became wary of authoritarianism and the government did not give strong authorities to organizations. In a strongly hierarchical organization, middle managers and front-line workers cannot make decisions without considering the influences for all stakeholders in an organization and obtaining their consent to implement the decision. In our view, this is the historical reason why Japan has become extremely Consensual-Hierarchical. The process of obtaining consensus requires much more time and communication than Top Down. The informal procedures for obtaining a consensus are called “Nemawashi” and the formal procedures are called “Ringi,” both are considered to be unique decision-making methods in Japanese organizations. In many Japanese companies, it is customary to conduct the Nemawashi in advance of the formal decision-making to ensure that the decision-making process would proceed without any problems (Sagi, 2015; Watabe, et al., 1992). In order to lay the groundwork, it will be necessary for decision makers to have individual informal meetings with stakeholders and persuade them by talking about the background and reasons for decisions. Such informal conversations are often held in non-working hours or at dinner gatherings after work hours. In online work, basically only formal decision making takes place, and it is difficult to create informal opportunities for laying the groundwork. In other words, the Japanese-style decision-making procedures are hindered in online work settings. This creates a strong incentive for physical face-to-face communication in the workplace. The research report by Cabinet Secretariat, & Ministry of Economy, Trade, and Industry, Japan (2020) shows evidence for supporting this hypothesis. It shows that 89.1% of Japanese workers think that online work setting decreases productivity whereas 41.2% of U.S workers think that online work setting increases productivity. We believe this is the reason why Japanese workers in the US and Japan rate online work as less productive.

3 Internal Motivation Hypothesis—From Maslow’s Hierarchy of Needs A different hypothesis from the above discussion is that Japanese workers have internal motivations to face-to-face in the workplace, independent from external incentives. This hypothesis can be explained by Maslow’s hierarchy of needs theory. Maslow’s Hierarchy of Needs is a widely known classic theory in business administration (Maslow, 1952, 1970), although it is controversial (Wahba, & Bridwell, 1976). There is a hierarchy of five levels of human needs, and people basically try to satisfy their needs at the lower levels. From the lowest level to the highest level, there are (1) Physiological needs, (2) Safety needs, (3) Love and belongingness needs, (4)

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Fig. 2 Maslow’s Hierarchy of Needs. Source Created by J. Finkelstein, reused under the Creative Commons CC0 License

Esteem needs, and (5) Self-Actualization needs. Although there are exceptions, basically a certain need is created only after the needs at the lower levels are satisfied (Fig. 2). In order to facilitate the informal laying of groundwork described in above, it is important to know the position and personality of a person to whom you need to have consensus. For this reason, it is necessary to develop friendship with the other party and build mutual trust before laying the groundwork. The reason why Japanese companies have a custom of getting to know each other first and developing friendship before discussing business is because this will ultimately contribute to smooth organizational decision-makings. In addition, Japan’s lifetime employment system and seniority system are the major factors that make this possible. These systems control the mobility of workers within the organizations of Japanese companies, so that many people stay in a position for a long time. The more friendships these people have, the smoother the decisionmaking process and the faster the implementation. A side (and unintentional) effect of such practices is that many workers often have their own psychological safety and social needs in the company organization. In the Japanese work environment where people spend a lot of time in the workplace due to lifetime employment and seniority system and also spend a lot of time with people for non-working hours as described above, (1) physiological needs and (2) safety needs are usually met, especially in white-collar jobs. As mentioned above, informal communication for non-working hours contributes to fulfil (3) love and belongingness needs. Takahashi et al. (2008) pointed out that the personal relationships of Japanese workers contribute for smooth communication and work efficiency in the workplace.

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During the pandemic, the phenomenon of many people going out, in spite of the government’s request for restraint, occurred all over the world. Whereas the problem in Europe was that people went out for recreation, the problem in Japan was that people went out for work. This suggests that in Japan, (3) love and belongingness needs are not met by online work, nor by face-to-face interactions with family and/or roommates. “Workplace isolation” induced by Covid-19 is a psychological burden for Japanese workers.

4 Integration Through Cultural Self Theory We have discussed the structure of external incentives and of internal motivations of Japanese workers during pandemics. However, we do not argue that each explanation is independent or competing with the other. Rather, we think that these hypotheses complement and reinforce each other. The basis for this is the cultural view of the self, presented by Markus and Kitayama (1991). The self is developed through interactions with, not only, others, but also the social and cultural environment (Markus & Kitayama, 1991, 2010). Markus and Kitayama (1991) stress the importance of Independence and Interdependence in self-identity. Particularly, Western cultures tend to emphasize independence and perceive the self as distinct autonomous entities unique from other people. This encourages one to discover and express one’s unique attributes. This encourages one to discover and express one’s unique attributes. In order to achieve independence from other people, one’s self-identity is formed with reference to one’s own internal thoughts. In order to achieve independence from other people, one’s self-identity is formed with reference to one’s own internal thoughts, feelings, motivations, and actions irrespective of other people (Fig. 3A). Eastern cultures, however, place greater emphasis on interdependence, which refers to the interconnectedness of oneself to other people

Fig. 3 Cultural self. Source Authors recreated based on Markus and Kitayama (1991)

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and group membership forms an important part of self-identity. Eastern cultures, however, place greater emphasis on interdependence, which refers to the interconnectedness of oneself to other people and group membership forms an important part of self-identity. This is reflected in the overlap of one’s concept of the self to other people (Fig. 3B). Japanese people have an Interdependence self. Their self-identity is maintained in the context of their relationships with significant others. If the “significant others” are people in the workplace, the person’s identity is threatened by being cut off from interaction with the people in the workplace. Some people who have a high percentage of significant others in the workplace experience an identity crisis. A strong commitment to the workplace also affects self-identity. We argue that the combination of Japanese self-identity and strong commitment to the workplace has created the Consensual-Hierarchical decision-making style. In order for it to work in a country of Interdependent Self, a Consensual decisionmaking process was needed. In order for this to work in an Interdependence Self country, a Consensual decision-making process was necessary. “Nemawashi” and “Ringi” were practices to make Consensual decision-making, which is slower than Top Down, proceed as quickly as possible. The reason this worked in Japan was because of one unintended effect. The lifetime employment and seniority systems of Japanese organizations have reduced the mobility of workers and demanded a strong commitment to the organization. Organizations have provided generous benefits to workers to encourage long-term commitment. For example, company housing placement is such benefits. Families from the same company can live together as a community in the same place at a lower rental rate. These benefits have been common in Japanese companies more than 50 years. In such an environment, people at work are more likely to become part of the self as “significant others. As shown in Fig. 4A and B, even in the same category of Interdependent Self, the percentage of people in the workplace who form part of the self is higher in Japan. This creates a high level of loyalty to an organization

Fig. 4 General interdependence self and Japanese interdependence Self. Source Authors recreated based on Markus and Kitayama (1991)

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and a high level of internal motivation for communication within the organization, creating internal motivation for each individual to facilitate relationships within the workplace in order to fulfil Love and Belongings Needs. Based on the characteristics of the cultural self, we argue that external incentives and internal motivations mutually and complementarily reinforce to make decisionmaking process in Japanese organizations sustainable.

5 Conclusion The pressure that Covid-19 brought to Japanese organizations revealed the unique characteristics of Japanese workers and organizations. It was shown that the decisionmaking style of Japan’s unique leaders requires face-to-face communication, and that the style and cultural self-view also form internal motivations for preferring faceto-face communication, which complement each other to create sustainable cultural practices. What this discussion has shown is that face-to-face communication is essential for decision-making in Japanese organizations and is necessary to satisfy the psychological needs of Japanese people. In other words, our discussion has shown the cultural rationality behind seemingly irrational behavior. However, we should note that the above discussion is still in the hypothesis stage, and it goes without saying that more research is needed to substantiate the argument of this study. Even if this argument is correct, practical problems would exist. Facing off in the workplace during a pandemic increases health risks. It is hard to say that the current conflict between increased health risks and cultural rationality will ever be sustainable. If the pandemic is quickly resolved, Japanese cultural practices would be likely to continue. However, as the pandemic drags on and the health risks increase, the culture may change. How these changes would go largely depends on factors other than those discussed in this paper. One of the most important for sure will be productivity in online work. We believe that it will be important to be able to invent decision-making methods that can achieve the same or higher productivity without face-to-face communication. Acknowledgements We are thankful for the reviewer’s fruitful comments. They significantly contributed to improve the quality of the chapter.

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Tilly, C. (1995). The Emergence of Citizenship in France and Elsewhere. International Review of Social History, 40(S3), 223–236. https://doi.org/10.1017/S0020859000113653 Wahba, M. A., & Bridwell, L. G. (1976). Maslow reconsidered: A review of research on the need hierarchy theory. Organizational Behavior and Human Performance, 15(2), 212–240. Watabe, K., Holsapple, C. W., & Whinston, A. B. (1992). Coordinator support in a nemawashi decision process. Decision Support Systems, 8(2), 85–98.

Professor Motoki Watabe After graduated and obtained MA in Hokkaido University, Japan, Motoki obtained Ph.D. in sociology at University of California, Los Angeles. Specific major was social psychology and organizational behavior. He started his academic career at Kyoto University, Japan, and he moved to Waseda University in 2007. He joined Monash University, Malaysia in 2013 as an associate professor at Department of Management, School of Business, and served as the vice-director of Neurobusiness Behavioural Laboratory from 2014–2018, the director of Graduate Research from 2015–2018 and the director of Neurobusiness Behavioural Laboratory from 2018–2022. He joined Sunway University, as a professor and the head of Department in Management, Sunway Business School. He has been working on the emergence of trust, fairness, and cooperation in organization and society with behavioral experimental and neuroscientific methods. Tomoya Murakami Tomoya graduated from the Department of Production and Environmental Sciences, Faculty of Agriculture, Kyoto University, Japan. He stared his career at IBM Business Consulting Services and served consultant work at Willis Towers Watson. He has provided consulting services mainly in the areas of leadership development, manager training, succession planning, human resource assessment, executive coaching, organizational transformation support, engagement surveys, 360-degree surveys, corporate governance (board evaluation, management nomination), and human resource system design. In October 2016, he joined Hitlab.JP as the social architect to contribute to development of organizations and human resources not only through the transformation and evolution of a single company, but also through the upgrading of social systems and infrastructure as a whole. Professor Minoru Nagata Minoru graduated from Hitotsubashi University with a degree in sociology and received an MBA from the University of California, Los Angeles (UCLA). After working at Matsushita Electric Industrial (currently, Panasonic) and McKinsey & Company, he joined Willis Towers Watson, where he spent nearly 20 years consulting on business models, organizational models, and human resource management models. In June 2016, he left Willis Towers Watson and launched HitoLab.jp. He has been a professor at the Graduate School of Business Administration, Ritsumeikan University since 2017.

COVID-19 Implications for Tourism: Shifts, Trends, Challenges, and Opportunities Andrei O. J. Kwok

and Sharon G. M. Koh

Abstract The COVID-19 pandemic has caused a significant global decline in tourist arrivals. The economies of several developing Asian countries that depend highly on international tourism as a crucial source of income have been severely affected. Against such an exogenous shock, what are the implications for the tourism industry and, in particular, the industry in Asia? The purpose of this chapter is to review the literature specific to COVID-19 that was produced in the first six months of the crisis to reveal the critical themes, trends, and gaps from diverse fields of tourism research that may impact the future of the industry. Using data from sixty-seven journal articles retrieved from the leading twenty-four tourism journals, we identified 1,707 related terms. The quantitative contextual synthesis revealed three main clusters (ramification, adaptation, and transformation) and five associated subclusters (impact, effect on stakeholders, response, outlook, and recovery solutions). The findings provide quantified support for new and often overlooked research areas in which we believe additional work should be undertaken. Based on the literature, we discuss the implications of the pandemic on Asia. Overall, the findings imply that the tourism industry must continue responding, adjusting, and adapting with resiliency to COVID-19. Keywords Content analysis · Pandemic · Sustainability · Tourism recovery · Tourism impact · Complexity theory

A. O. J. Kwok (B) Department of Management, School of Business, Monash University, Bandar Sunway, Malaysia e-mail: [email protected] S. G. M. Koh Department of Economics, School of Business, Monash University, Bandar Sunway, Malaysia e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 A. O. J. Kwok et al. (eds.), COVID-19 and the Evolving Business Environment in Asia, https://doi.org/10.1007/978-981-19-2749-2_3

27

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A. O. J. Kwok and S. G. M. Koh

1 Introduction The COVID-19 pandemic, as an exogenous shock, has unexpectedly and significantly disrupted tourism. Not only has tourism’s predictable growth trajectory been derailed, but the industry is also facing new pressing challenges due to global travel restrictions and COVID-19 containment (World Tourism Organization [UNWTO], 2020). With tourism undergoing a systemic shock, especially in the first six months of the pandemic due to the numerous whiplash reactions, the relentless pursuit of tourism as a valuable tool for economic growth requires a pause for reflection (CárdenasGarcía & Pulido-Fernández, 2019; Everingham & Chassagne, 2020; Hall et al., 2020). The pandemic offers a transformative opportunity to rethink future tourism practices (OECD, 2020) and advance tourism research to build resiliency (Brouder, 2020; Sigala, 2020). In parallel with this, scholarly research that contributes to industry practices will need to reorient its focus, given that the industry will undoubtedly change with the establishment of new normal practices (Brouder et al., 2020). For instance, the focus on over-tourism, a growing issue pre-pandemic, will shift due to the greater postpandemic emphasis on sustainable tourism and greater alignment with the United Nations Sustainable Development Goals (UNSDGs) (Gössling et al., 2020). Meanwhile, tourism stakeholders have become more interested in adapting to the new normal beyond mere economic sustainability by building post-pandemic collaboration and resiliency (Cheer, 2020). However, in the present state of complexity, the new normal remains uncertain. Especially in Asia, where tourism is a vital source of income for several developing countries like Cambodia, Myanmar, Mongolia, Thailand, and Vietnam and demand shocks have had a spillover effect on other economic sectors (Abiad et al., 2020). What are the implications of this in Asia and how has the tourism industry responded to the pandemic? At this juncture, several leading tourism journals have sounded a clarion call and published rapidly on the effects, responses, recovery, and challenges that have occurred in tourism systems due to the pandemic (e.g. Assaf & Scuderi, 2020; Gössling et al., 2020; Gursoy & Chi, 2020; Lew et al., 2020; Rivera, 2020; Zenker & Kock, 2020). Given the diverse aims and scope of each journal, a need has arisen to clarify the interconnected contexts that have developed from the fragmented studies and academic attention that formed the immediate response to the pandemic. Underpinned by the chaos and complexity theory, this paper employs systematic content analysis (a summative-inductive approach) and uses an adapted PRISMA process (Kitchenham et al., 2009) to explore future pathways for tourism researchers and practitioners by reviewing the current state of COVID-19-related publications in the leading tourism journals. The findings will offer insights and highlight research gaps to advance the field.

COVID-19 Implications for Tourism …

29

1.1 The Severity of the pandemic’s Impact on the Tourism Industry In most Asian countries, the first COVID-19 case was detected in January 2020. Table 1 displays the severity and impact of COVID-19 on tourism in different regions. Globally, international tourism recorded a drastic fall, but its impact on tourism in Asia was more severe. Developing countries in Asia, especially those in Southeast Asia, are less resilient and prepared to manage such crises (Koh & Kwok, 2018; Kwok, 2018) and are dependent on tourism revenue. For instance, the two most affected destinations were Thailand and Malaysia, each having a share of international tourism as a share of total tourism equally at about 36%. Each contributed an estimated 7% Table 1 Severity and impact of COVID-19 on the tourism industry by region

Region

International tourist arrivals (%)a

North East Asia

−88

South East Asia

−82

South Asia

−78

Oceania

−79

YTD change by region: Asia and the Pacific

−84

South America

−72

Central America

−72

North America

−68

Caribbean

−61

YTD change by region: Americas

−68

Northern Europe

−74

Southern Europe

−71

Central/ Eastern Europe

−69

Western Europe

−65

YTD change by region: Europe −69 Middle East

−75

YTD change by region: Middle −75 East North Africa

−78

Sub-Saharan Africa

−63

YTD change by region: Africa

−69

Note Data retrieved from https://www.unwto.org/international-tou rism-and-covid-19 and compiled from January to December 2020. a Percentage change from the same period of the previous year Source World Tourism Organization (UNWTO) (2020)

30

A. O. J. Kwok and S. G. M. Koh

equally to their country’s gross domestic product (GDP).1 These developing countries have been more susceptible to the pandemic than developed Asian countries like Singapore, Korea, and China, where containment occurred swiftly (Haiqian Chen et al., 2021). Furthermore, the study by Haiqian Chen et al. (2021) demonstrated that government containment action has been more effective than mitigation action. In Asia, according to Wen et al. (2020), the pandemic has changed the consumption behavior (i.e., the lifestyle choices, travel behavior, and tourism preferences) of Chinese travelers. This will have short- and long-term implications on how businesses design their services and operate their distribution channels. A study on Chinese news coverage by Honglin Chen et al. (2020) found that changes in tourist sentiment would significantly impact tourism-related businesses. Meanwhile, according to the preliminary findings of Junxiong Li, Nguyen, et al. (2020), significant changes occurred in China in terms of post-pandemic planned travel behavior, such as the preference for private transport (cars) over the use of public transport (trains). Jianping Li, Feng, et al. (2020) found evidence that tourism enterprises in China are commonly exposed to regulatory changes, business expansion risk, and stock market risk. According to Qiu et al. (2020), residents of Hong Kong, Guangzhou, and Wuhan were willing to bear the social cost of reducing the risk of infection associated with tourism activity. Meanwhile, McCartney (2020) highlighted that in Macao, government policy measures that included allocating hotel rooms for quarantine and closing borders had managed to halt the infection rate, albeit at an economic cost. Similarly, in Korea, Choi et al. (2020) highlighted the efficacy of the government’s policy measures to limit the infection rate, citing proactive information-sharing and the use of smart technologies. On the other hand, Foo et al. (2020) reviewed the extent of the economic impact of flight and hotel booking cancellations and discussed how the Malaysian government intervened to support and incentivize the tourism industry. The above articles were written while the number of cases in Asia initially appears to be better contained than in the West. Therefore, it remains too early and difficult to assess the efficacy of government policy measures due to the subsequent wave of the virus. We hope that regardless of whether Asian or Western contexts are explored, much can be learned from all parties to overcome the pandemic.

1.2 Theoretical Consideration: COVID-19-Induced Chaos and Complexity? Chaos and complexity theory, although initially rooted in the scientific literature (e.g., physics, biology, and mathematics), entered the lexicon of tourism researchers as an alternative approach to the use of tourism crisis models. The underlying premise of using a chaos and complexity framework here is the need to challenge the notion 1

Data obtained from https://www.unwto.org/international-tourism-and-covid-19.

COVID-19 Implications for Tourism …

31

of a linear and structured approach (Russell & Faulkner, 1999) in response to an unpredictable social phenomenon, such as the COVID-19 threat. In the tourism literature, chaos theory and its companion model, complexity theory, have been used to explain several tourism-related crises, such as the H1N1 pandemic (Speakman & Sharpley, 2012), economic downturns (Boukas & Ziakas, 2014), and post-conflict recovery (Reddy et al., 2020). Chaos theory states that all things are related and constantly changing. As such, this chapter draws from the chaos and complexity perspective introduced to tourism (Baggio, 2008; Baggio et al., 2010) to understand the interdependence of COVID-19-specific studies (see Hartman, 2020). Chaos and complexity theory offers an opportunity to learn from the current academic work on the pandemic from an innovative perspective. Individually, fragments of research cannot provide an overall understanding of the current complex situation. However, interconnecting individual fragments can produce a cohesive picture of the overall trajectory of tourism and offer guidance to future research (Baggio, 2019). Use of the chaos and complexity theory is suitable here, given the following assumptions: 1.

2.

A complex adaptive system: Tourism is viewed as a complex adaptive system, given its mutually dependent and interconnected elements (Baggio, 2008) that change randomly to produce new properties and structures (Olmedo & Mateos, 2015). The butterfly effect: Small events can lead to significant effects, whereby “apparently unrelated events which, even despite their low significance, may trigger major changes” (Baggio & Sainaghi, 2011, p. 844). Speakman (2017) observed two types of butterfly effects in tourism research: positive effects and negative effects. Both types can influence one another, while a negative effect more often leads to a positive effect over time. Examples of negative butterfly effects are random acts of nature, such as the disasters that destroy livelihoods in popular tourist destinations. Meanwhile, an example of a positive butterfly effect is an investment in infrastructure or technology intended to improve a destination’s accessibility.

COVID-19 is unprecedented2 as it has challenged the “existing structure, habitual operations [and] existence of the organization” and forced tourism to adapt and evolve “along new dynamic paths” (Baggio & Sainaghi, 2011, p. 841). The pandemic is a complex crisis since the involvement of global and local institutions in handling the phenomenon has caused non-linear interactions of relevant stakeholders, requiring the adaptation of responses (Angeli & Montefusco, 2020). Also, due to the systemic complications brought about by COVID-19, tourism stakeholders may have to reorient the existing concepts and test new ones to adapt to the post-pandemic environment. In one of the earliest applications of chaos and complexity theory in tourism, McKercher (1999) stated that: 2

The impact of COVID-19 on global tourism is much greater than that of large-scale disasters such as the Great East Japan triple disaster (see Kwok & Chew, 2017).

32

A. O. J. Kwok and S. G. M. Koh Complexity theory shows that both instability and change are inherent, beneficial characteristics of any tourism system. The history of most destinations has been punctuated by periods of great upheaval followed by periods of relative stability. This process is essential to enable the destination to re-invent itself. (p. 429)

Adapting and responding effectively to the crisis could lead to an adaptive evolutionary approach that stimulates a recovery from the COVID-19-induced slump (Hartman, 2020). In the following section, the study methodology will be discussed.

2 Methodology 2.1 Journal Selection The preliminary investigation included compiling the journal titles that appeared in the lists provided by Hall (2011), Mckercher et al. (2006), and Okumus et al. (2018). The ranking method employed by all three lists used several indicators of quality, such as impact, peer assessment, and balanced rating index (subjective and objective indicators). The journals were matched against indicators of journal quality from 2019, which included the journal’s use of rigorous peer-reviews, influence, readership frequency, and high cite-scores (based on the ABDC list, SJR quartile, and an SCI JCR impact factor above 1.0) (see Table 2). Articles published in these leading journals can be considered authoritative and significantly impactful for tourism practitioners and researchers, prompting extensive readership and subsequent studies that achieve high citation scores (McKercher, 2008).

2.2 Summative-Inductive Content Analysis The summative-inductive content analysis approach used in this study sought to identify and quantify the thematic attributes represented in the textual content. Content analysis allows investigative flexibility through an objective and systematic method to offer valid generalizations (Camprubí & Coromina, 2016). The purpose of employing this approach was to obtain insights into the contextual use of the content in each COVID-19-specific article by exploring the use of textual data, rather than to infer meaning from the article (Hsieh & Shannon, 2005). The frequency and relevance of a particular textual item (a term) would signify the content and field associated with the article (Kuhzady et al., 2020). These terms tend to cluster around a theme; thus, they represent thematic attributes. Textual data were obtained using an adapted PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses) process, which is commonly used in systematic literature reviews (e.g. Kwok & Koh,

COVID-19 Implications for Tourism …

33

Table 2 List of journal classifications Journal title (alphabetical order)

2019 JCR impact factor

2019 ABDC Rating

2019 SJR

Annals of Tourism Research

5.908

A*

1

Asia Pacific Journal of Tourism Research

2.017

A

1

Cornell Hospitality Quarterly

2.800

A

1

Current Issues in Tourism

4.147

A

1

International Journal of Contemporary Hospitality Management

5.667

A

1

International Journal of Hospitality Management

6.701

A*

1

International Journal of Tourism Research

2.585

A

1

Journal of Destination Marketing & Management

4.279

A

1

Journal of Hospitality and Tourism Management

3.415

A

1

Journal of Hospitality and Tourism Research

3.816

A

1

Journal of Hospitality Marketing and Management

4.489

A

1

Journal of Hospitality and Tourism Technology

2.796

B

1

Journal of Sustainable Tourism

3.986

A*

1

Journal of Tourism and Cultural Change

1.327

B

1

Journal of Travel & Tourism 4.097 Marketing

A

1

Journal of Travel Research

7.027

A*

1

Journal of Vacation Marketing

1.940

A

1

Leisure Studies

1.566

A

2

Scandinavian Journal of Hospitality and Tourism

3.037

A

1

Tourism Economics

1.819

A

2

Tourism Geographies

3.159

A

1

Tourism Management

7.432

A*

1

Tourism Management Perspectives

3.648

A

1 (continued)

34

A. O. J. Kwok and S. G. M. Koh

Table 2 (continued) Journal title (alphabetical order)

2019 JCR impact factor

2019 ABDC Rating

2019 SJR

Tourism Review

2.908

B

1

Note Updated 16 July 2020 Source Authors’ compilation

2020). PRISMA utilizes a data-driven approach for reporting systematic reviews of literature. An in-depth article search was conducted via a meticulous and purposive selection of the 24 tourism journals identified in Table 2. A focal search for the keyword “COVID-19”, using a date range of 1 January 2020 to 16 July 2020, yielded a total of 116 articles from these journals. Keyword searches were relied on since they provided a snapshot of the conceptual structure of each article (Yawei Jiang et al., 2019) and highlighted its prominence. Two researchers and a research assistant analyzed the selected articles qualitatively by reading and sorting each one. Finally, 67 COVID19-specific articles were identified (Table 3). These were analyzed independently and matched by consensus to minimize any bias. Approximately 80% of the sampled articles have been published by four leading journals, namely: Tourism Geographies, Current Issues in Tourism, Annals of Tourism Research, and the Journal of Sustainable Tourism. The articles comprised commentaries (41%), conceptual and empirical articles (28%), research notes (16%), research letters (6%), and editorial papers (9%) (Fig. 1). Meanwhile, Fig. 2 provides an overview of the process steps of the systematic content analysis methodology. Inclusion and exclusion criteria: All COVID-19-specific articles were included in the selection, whereas articles that briefly mentioned COVID-19 and studies conducted before the pandemic were excluded.

3 Data Analysis VOSviewer, a text-mining tool, was used to reveal the research cluster themes and networks graphically. VOSviewer was suitable as it allows authors to create maps of keywords and thus explore the relationships between concepts, i.e., to perform relational analyses based on co-occurrence data. As a form of content analysis, researchers can group interrelated co-occurring texts that suggest overall meanings or themes. Once coded, the degree to which the texts are related is visualized through mapping. VOSviewer has been recently applied in tourism research (Lanke & Nath, 2019; Sainaghi et al., 2020). For this study, VOSViewer (version 1.6.15) was used to analyze

COVID-19 Implications for Tourism …

35

Table 3 Finalized list of articles for data extraction Title

Authors

Annals of Tourism Research Social costs of tourism during the COVID-19 pandemic

Qiu et al. (2020)

An open market valuation of the effects of COVID-19 on the travel and tourism industry

Sharma and Nicolau (2020)

Outlook of tourism recovery amid an epidemic: Importance of outbreak control by the government

Fong et al. (2020)

Coronavirus impacts on post-pandemic planned travel behaviours

Li, Nguyen, et al. (2020)

Mortality threats and technology effects on tourism

Nanni and Ulqinaku (2020)

Adaptive tourism areas in times of change

Hartman (2020)

Coronavirus pandemic and tourism: Dynamic stochastic general equilibrium modeling of infectious disease outbreak

Yang et al. (2020)

Tourism companies’ risk exposures on text disclosure

Jianping Li, Feng, et al. (2020)

Cornell Hospitality Quarterly Take care of yourself and look out for others

Tracey (2020)

Current Issues in Tourism The unwanted free rider: Covid-19

Falk and Hagsten (2020)

COVID-19 cripples global restaurant and hospitality industry

Dube et al. (2020)

A content analysis of Chinese news coverage of COVID-19 and tourism

Honglin Chen et al. (2020)

The impact of COVID-19 on tourism industry in Malaysia Foo et al. (2020) Communication-related health crisis on social media: A case of COVID-19 outbreak

Yu et al. (2020)

Effects of tourism CSR on employee psychological capital Mao et al. (2020) in the COVID-19 crisis: From the perspective of conservation of resources theory Service robots as a tool for physical distancing in tourism

Seyito˘glu and Ivanov (2020)

The impact of the coronavirus outbreak on Macao. From tourism lockdown to tourism recovery

McCartney (2020)

International Journal of Contemporary Hospitality Management Effects of COVID-19 on hotel marketing and management: Yangyang Jiang and Wen (2020) A perspective article Hospitality, tourism, human rights and the impact of COVID-19

Baum and Hai Nguyen Thi (2020)

International Journal of Hospitality Management Hitting the reset button for hospitality research in times of crisis: Covid19 and beyond

Rivera (2020) (continued)

36

A. O. J. Kwok and S. G. M. Koh

Table 3 (continued) Title

Authors

International Journal of Tourism Research Geopolitical risk and tourism: Evidence from dynamic heterogeneous panel models

Lee et al. (2020)

Journal of Hospitality Marketing and Management Effects of COVID-19 pandemic on hospitality industry: A review of the current situations and a research agenda

Gursoy and Chi (2020)

Journal of Sustainable Tourism Pandemics, tourism and global change: A rapid assessment Gössling et al. (2020) of COVID-19 Changes in air passenger demand as a result of the Gallego and Font (2020) COVID-19 crisis: Using Big Data to inform tourism policy Smart Korea: Governance for smart justice during a global Choi et al. (2020) pandemic Reconstructing tourism in the Caribbean: Connecting pandemic recovery, climate resilience and sustainable tourism through mobility justice

Sheller (2020)

Technology and the sustainable tourist in the new age of disruption

Fennell (2020)

Shaping tourists’ wellbeing through guided slow adventures

Farki´c et al. (2020)

Journal of Travel Research International tourism and outbreak of Coronavirus (COVID-19): A cross-country analysis

Farzanegan et al. (2020)

The low-carbon imperative: Destination management under urgent climate change

Gössling and Higham (2020)

Knowledge creation in information technology and tourism: A critical reflection and an outlook for the future

Xiang et al. (2020)

Leisure Studies The ‘troika of security:’ Merging retrospective and futuristic ‘risk’ and ‘security’ assessments before Euro 2020

Ludvigsen (2020)

Tourism Economics COVID-19 and gradual adjustment in the tourism, hospitality, and related industries

Tsionas (2020)

COVID-19 and the recovery of the tourism industry

Assaf and Scuderi (2020)

Tourism Geographies Visions of travel and tourism after the global COVID-19 transformation of 2020

Lew et al. (2020)

COVID-19, indigenous peoples and tourism: a view from New Zealand

Carr (2020) (continued)

COVID-19 Implications for Tourism …

37

Table 3 (continued) Title

Authors

Reconnecting tourism after COVID-19: the paradox of alterity in tourism areas

Lapointe (2020)

From high-touch to high-tech: COVID-19 drives robotics adoption

Zeng et al. (2020)

The COVID-19 crisis as an opportunity for escaping the unsustainable global tourism path

Ioannides and Gyimóthy (2020)

Covid-19 is an unnatural disaster: Hope in revelatory moments of crisis

Mostafanezhad (2020)

Human flourishing, tourism transformation and COVID-19: a conceptual touchstone

Cheer (2020)

Post COVID-19 ecological and social reset: moving away from capitalist growth models towards tourism as Buen Vivir

Everingham and Chassagne (2020)

Lessons from COVID-19 can prepare global tourism for the economic transformation needed to combat climate change

Prideaux et al. (2020)

Socialising tourism for social and ecological justice after COVID-19

Higgins-Desbiolles (2020)

Reset redux: possible evolutionary pathways towards the transformation of tourism in a COVID-19 world

Brouder (2020)

A post-COVID future: tourism community re-imagined and enabled

Haywood (2020)

Reconsidering global mobility—distancing from mass cruise tourism in the aftermath of COVID-19

Renaud (2020)

COVID-19 is expanding global consciousness and the sustainability of travel and tourism

Galvani et al. (2020)

The transformational festival as a subversive toolbox for a transformed tourism: lessons from Burning Man for a COVID-19 world

Rowen (2020)

Ecological grief generates desire for environmental healing Crossley (2020) in tourism after COVID-19 COVID-19: from temporary de-globalisation to a re-discovery of tourism?

Niewiadomski (2020)

The COVID-19 crisis: Opportunities for sustainable and proximity tourism

Romagosa (2020)

Travel and tourism after COVID-19—business as usual or opportunity to reset?

Nepal (2020)

COVID-19 leads to a new context for the “right to tourism”: a reset of tourists’ perspectives on space appropriation is needed

Tremblay-Huet (2020)

Pandemics, transformations and tourism: be careful what you wish for

Hall et al. (2020) (continued)

38

A. O. J. Kwok and S. G. M. Koh

Table 3 (continued) Title

Authors

How should tourism education values be transformed after Edelheim (2020) 2020 Cancelling March Madness exposes opportunities for a more sustainable sports tourism economy

Cooper and Alderman (2020)

Regenerative tourism needs diverse economic practices

Cave and Dredge (2020)

A mindful shift: an opportunity for mindfulness-driven tourism in a post-pandemic world

Stankov et al. (2020)

“We can’t return to normal:” Committing to tourism equity Benjamin et al. (2020) in the post-pandemic age The novel spaces and power-geometries in tourism and hospitality after 2020 will belong to the ‘local’

Tomassini and Cavagnaro (2020)

Critical tourism scholars: Brokers of hope

Pernecky (2020)

Transforming the (tourism) world for good and (re)generating the potential ‘new normal’

Ateljevic (2020)

Reflections and discussions: tourism matters in the new normal post COVID-19

Brouder et al. (2020)

Tourism Management The coronavirus pandemic—A critical discussion of a tourism research agenda

Zenker and Kock (2020)

Tourism Management Perspectives Understanding the effects of COVID-19 on the health and safety of immigrant hospitality workers in the United States

Sönmez et al. (2020)

Tourism Review COVID-19: Potential effects on Chinese citizens’ lifestyle and travel

Wen et al. (2020)

Source Authors’ compilation Fig. 1 Categorization of published works in tourism research (January to July 2020)

Research Notes 16%

Articles 28%

Research Letters 6% Editorials 9%

Commentaries 41%

COVID-19 Implications for Tourism … Iden fy data source (24 highest ranked journals) •ABDC 2019 (A*, A, B) •SJR 2019 (Q1 & Q2) •JCR 2019 impact factor (>1.0)

Visualiza on and thema c analysis •Subthemes (5 clusters comprising 21 terms) •Main themes (3 clusters comprising 9 terms)

39 Screen data (116 ar cles)

Select eligible data (67 ar cles)

•From January 2020 to July 2020 •Search specifically “COVID-19”

•Include COVID-19-related arƟcles •Exclude arƟcles that merely menƟon COVID-19

Quan ta ve contextual synthesis (VOSviewer) •Level 1 co-occurence (subthemes) •1,707 terms based on Ɵtle and abstract --> 48 meet co-occurence threshold --> 21 final terms •Level 2 co-occurence (main themes) •28 terms based on subject keywords --> 9 final terms

Qualita ve synthesis •Read and sort each arƟcle independently and then match by consensus to minimize bias •Analyze arƟcle Ɵtle, subject keywords, abstract and general themes

Fig. 2 Overview of the systematic content analysis process steps

the co-occurrence of texts at two levels, (1) subthemes, and (2) main themes, by ascertaining the strength of their association based on a similarity matrix of word frequency and relevance score (Van Eck & Waltman, 2010). In the final step, the researchers transformed the co-occurrence analysis results into a visualized network. The visualized network maps in Fig. 3 illustrates the co-occurrence of article keywords. The node sizes are proportional to the number of appearances of any keyword, while colors highlight different nodes.

3.1 Level 1 Co-Occurrence Analysis: Subthemes of COVID-19 Tourism Research The first level of analysis used article titles and abstracts to reveal the subthemes. The terms were analyzed based on full counting, which included every occurrence of a term in each article, with a minimum of co-occurrence set at six. Out of the 1,707 terms examined, forty-eight terms met the threshold. After removing redundant terms, sixty percent of the most relevant terms were selected to generate the network cluster (Fig. 3). As revealed in Fig. 3, the first level of analysis (subthemes) yielded the twenty-one most relevant terms across five emerging research clusters. Each colorcoded cluster specifies the prevalent focal areas of research. The distance between the keywords indicates their relatedness. The subthemes were named based on the collective meanings derived from the terms within each cluster. Cluster 1 (Impact on tourism): The terms in the first cluster (yellow) consisted of ‘case,’ ‘death,’ and ‘government.’ They are concerned with the pandemic’s impact on tourism. Several papers and case studies, such as those of Dube et al. (2020), Falk and Hagsten (2020), Farzanegan et al. (2020), Tsionas (2020), and Yang et al. (2020), focus on describing the impact of the pandemic on this industry.

Fig. 3 Subthemes of COVID-19 tourism research

2. Effects on stakeholder behavior

4. Outlook

5. Recovery solu ons 1. Impact on tourism

3. Response

40 A. O. J. Kwok and S. G. M. Koh

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Cluster 2 (Effects on stakeholder behavior): The terms in the second cluster (purple), while resembling those of the first cluster, transcend discussions of the pandemic’s impact by indicating more precisely the effects on tourism stakeholder behavior. The papers by the following researchers fall into this cluster: Gallego and Font (2020), Lee et al. (2020), Qiu et al. (2020), Sönmez et al. (2020), and Wen et al. (2020). Cluster 3 (Response): The third cluster (red) suggests how the tourism industry has reacted and adjusted to the pandemic. The associated keywords include ‘extent,’ ‘hope,’ ‘planet,’ ‘resilience,’ ‘response,’ ‘sustainability,’ and ‘way.’ Six papers, such as those by Choi et al. (2020), Fennell (2020), Hartman (2020), Mao et al. (2020), Mostafanezhad (2020) and Seyito˘glu and Ivanov (2020), offer insights into ways that technology, resource allocation, and information sharing can be used to manage the pandemic. Cluster 4 (Outlook): Straddling the previous two clusters, the fourth cluster (green) envisions the after-effects on, or outlook for, tourism. The keywords in this cluster include ‘future,’ ‘hospitality,’ ‘space,’ ‘transformation,’ and ‘value.’ Papers by Brouder (2020), Edelheim (2020), Galvani et al. (2020), Haywood (2020), and Tomassini and Cavagnaro (2020) explore how the pandemic may transform the industry. Cluster 5 (Recovery solutions): Finally, the last cluster (blue) offers potential solutions that might allow tourism to recover. For instance, papers by Everingham and Chassagne (2020), Fong et al. (2020), Lapointe (2020), and Sheller (2020) explore long-term post-pandemic solutions that might be undertaken by tourism stakeholders.

3.2 Level 2 Co-Occurrence Analysis: Main Themes of COVID-19 Tourism Research At the second level, 28 co-occurrence terms were identified from the bibliographic subject keywords. Nine terms were then selected to generate the network cluster and reveal the main themes. Each cluster indicated a thematic area of research, and the clusters were condensed into ‘ramification,’ ‘adaptation,’ and ‘transformation’. Essentially, the themes reveal a conceptual scheme of the current state of COVID-19 research. A summary of the two levels of thematic analysis, supported by selected published examples, is provided in Appendix.

3.2.1

Ramification Context

Studies on the ramifications of COVID-19 typically focus on assessing the impact on tourism by examining government efforts, measures, and subsidies to contain

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COVID-19 and revive tourism (Tsionas, 2020; Yang et al., 2020). More specifically, several studies focus on empirical evidence from specific countries (Falk & Hagsten, 2020; Farzanegan et al., 2020) and subsectors, such as restaurants (Dube et al., 2020). The effects on stakeholder behavior are explored from the tourist’s perspective, such as tourism demand (Lee et al., 2020), changes in lifestyle and preferences (Wen et al., 2020), and the desire to travel by air (Gallego & Font, 2020). The effects on the health and safety of residents (Qiu et al., 2020) and immigrant hospitality workers (Sönmez et al., 2020) are also assessed.

3.2.2

Adaptation Context

With tourism responding and adjusting to the changes arising from the COVID-19 pandemic, studies exploring the subtheme of adaptation tend to focus on resiliency and sustainability during the pandemic. This research examines the array of responsedriven approaches, such as those of the public sector (Choi et al., 2020), and the mitigation efforts undertaken by the private sector. For example, one paper examines how corporations can support their employees (Mao et al., 2020) during the pandemic. Furthermore, the use of technology for social distancing (Seyito˘glu & Ivanov, 2020) and as a travel substitute (Fennell, 2020) have been investigated. Studies also explore the capacity to adapt to change (Hartman, 2020) and find hope (Mostafanezhad, 2020).

3.2.3

Transformation Context

Finally, articles specific to the transformation of tourism are primarily discursive commentaries that look beyond the present circumstances toward the future. These articles refer to the post-pandemic outlook and the need to rethink the tourism space. For example, Haywood (2020) used a ‘future back’ approach to reimagine and query how tourism could progress, whereas Brouder (2020) discussed the potential evolutionary pathways of tourism transformation. According to Edelheim (2020), COVID19 will catalyze the conversion of values in higher education in the travel, tourism, hospitality, and events sectors. At the global level, Galvani et al. (2020) suggested that COVID-19 would reshape universal consciousness to become more aligned with the UNSDGs. However, Tomassini and Cavagnaro (2020) argued that the local dimension would take precedence over the disrupted global dimension. Extant studies have tended to focus on impact and adaptation; very few articles have offered recovery solutions at this point, with the proclivity being to investigate the effects of COVID-19 instead. Fong et al. (2020) provide evidence of how government and individual efficacy will lead to tourism recovery. A reorientation toward a more sustainable and localized community-focused model was proposed by Lapointe (2020), while Everingham and Chassagne (2020) suggested that a social philosophy

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alternative is available through the concept of ‘Good Living’ or Buen Vivir. Meanwhile, Sheller (2020) postulated the idea of mobility justice as a means to revive tourism.

4 Discussion and Findings The analysis provided in Sect. 3 reveals that the most developed area of inquiry at the onset of the pandemic explored the impact and effects of COVID-19, as shown in the thematic analysis mapping (Fig. 3). Theoretically, the findings imply that it is critical for tourism as a complex adaptive system to continue to respond, adjust, and adapt with resiliency to COVID-19. Complexity theory challenges the traditional view that tourism activities follow a predictable and linear relationship. The theory posits that the industry is better understood through a series of random and unpredictable activities, while changes in the external environment result in a new norm. As the pandemic has had multiple effects on all aspects of global mobility through movement restrictions and border closures, a butterfly effect can be observed, whereby a crisis in one tourism subsector has affected the entire value chain (e.g., transport and tour operators, accommodation and food service, and global distribution systems) (OECD, 2020). Furthermore, as tourism is a complex adaptive system, its subsectors will interact in feedback loops, creating a cohesive learning opportunity to understand the current trends and issues pivotal to advancing tourism research. The tourism literature has quickly transformed to incorporate insights related to the pandemic. With the pandemic creating ‘chaos’ in the tourism industry, chaos theory predicts a new phase, during which the system is available to address a critical juncture and new alternatives or divergent fields will emerge. Notwithstanding, the content analysis produced several important observations that will benefit tourism practitioners or researchers in this field. First, the content analysis findings allow the synthesis of the following potential areas for future COVID-19-specific tourism research based on complexity theory: its relationship with human agency, and digitalization and innovation within the tourism industry. The negative butterfly (COVID-19) effect could become a more positive effect due to the transformation of the industry. Overall, six months into the pandemic, it appeared that limited research had been conducted on the role of agency (e.g., that of tourism enterprises or governments). Critical lessons can be learned by evaluating the efficacy of the mitigation measures undertaken by local stakeholders since the tourism industry became severely affected by the pandemic. Such studies can offer rich insights into the various aspects of the immediate transition of processes (e.g. Choi et al., 2020). Second, the current tourism business models must be revisited. There has been a particular lack of research on using technology or digitizing services to reconfigure post-pandemic practices and recovery. This includes modifying environments in business models to facilitate the evolution of effective solutions. Examples include

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shifting toward the use of new technologies and e-tourism platforms (Buhalis, 2019; Nanni & Ulqinaku, 2020; Zeng et al., 2020). The pandemic may also require tourism stakeholders to reposition themselves as early adopters of technology-driven solutions to remain competitive and profitable, or to exploit new market opportunities such as the use of immersive technologies like extended reality (Kwok & Koh, 2021a). Finally, scholarly research has offered limited insights into how the industry will recover and transform post-pandemic (Prideaux et al., 2020). With the tenets of globalization shaken and premature plateauing possible, the immediate focus has shifted to the revitalization of domestic tourism to spur recovery (OECD, 2020). As governments try to stimulate domestic tourism and leisure activities, travel-related subsectors (e.g., cruise lines, airlines, hotels, and rental cars) may experience recovery lags for the foreseeable future (Sharma & Nicolau, 2020). Hence, research into subsector recovery will contribute to the reconfiguration of the tourism industry on a micro and macro scale, especially as tourism practitioners lack clarity in this area. Policymakers may need to re-examine national biosecurity measures to contain the transmission of COVID-19 (e.g. Melly & Hanrahan, 2020). Although it may be too early to offer concrete solutions, the scarce new concepts and alternatives could potentially be implemented, allowing future investigations to test their validity (Yangyang Jiang & Wen, 2020). The research gaps in the current findings may provide tourism researchers and practitioners with new ideas for advancing COVID-19-specific studies. These gaps offer opportunities to examine (1) measurements of the efficacy of mitigation efforts, (2) the understanding of a new non-growth-led tourism trajectory, and (3) emerging recovery solutions by introducing innovation or digitalization in tourism activities. The steering of a cohesive trajectory in COVID-19-linked tourism research will require concerted but adaptive efforts from all stakeholders.

5 Conclusion This chapter aimed to assess COVID-19-specific research in the first six months of the outbreak. The findings were organized according to three main thematic clusters: ramification, adaptation, and transformation, which might apply to and develop future studies. The revelations from the subthemes and trends contributed by generating new offshoots in COVID-19 tourism research. Insights into the pandemic’s impact and effects on stakeholder behavior enable a broader and more in-depth understanding of the industry’s evolution toward the new normal. Although this chapter precisely targeted 24 leading tourism journals, the findings are not exhaustive. Future research using a systematic literature review approach with a more extended period and bibliography is warranted.

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Acknowledgements This chapter has been developed and extended from the working paper presented by the authors (Kwok & Koh, 2021b) at the 31st Annual Conference, Council for Australasian University Tourism and Hospitality Education (CAUTHE) in February 2021. The authors thank the organizers, anonymous reviewers, session chair and participants for their valuable comments.

Appendix: Thematic Analysis and the Corresponding Examples Main themes Stage 1

Subthemes Stage 2

Relevant terms

case Impact on tourism

death government

Examples Dube, Nhamo, and Chikodzi (2020) Falk and Hagsten (2020) Farzanegan, Gholipour, Feizi, Nunkoo, and Andargoli (2020) Tsionas (2020) Yang, Zhang, and Chen (2020)

Ramificaton

Effects on stakeholder behavior

geopolitical risk safety tourist

Gallego and Font (2020) Lee, Olasehinde-Williams, and Akadiri (2020) Qiu, Park, Li, and Song (2020) Sönmez, Apostolopoulos, Lemke, and Hsieh (2020) Wen, Kozak, Yang, and Liu (2020)

extent hope planet Adaptation

Response

resilience response sustainability

Choi, Lee, and Jamal (2020) Fennell (2020) Hartman (2020) Mao, He, Morrison, and Andres CocaStefaniak (2020) Mostafanezhad (2020) Seyitoğlu and Ivanov (2020)

way

future hospitality Outlook

space transformation

Brouder (2020) Edelheim (2020) Galvani, Lew, and Perez (2020) Haywood (2020) Tomassini and Cavagnaro (2020)

value Transformation buen vivir Recovery solutions

community post covid

Everingham and Chassagne (2020) Fong, Law, and Ye (2020) Lapointe (2020) Sheller (2020)

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Yang, Y., Zhang, H., & Chen, X. (2020). Coronavirus pandemic and tourism: Dynamic stochastic general equilibrium modeling of infectious disease outbreak. Annals of Tourism Research, 83, 102913. https://doi.org/10.1016/j.annals.2020.102913 Yu, M., Li, Z., Yu, Z., He, J., & Zhou, J. (2020). Communication related health crisis on social media: A case of COVID-19 outbreak. Current Issues in Tourism, 1–7. https://doi.org/10.1080/ 13683500.2020.1752632 Zeng, Z., Chen, P.-J., & Lew, A. A. (2020). From high-touch to high-tech: COVID-19 drives robotics adoption. Tourism Geographies, 22(3), 724–734. https://doi.org/10.1080/14616688.2020.176 2118 Zenker, S., & Kock, F. (2020). The coronavirus pandemic—A critical discussion of a tourism research agenda. Tourism Management, 81, 104164. https://doi.org/10.1016/j.tourman.2020. 104164

Dr. Andrei Kwok is a Senior Lecturer at the Department of Management, Monash University Malaysia. He holds a Ph.D. in Management from Monash University Malaysia. His research focuses on decision-making behavior (trust and cooperation) and emerging/frontier technologies (blockchain, XR, A.I., etc.). Andrei has published multidisciplinary and interdisciplinary papers in several leading international journals. Before joining academia, he has managed international R&D teams in global technology firms. Dr. Sharon Koh currently lectures at Monash University Malaysia. She holds a Ph.D. in Economics from Monash University. Her research lies in the impact of globalization on societies in Asia, particularly on inclusiveness, growth, and income inequality. She was a visiting research fellow at Harvard University (Fall 2015), and a recipient of an Education Excellence award in Melbourne. She has also obtained an international travel grant from the Asian Development Bank Institute to present her research in Tokyo.

COVID-19 and India’s Flirtation with Localism Shafiullah Anis and Juliana A. French

Abstract The economic disruption precipitated by the COVID-19 pandemic has put a spotlight on the localism discourse globally. Amidst the worldwide upsurge in right-wing sentiment, left-wing progressive ideas of localism are being appropriated by far-right governments and political parties to promote chauvinistic ethnic nationalism. India’s ruling regime is also promoting policies around localism, bolstered by the country’s history of Swadeshi discourse. Swadeshi was an anti-consumption movement started by M. K. Gandhi as an anti-colonial, non-violent movement against the British regime. Swadeshi was conceptualized as both a boycott of British goods and a protest against colonial economic policies and emphasized the revival of indigenous industry and the political goal of self-rule. However, in its current distorted avatar, neo-Swadeshi borrows heavily from Hindutva, the militant Hindu nationalist ideology that seeks to create a masculine Hindu nation. Neo-Swadeshi is the neo-liberal form of the state-temple-corporate complex mediated by conspicuous consumption. Using Laclau and Mouffe’s discourse theory and Nico Carpentier’s conceptualization of a “discursive-material knot” to further our study’s theoretical depth, we examine the intersection of the neo-Swadeshi discourse and the localism discourse in India. We find a departure between the two discourses as the neoSwadeshi discourse is anti-MNC and anti-globalization while the localism discourse, as articulated by Indian Prime Minister Narendra Modi, aims to attract MNCs to shift their supply bases from China to India. These irreconcilable and antagonistic objectives of the two discourses jeopardize policy frameworks and their materialization. In post-structuralist parlance, the master signifier of Swadeshi becomes a floating signifier due to inconsistencies within the discourse, thus rendering the project localism a vain exercise. Keywords Swadeshi · Localism · Discourse theory · Discursive-material knot · Dislocation S. Anis Monash University Malaysia, Subang Jaya, Malaysia e-mail: [email protected] J. A. French (B) Monash University Malaysia, Subang Jaya, Malaysia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 A. O. J. Kwok et al. (eds.), COVID-19 and the Evolving Business Environment in Asia, https://doi.org/10.1007/978-981-19-2749-2_4

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1 Introduction The COVID-19 pandemic has put the spotlight back on localism (Desai, 2020; Jenkins, 2020). Governments, brands, consumers, and communities have started to question the level of precarity within the globalized world order (i.e., global supply chains, global brands, global finance, and the global economy) owing to its complex nature and its spread across geographies to induce efficiency. However, the pandemic has not only exposed the unpreparedness of governments to deal effectively with such events, it has also made it clear that the globalized economy is so precarious that a stressor such as this can destroy lives, livelihoods, and social structures. For instance, during the early phase of the pandemic, there was a global shortage of personal protective equipment (PPE), masks, and critical medical equipment across the world due to the “People’s Republic of China (PRC) being the major producer of PPE in the global trade network and the first country to be hit by the coronavirus” (Asian Development Bank, 2020). The pandemic has initiated a conversation around localism that previously revolved around discourses of sustainability, cultural diversity, environmental protection, and local autonomy (Park, 2013). The proponents of localism, traditionally regarded as left-wing or progressive, have campaigned for a localized model of the economy for various reasons, such as to address ecological and environmental concerns, the exploitation of workers, issues with business ethics, and the redistribution of profit within the production value chain. The COVID-19 pandemic, however, precipitated the appropriation of localism by far-right idealogues globally to further their ethno-exclusionary and chauvinistic politics amidst the rising right-wing political discourse (Cambefort & Pecot, 2020). The Indian government, too, led by a right-wing political party, floated the idea of localism with slogans such as “vocal for local” and “Atma Nirbhar Bharat” (selfreliant India) while announcing an economic stimulus package during the pandemic. The Swadeshi discourse was originally popularized by M. K. Gandhi as a nonviolent form of non-cooperation against the British colonial government (Varman & Belk, 2009). It has, however, been adopted and reconceptualized by the current rightwing regime with a religio-nationalist flavor, which we refer to in this chapter as neo-Swadeshi discourse (Sreekumar & Varman, 2019). However, while announcing the stimulus package and pitching for a localized economy, Indian Prime Minister Narendra Modi (henceforth, PM Modi) did not invoke the term “Swadeshi” in his speech, nor did he propose the various other discursive elements of the Swadeshi discourse. Was this omission deliberate or an innocent oversight? This article intends to dive deep into this question and explore and unearth the incompatibility of the Swadeshi discourse with localism (and other related projects such as “make in India”), as the irreconcilability of the two discourses has become far more exposed during the economic slowdown associated with the COVID-19 pandemic. Further, this article presents how the conflicting nature of the two discourses will need to be reconciled at an ideological level before its economic manifestation is experienced.

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In other words, we argue using Laclau and Mouffe’s (2001) discourse theory that the irreconcilable nature of the two discourses is so strong that it destroys any hegemonic formation of a unified policy framework, thus rendering such an articulation difficult to achieve.

2 Context The COVID-19 pandemic has played a precipitating role in strengthening the discourse of localism. On 12th May 2020, PM Modi addressed the nation and announced an economic stimulus package worth USD 270 billion to support the Indian economy against impacts of the pandemic. Though the details of the stimulus were shared later by the finance minister in five sessions over the following five days, PM Modi pitched “localism” during his speech as a plank to transform the economy. He is not the only global leader to leverage localism as an economic transformation strategy during the pandemic. The impact of the spread of COVID-19 on the global economy, global supply chains and networks, and international capital flows has led to calls for deglobalization by big economies, and various back-end nations have tried to pick up on it as an opportunity. Such calls, when shaped into policies, will have a definite impact on Asian economies and world leaders, especially those with a nationalist political ideology, who are first among the ranks to espouse the transformation of the economy into a localized one. Alongside localism, disentanglement from economic dependency on China was another strategy put forth. In India’s case, however, the government sees the localism discourse as serving two purposes: to develop a robust manufacturing sector like China’s, and to arrest the growth of China, a traditional competitor and strategic threat. In his speech, PM Modi referred to the new localist model Atma Nirbhar Bharat (a self-reliance movement) as having five pillars: economy, infrastructure, IT systems, demography, and demand. He calls for citizens to support localism and be “vocal for local.” Although, as an ideological Hindu nationalist, his emphasis on a localized economic model is not surprising, his omission of the Swadeshi narrative and rhetoric from his speech is worth mentioning because Swadeshi has become the core economic model of Modi’s far-right ruling party, the Bhartiya Janata Party (BJP).

2.1 Swadeshi and Neo-Swadeshi Before beginning a discussion on the conflicting notions of localism and Swadeshi, it is pertinent to briefly revisit the trajectory of Swadeshi to date. The Swadeshi movement was originally an anti-colonial movement formed in India during the latter half of the nineteenth century (Sarkar, 2014). M. K. Gandhi borrowed the concept from Bengali leaders and transformed the movement into a pan-Indian nationalist movement that incorporated economic non-cooperation with the British government.

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Examples of non-cooperation included boycotting British goods, initiating economic protests, and reviving indigenous industry with the political goal of “Swaraj” (swa = self, raj = rule). The movement had elements of both a boycott and a buycott (Sreekumar & Varman, 2019). Gandhi’s call for Swadeshi was entwined with the ideas of “neighbourliness, patriotism, purity, and sacrifice,” an ideological framework more powerful than a mere call for independence (Bayly, 1986). The religio-nationalist neo-Swadeshi (literally, “new Swadeshi”) discourse, in its current distorted form, is being pushed by the right-wing ruling regime of India. In its current neo-liberal avatar, neo-Swadeshi borrows heavily from Hindutva, the militant Hindu nationalist movement that seeks to create a masculine Hindu nation-state— one “capable of fighting and striking hard at both external enemies (Pakistan and China) and internal threats (‘Muslim terrorists,’ most obviously)” (Srivastava, 2015). Gandhi’s Swadeshi operated around the ideas of anti-industry and anti-modernity based upon the moral economy of self-reliant villages. Neo-Swadeshi, on the other hand, is the neo-liberal form of the state-temple-corporate complex mediated by conspicuous consumption (Nanda, 2009).

3 Research Questions and Research Objectives Against this backdrop, the overarching research question that we seek to answer is: How does COVID-19 dislocate the Swadeshi discourse? To do this, we seek to achieve the following objectives: • To understand the materiality of COVID-19 as an event. • To investigate how Swadeshi as a nodal point is dislocated during the pandemic. • To explore how COVID-19 enables the hegemony of the localism discourse during the pandemic.

4 Theoretical Background This study’s theoretical grounding is based on the post-foundational discourse theory approach (Marttila, 2019b) of political theorists Ernesto Laclau and Chantal Mouffe (henceforth, L&M). Nico Carpentier’s conceptualization of a “discursive-material knot” is used to enhance the theoretical depth. L&M developed the discoursetheoretical approach by reimagining and modifying the two theoretical traditions of Marxism and structuralism, borrowing the initial conceptualization of discourse from Foucault. “Laclau and Mouffe fuse these traditions into a single poststructuralist theory in which the whole social field is understood as a web of processes in which meaning is created” (Jørgensen & Phillips, 2019, p. 26). Building on L&M’s discourse-theoretical approach, Carpentier sharpens the analytical lens by

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bringing insights from “new materialism” without privileging either the material or the discourse. Brief descriptions of both the approaches and their use are discussed next.

4.1 The Discourse-Theoretical Approach L&M theorized that discourse encompasses not just language but all social phenomena and that objectivity is constructed through the “discursive production of meaning” (Jørgensen & Phillips, 2019, p. 33). L&M reject the Foucauldian idea of a world divided into discursive (idealist) and non-discursive (material) domains (Walton & Boon, 2014). In their conception, everything that is meaningful to our consciousness is discursive, as meaning is constructed socially (Howarth, 2000). For L&M, discourses try to fix meanings, yet the fixation of meanings is contingent and temporary. L&M define the key terms of their discourse theory: We will call articulation any practice establishing a relation among elements such that their identity is modified as a result of the articulatory practice. The structured totality resulting from the articulatory practice, we will call discourse. The differential positions, in so far as they appear articulated within a discourse, we will call moments. By contrast, we will call element any difference that is not discursively articulated. (Laclau & Mouffe, 2001)

L&M gave a political logic to the process of fixation of the meanings through Antonio Gramsci’s concept of hegemony. The closure of meaning or sedimentation is dependent on the hegemony of the articulatory practice (Laclau & Mouffe, 2001). Thus, the logic behind the success of one’s discourse is neither economic nor material but is instead the political logic of fixing one’s favored meaning over other competing discourses through the establishment of hegemony (Marttila, 2019a). Identities become hegemonic when the discourses expand in a social field around a nodal point, which temporarily and partially fixes meaning. Nodal points, also known as empty signifiers, act like the central poles in a tent, providing stability to the whole discourse. Once the nodal point is dislocated, the whole discourse gets destabilized, and the nodal point becomes a floating signifier. Since the identities are differential, the stability of the nodal point is co-constitutive with a discursive outside, the enemy, or “the Other”.

4.2 Discursive-Material Knot Nico Carpentier conceptualized the relationship between the discursive and the material domains, enhancing L&M’s discourse-theoretical approach. He borrows the idea of materiality from studies of “new materialism” and assigns a certain degree of agency to materials that new materialism espouses. In essence, he agrees that the material and discursive domains have a non-hierarchical relationship, which remains

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within the boundaries of L&M’s theoretical framework. According to his conceptualization, the discursive and material domains are two sides of the same coin. In Laclau and Mouffe’s (2001) writing, the material dimension of social reality is duly acknowledged, and discourse gives meaning to the material and constructs its intelligibility An earthquake or the falling of a brick is an event that certainly exists, in the sense that it occurs here and now, independently of my will. But whether their specificity as objects is constructed in terms of ‘natural phenomena’ or ‘expressions of the wrath of God’ depends upon the structuring of a discursive field. What is denied is not that such objects exist externally to thought, but the rather different assertions that they could constitute themselves as objects outside any discursive condition of emergence. (p. 100)

In other words, L&M ironed out the dichotomy between idealism and materialism with their creative approach called “radical materialism.” Howarth (1998, p. 289) concludes that through radical materialism, L&M resolved the “classical dichotomy between an objective field constituted outside of any discursive intervention, and a discourse consisting of the pure expression of thought.” Carpentier conceptualizes the discursive–material knot as an assemblage or an entanglement of the discursive and the material domains and their contingencies within a discourse. Thus, the material objects participate in a discourse as “elements” that influence articulation through “dislocation” and “invitation.” Laclau and Mouffe (2001, p. 109) theorize that “the practice of articulation, as fixation/dislocation of a system of differences, cannot consist as purely linguistic phenomena; but must instead pierce the entire material density of the multifarious institutions, rituals, and practices through which a discursive formation is structured.” Building on this, Carpentier (2017) introduces the agency of the material that affects discourses in two ways, through dislocation and invitation. The “agential matter” of the material can disrupt a discourse or the material can privilege selected discourses over others through the material itself. However, the material remains in a nonhierarchical ontology with the discursive.

4.3 Antagonism, the Logic of Equivalence, and the Logic of Difference L&M theorize that every structure is delimited antagonistically (i.e., that discourses gain their meaning through the construction of discursive frontiers that are antagonistic in nature). This is in line with the post-structuralist thesis of the differential construction of identities. Antagonism, according to L&M, becomes the reason for identities being inherently unstable and dislocated, which provides them temporary and contingent stability, instead of a foundational base such as an economic or essential nature. The key thesis of L&M’s discourse theory is “that of conflict and struggle over identity” (Walton & Boon, 2014, p. 353) constructed through discursive contestations. In other words, discursive contestation is naming and viewing the strategies

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of meaning-making by agents to fix the meaning of “objects, subjects or practices” (Walton & Boon, 2014, p. 353). A subject does not exist as an autonomous human being (the subject), but as a being who is constantly being recruited by several competing discourses (Walton & Boon, 2014). A person can be a doctor (medical discourse), an Afro-American (anti-racism discourse), a mother (“family person” discourse), a feminist (feminism discourse), an environmental activist (ecology discourse), a Christian (religious discourse), and an American citizen (nationalist discourse) at the same time. All these identities are subject positions that continuously influence the person and make her act like one of the subjects (Sutherland, 2005). None of these identities is sovereign. None of the identities is permanent, either. For instance, on an election day, whether the person votes as a feminist (influenced by feminism) or as a Christian (influenced by a religion) depends on the discourse that she identifies with more. Antagonism occurs when identities mutually exclude each other (Howarth, 2000). In the above example, the feminist discourse would ask the woman to support a prochoice candidate, thus favoring a liberal candidate who would back abortion rights. However, her Christian identity, informed by a pro-life discourse, would ask her to vote for a conservative candidate who opposes abortion. Her choice to vote as a feminist is due to her politics that give privilege to a pro-choice discourse over one that is pro-life. The choice by the subject to vote for a liberal candidate or to choose one identity over others is not random. Discourses create the logic of difference and logic of equivalence to achieve their dominance or hegemony. Favoring one identity conglomerate over another beyond the antagonistic frontier is a hegemonic intervention. Figure 1 provides an illustration of this. Both discourses try to bring together elements that can be clubbed together into a compatible chain of equivalence that differentiates itself from the “other” through the logic of difference (Laclau & Mouffe, 2001). “Liberal” and “conservative” are two hubs or nodal points around which the other elements are arranged.

Fig. 1 The antagonistic discursive frontier. Adapted from Walton and Boon (2014)

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4.4 Dislocation and Invitation The capacity of a discourse to determine the identity (of a subject) is negotiated with the “play of meaning within discursive structures,” yet the sense-making made by the subject is unquestionably guided by discourses (Torfing, 1999, p. 148). L&M suggest that what actually “undermines the determining capacity of the structure is dislocation” (Torfing, 1999, p. 148). Torfing (1999) defines dislocation as “an event, or a set of events that cannot be represented, symbolized, or in other ways domesticated by the discursive structure – which therefore is disrupted”. Dislocation continuously prevents the formation of the structure to the totality. In other words, dislocation is “the traumatic event of ‘chaos’ and ‘crisis’ that ensures the incompleteness of the structure” (Torfing, 1999, p. 149). It follows that the very essence of dislocation is such that the entity responsible for the dislocation cannot be discursively captured or symbolized. When dislocation happens due to an event, Carpentier (2017) finds that the materiality of an event is the cause: It is important to clarify that in this context the notion of the event refers to a material change that at least has the potential to dislocate a particular discourse, even though the temporal relationship is not necessary and immediate: gaps, delays, reiterations, and continuations may occur. An event, in its materiality, dislocates a discourse because this discourse turns out to be unable to attribute meaning to the event, while the event simultaneously invites for its incorporation into this discourse. (p. 163) (emphasis mine)

Dislocation creates the conditions for the emergence of a new discourse. Invitation incorporates the new discourse in the unstable discursive order that results after the dislocation. In this study, Swadeshi, as the master signifier with its constitutive outside of “foreignness,” is a relatively stable discourse before the pandemic. However, the pandemic as an event creates new material conditions that permeate the discursive fabric of Swadeshi and render it unstable. Swadeshi, thus, becomes a floating signifier. The transformation of Swadeshi from a master signifier to a floating signifier is identified as the dislocation of the Swadeshi discourse. Further, the pandemic and its materiality invite the localism discourse to capture the new social realities associated with it, to make sense of the new order. The localism discourse is successful in providing stability to the unstable Swadeshi discourse, and thus arrests instability and chaos, although not totally. The invitation is the resolution from an ambiguous condition to a new form of political action. Thus, the localism discourse ends up becoming the most suitable discourse for Hindu nationalist ideology, post-pandemic. In this study we show how the dislocation of the Swadeshi discourse occurs due to the pandemic and how the localism discourse becomes the dominant narrative, sidelining the Swadeshi discourse.

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5 Methodology 5.1 Data Collection and Coding To facilitate the discourse analysis, the basic unit of analysis used in this research is text. According to Laclau and Mouffe’s (2001) discourse-theoretical perspective, any social phenomenon can be interpreted as text. Marttila (2015), for example, includes newspaper reports, interviews, policy documents, and speeches as textual material to understand the subjective experience of individuals and their understanding of the social phenomenon. As summarized in Table 1, we used four sources of text data in our research: (a) a speech delivered by PM Modi, (b) articles in a monthly magazine published by Swadeshi Jagran Manch from January 2019 to April 2021, (c) news, media reports, and related items on Atma Nirbhar Bharat from May 2020 to April 2021, and (d) the Twitter tweets of Baba Ramdev (a key ideologue of Swadeshi), and the Twitter tweets and advertisements of Patanjali Ayurveda Ltd. (a company founded and led by Ramdev) between September 2019 and August 2020. To operationalize the analysis, various forms of data (text and visual items) were collected and converted into text for the analysis. The collection of data was repeated iteratively until saturation was reached. Following this, the six-step iterative data coding method developed by Walton and Boon (2014) was modified and employed to suit the needs of the research (see Fig. 2). The steps involved in data coding included: (1) constructing the data, (2) identifying key elements and moments of the discourses, (3) identifying the antagonism between the discourses, (4) analyzing the organization of key discourses, (5) identifying the materiality of COVID-19 as an event, and (6) examining the processes of dislocation and invitation.

5.2 Data Analysis The analysis of this study’s data uses the discourse analysis approach conceptualized by political theorists Ernesto Laclau and Chantal Mouffe in Laclau and Mouffe (2001). The key advantage of using this theory of discourse is that it is focused on the “primacy of the political” in social ontology (Howarth, 2015a; Laclau & Mouffe, 2001). Howarth (2015b) elaborates: Discourses are constructed by the drawing of political frontiers between differently positioned social subjects via the exercise of power, in which certain elements are included in discourse or political projects and others are not. In this model, one force endeavors to universalize its values and norms by winning the consent of its allies and by securing the compliance of its others, though coercion and violence may be required to subject its opponents. The logic of hegemony… captures this complex set of processes. (p. 6)

L&M’s discourse analysis is a suitable analytical tool because it considers all objects as objects of discourse, thereby making linguistic and non-linguistic practices a site of interrogation. As Laclau and Mouffe (2001, p. 109) explain, “the practice

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Table 1 Discourses and their data sources Discourse

Data source(s)

Analysis

Swadeshi discourse

The Twitter handles of Baba Ramdev and Patanjali Ayurved Ltd. (PAL), and all the advertisements from PAL between September 2019 and August 2020, are skimmed for the quality of content. A purposive sample of 90 advertisements and tweets is collected

Coding and discourse analysis of the tweets and advertisements of Baba Ramdev and PAL to communicate the Swadeshi discourse to the Indian public via social media marketing and wider communication with the masses

Localism discourse

Swadeshi Partrika, the primary publication of Swadeshi Jagran Manch, which is one of the 40 affiliate organizations of Rashtriya Swayamsewak Sangh (RSS)

Comprehensive coding and discourse analysis of 28 issues over three years (January 2019–April 2021) to look for categories and the dominant themes of the localism discourse before and after the event (i.e., the COVID-19 pandemic)

Localism discourse

Speech delivered by PM Narendra Modi on May 12th, 2020. PM Modi is a life-long member of RSS and leader of BJP, the political wing of RSS and one of its 40 affiliated organizations. The speech is 30 min long and delivered in the Hindi language

Coding and discourse analysis of the speech to map the policy initiative taken by PM Modi to introduce and re-conceptualize the localism discourse under the Atma Nirbhar Bharat Movement as part of a relief package in response to the COVID-19 pandemic

Swadeshi and localism discourses

News and media reports on Atma Nirbhar Bharat, dealing with localism, Swadeshi, and related items, from May 2020 to April 2021

Coding and discourse analysis of media reports to map the key discussions and debates in the mainstream media after PM Modi’s speech. This mapping helped in the discovery of the dislocation of the Swadeshi discourse and the invitation of the localism discourse born from the pandemic

of articulation, as fixation/dislocation of a system of differences, cannot consist of purely linguistic phenomena; but must instead pierce the entire material density of the multifarious institutions, rituals, and practices through which a discursive formation is structured.” The concept of discourse is used to name and view the strategies of signification by sets of agents, political parties, and the state (in our case), as they battle to dominate or fix a particular identity of objects. In this case, the articulation of localism by the Indian government and its internal conflict with the ideological neo-Swadeshi discourse were analyzed and their antagonistic nature were revealed

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Fig. 2 Coding scheme used with text and visuals collected for the research

through the process of dislocation and invitation. Further, a discussion of how the materialization of localism is internally threatened by the ideological groundings of India’s ruling regime will be provided using L&M’s framework.

6 Findings 6.1 The Swadeshi Discourse Rashtriya Swayamsewak Sangh (RSS) is the umbrella organization of Hindu nationalism. PM Modi has been a life-long member of RSS and BJP is the organization’s political wing. RSS operates Swadeshi Jagran Manch (SJM), a social organization that lobbies for a Swadeshi form of Hindu economics (Jaffrelot, 2009). Baba Ramdev, an immensely popular saffron-clad Yoga Guru and founder/CEO of Patanjali Ayurveda Ltd. (PAL), is another household name. He has built a business empire articulating as well as practicing the Swadeshi discourse and is credited with single-handedly creating a marketplace for Swadeshi consumption. To map the key elements of the Swadeshi discourse, we analyzed his key articulations. Ramdev is famous for his outspoken rhetoric. For instance, Colgate ka gate bhi band hoga, Pantene ka to pant gila hone wala hai, Unilever ka lever bhi baithega aur Nestlé ki chidiya bhi udegi (Translation: The gate of Colgate will be shut, Pantene will wet its pants, the lever of Unilever will break down, and the little Nestlé bird will fly away). (Pathak-narain, 2017)

Three themes emerged from the data analysis that show how the Swadeshi discourse develops around the idea that India as a nation is socio-culturally Hindu, and that Indian nationalism is implicitly built around the Hindu ethos of pollution and purity. Foreignness is unscrupulous, polluting, and corrupting by the very designation of being foreign, while localization, Indianization, and adoption of Hindu

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Fig. 3 Discourse, themes, and categories that emerged from the data analysis

culture are processes of purification. The three themes that emerge from the data are (a) economic nationalism, (b) Hindu cultural homogenization, and (c) purity of the body/soul (Fig. 3). The ideas of purity and pollution have important significance in Indian society, a society marred with an apartheid caste system across religions and regions (Vikas et al., 2015). In Indian society, one’s status is determined by their birth-based caste in a rigid caste hierarchy. The lower one’s caste in this hierarchy, the more polluting is their existence, and vice versa. Such a person is stigmatized by caste-based pollution. Similarly, the idea of foreignness is also associated with impurity and, since ancient times, the term “mleccha” has referred to foreigners. Parasher (1984, p. 92) writes, “the word mleccha was supposedly referring to a people who either spoke an alien tongue or whose speech was faulty. Ultimately, however, […] the word mleccha in the English language has to be generally accepted as barbarian or alien.” Mleccha, in common parlance, refers to something that is polluting and dirty (Parasher, 1979). The theme of the homogenization of Hindu culture in India appears clearly in the articulations within the empirical material accessed and analyzed for this research. For example, in one of his tweets, Baba Ramdev says: From 2- to 7-year-old kids learnt-by-heart Ashtadhyayi (a book on Sanskrit language). In next 25 years, through extreme hard work of Patanjali, India will become a grand-spiritualworld-leader. Patanjali has developed work plan for next 500 years through spiritual teachings to make cultured India. (Source: Tweet from the Twitter handle of Baba Ramdev @yogrishiramdev on 3rd January 2020)

The imagination of the Hindu religion as the country’s default religion is corroborated by the tweets made by Baba Ramdev and in Patanjali advertisements suggesting that people opt for complete cultural independence from foreign faiths, cultures, and any polluting consumption (see the advertisements below).

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(Source: Tweets from the Twitter handle of Baba Ramdev @yogrishiramdev) Ad on the left: It was a dream of our leaders like Mahatma Gandhi, Bhagat Singh, and Bismil to make India self-reliant and attain complete cultural and economic independence with the Swadeshi movement. This Republic Day, join Patanjali’s Swadeshi movement to protect India from the loot of foreign companies and to bring about economic and cultural freedom. When you have India’s no.1 brand Patanjali, just boycott foreign brands and embrace Swadeshi completely. Ad on the right: Bring home Patanjali Products Get India Economic Freedom. Though we got Political freedom 70 years back, Economic Freedom is still a dream. The way East India Company enslaved and looted us. Multi-National Companies are still doing the same by selling Soap, Shampoo, Toothpaste, Cream, Powder and similar daily use items at exorbitant price. Thousands of crores of profit thus generated is ploughed back to their own countries. Let’s take a pledge to make India Economically Independent.

This homogenization process happens through two related processes of pollution and purification: the presence of non-Hindu or foreign culture as anti-national is the site of pollution, while the adoption of Hindu culture as the national culture of India is the process of purification. We should make our life superior by transforming from Swadeshi (consumption) to Swadeshi language, Swadeshi culture, Swadeshi food, Swadeshi religious songs, Swadeshi farming, Swadeshi education, Swadeshi medicinal system. We should have pride over our culture and civilization. We should become great and take a vow to make our nation great. #VocalForLocal #Patanjali (Source: Tweet from the Twitter handle of Baba Ramdev @yogrishiramdev)

Aloysius (1994) rightly notes that the right-wing Hindutva campaign

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S. Anis and J. A. French … has to be understood as one formulation, remarkably compact and coherent, of our religiocultural past as an agenda for present political action leading to a future vision of Indian society. […] it is a presentation of a ‘semiticized Hinduism’ (see the tweet below) as the ‘national tradition’ to be preserved and treasured as our unique genius and to be used as an ideological weapon against the Western modernity.

In addition, Baba Ramdev writes: Yoga and holistic health- Our body should be strong like steel. One should not live a life as scared and timid, sad and poor. Be powerful, be glorious, be urbane, have good character, be rich, be spiritual, be great, this is life. #MotivationalQuotes (Source: Tweet from the Twitter handle of Baba Ramdev @yogrishiramdev on 22nd December 2019)

As a practitioner of Yoga and Ayurveda and a manufacturer of Ayurvedic medicine, Patanjali’s marketing campaigns are centered around gaining popularity by espousing an ancient superior knowledge of Hindu saints as mentioned in Hindu scriptures. Going back to the ancient wisdom of Hindu saints, Patanjali claims that the adoption of Ayurveda (a medicine system of the soil) is a solution to the ills induced by modernity and a Western lifestyle. In this sense, the idea of foreignness and its cure by a Hindu culture system is used again in neo-Swadeshi discourse. If the disease is foreign (due to a Western lifestyle, medicine, and technology), the cure lies in treatments such as Ayurveda and Yoga that are rooted in Hindu culture. Thus, purification from foreignness lies in Hindu cultural and medicinal practices. Having arrived at the three themes after applying Laclau and Mouffe’s discourse analysis, three moments emerged that are the same as the themes of the analysis (see Fig. 4). The antagonistic frontier denotes the political terrain that divides the political topography of the neo-Swadeshi discourse from that of other discourses. As apparent from the discussion so far, the central dialectical relationship that the neo-Swadeshi discourse challenges is “foreignness,” thus, the discourse(s) on the other side of the frontier is expected to be related to “foreignness.”

6.2 Localist Discourse With the onset of the pandemic, the key focus of the Swadeshi Jagran Manch (SJM) discourse became fixated on China. Although SJM focused on boosting domestic manufacturing by the key affiliate of PM Modi’s political party, its rhetoric was articulated in terms of the trade deficit with China. While Swadeshi has traditionally focused on cultural and economic nationalist sentiments, the pandemic brought these strategic dimensions to the fore. No doubt some Indian companies will get hurt. But we must look at the long-term benefits of reducing excessive dependence on China. This can be done by changing the structure of our trading and investment relationship with China on one hand to creating the right policies to boost domestic manufacturing on the other. We need to address the asymmetry of the relationship with China. Otherwise, China will use both economic and political leverage as pressure points. The risk of opportunistic takeovers by Chinese entities is indeed real, not imaginary. (Source: Cover Story, “Checking China.” In Swadeshi Patrika published by SJM. May 2020, p. 10. https://www.swadeshionline.in/)

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Fig. 4 Discourse, moments, and the antagonistic frontier that emerged from the data analysis of the Swadeshi discourse

Cover page of Swadeshi Patrika magazine published by SJM in July 2020 (Source: https://www.swadeshionline.in/).

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The rise in the number of COVID-19 cases also saw the rise of protests against Chinese goods sold in the Indian market, and SJM and other RSS affiliates were at the forefront of these protests. When PM Modi launched a stimulus package to boost the economy, he stressed “make in India” initiatives inviting MNCs from across the world to set up their manufacturing plants in India. This policy framework and the initiatives taken by the PM were a major shift from the Swadeshi discourse originally conceptualized by SJM. The conflict can be observed in an analysis published in Swadeshi Patrika, SJM’s monthly magazine: That is a problem and may be a solution in the next few years. As imports come down, substitutes have to be manufactured nationally. It may be return of the swadeshi. If it happens it could be Made in India, much more than what Prime Minister Narendra Modi has been trying at Make in India. Experts see the possibility in the post-COVID-19, revival of nationalism as opposed to three decades of globalization […] Re-nationalization may be the global cry […] It will also bring in opportunities for India as an emerging global drug supplier in a Gandhian swadeshi in a new jacket. It may not be rigid but strong enough to create a new India, if planned in perspective. (Source: Analysis of “Post-Covid a nationalist world! See change likely in global finance, Home production to sustain India.” In Swadeshi Patrika published by SJM. May 2020, p. 12. https://www.swadeshionline.in/)

This conflict was backed by introducing SJM’s new ideas of self-reliance and selfsustenance. The selective opposition to Chinese trade and the invitation extended to foreign MNCs of other nations was backed by Dr. Mahajan, co-convener of SJM, based on the logic of pragmatism. Pragmatism and self-reliance became key parts of the Swadeshi movement’s rhetoric. It has not been a sudden change of heart. The government for the last three years has started to realize the importance of self-sustenance and has been working towards it. But today, it makes all the more sense amid a growing anti-China feeling internationally. (Source: Interview with Dr. Ashwani Mahajan, co-convener of SJM, “Wary of Aarogya Setu? What about TikTok: Swadeshi Jagran Manch.” In Swadeshi Patrika published by SJM. May 2020, p. 12. https://www.swadeshionline.in/)

Earlier, the Swadeshi movement had protested against and opposed foreign countries, MNCs, and foreign investors, irrespective of their geographic location. During the pandemic, as sentiments against China became strong both globally as well as in India, new qualifiers were added to the foreignness signifier. These new qualifiers included “a country which shares a land border,” “investment in greenfield projects,” exclusion of Japanese and American firms, and so on. Strategic and military reasons were used to justify the relaxations and exemptions afforded to other nations. Such justifications further diluted the strength of the Swadeshi appeal and exposed the logical inconsistency of the discourse. This comes a day after the government brought in stricter measures to curb the ‘opportunistic takeover’ of Indian companies by firms in neighboring countries, including China. The government has said that an entity of a country which shares a land border with India can invest only after receiving government approval. Both Swadeshi Jagran Manch and Laghu Udhyog Bharti of the Sanghparivar that look into economic issues, have asked for tighter scrutiny of investments from China, curbs on angel investments from China and specific markers for Chinese investments in greenfield projects. The organizations have also said notwithstanding the possibility of Japanese and American firms looking at India for

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shifting their companies from China to India, potential investors should not be promised royalties and the Indian market should be used as their export hub for supply to other markets […] In internal meetings, it was also discussed how China has not been particularly helpful to India on political issues, be it in terms of India’s permanent membership of the Nuclear Suppliers Group (NSG) or raising issues at the UN Security Council, and how India should even check on its immediate dependency on China for PPEs and APIs. […] What we want the government to do is to be careful about domestic interests. As far as greenfield investments go, there was no opposition to them…That needs to change as we need some distinguishing factors between investments that come from China and those that come from elsewhere. The global supply chain management system needs a massive overhaul so that our dependence on China is significantly reduced. We should also look at anti-dumping duties and the scope we have to increase tariffs. (emphasis mine) (Source: “Time to re-negotiate equations with China: Swadeshi organizations to govt.” https://eco nomictimes.indiatimes.com/news/politics-and-nation/time-to-re-negotiate-equations-withchina-swadeshiorganisations-to-govt/articleshow/75242555.cms) (Fig. 5)

Key ministries in the government of India, such as the Commerce and Industry Ministry and the External Affairs Ministry, were discursively aligned in their rhetoric with SJM. However, the government projected the compromise of Swadeshi ideals more as an opportunity. Such an articulation was also found in a speech by PM Modi in May 2020. Commerce and industry ministry (under) Piyush Goyal is likely to discuss these plans with the external affairs minister and Indian missions abroad on Thursday. ‘There are geographical issues of some countries because they don’t want to put all their eggs in one basket,

Fig. 5 Discourse, moments and the antagonistic frontier that emerged from the data analysis of the localism discourse

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S. Anis and J. A. French which is China. We are looking at sectors where we can improve capacity and reduce costs especially where dumping is happening,’ said one official […] As part of the strategy, India will look at areas where it has capability but continues to import and focus on the areas of core competence. Piyush Goyal on Wednesday told exporters that with shortage of food items in several countries due to supply chain disruptions, it is a good opportunity for export of agricultural and processed food items. He told exporters that incentives can be given, but they have to be ‘justified, reasonable, and WTO compliant.’ (Source: “India maps out post-Covid export plan to take on China.” Republished in Swadeshi Patrika by SJM May 2020, p. 36, original source: https://economictimes.indiatimes.com/news/economy/foreigntrade/india-maps-out-post-covid-export-plan-to-take-onchina/articleshow/75457477.cms)

The discursive conflict between Swadeshi and the localism (Atma Nirbhar Bharat) scheme of PM Modi did not go unnoticed. For instance, when Mr. Mahajan, the coconvener of SJM, was asked about it, he remained ambiguous in his answer without taking a side. Question: There is still some ambiguity about what defines ‘local’ in context of swadeshi. Does it mean products manufactured by Indians within the country? Or will it include products made in India by MNCs? Answer: When you say local, it is the narrowest form of swadeshi. In addition to goods made by Indian manufacturers, it would also encompass companies with foreign equity but where Indian equity is more than 51 percent. There is hardly any case for ambiguity. Local means a product used at the local level, produced by our indigenous industry—small, medium or cottage industry. It also includes GIs (Geographical Indications) like Kancheepuram silk, Moradabad metal craft, Firozabad glass and blue pottery of Jaipur. It also means decentralized production model and use of domestic resources and talent. (Source: Interview with Dr. Ashwani Mahajan, co-convener of SJM, “Vocal-For-Local Will Stop Unfair Chinese Dumping of Goods.” In Swadeshi Patrika published by SJM. June 2020, p. 10. https://www. swadeshionline.in/)

Mahajan explained the conflict between Swadeshi and localism as a matter of the degree of practice of Swadeshi ideals. In his opinion, localism is a partial implementation of Swadeshi ideals. While the explanation given by Mr. Mahajan accepts the dilution of the Swadeshi discourse, it fails to explain the acceptance of localism on three counts: first, the exclusion of Chinese MNCs and the inclusion of MNCs from Japan, the United States, and other nations; second, the governing principle that warrants the dilution of Swadeshi ideals; and third, how Hindu nationalism aligns with the compromise of the Swadeshi appeal. Question: Do you think the coronavirus outbreak has nudged the country towards swadeshi? Answer: There is definitely a context here. Coronavirus has already accelerated the collapse of the existing model of globalization, with lessons in self-reliance. Two weeks before the Prime Minister talked about it in his address, Sarsanghchalak ji (RSS chief Mohan Bhagwat) had called for national reconstruction through swadeshi and self-reliance. He had also talked about the model based on decentralization, using indigenous talent, giving employment to our youth. It can also be called ‘sanatan,’ invoking the philosophy of integral humanism as put forth by Deendayal Upadhyaya and later by Dattopant Thengadi. We are seeing its adoption in a new context. (Source: Interview with Dr. Ashwani Mahajan, co-convener of SJM, “Vocal-For-Local Will Stop Unfair Chinese Dumping of Goods.” In Swadeshi Patrika published by SJM. June 2020, p. 11. https://www.swadeshionline.in/)(Source: Interview with Dr. Ashwani Mahajan, co-convener of SJM, “Vocal-For-Local Will Stop Unfair Chinese

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Dumping of Goods.” In Swadeshi Patrika published by SJM. June 2020, p. 11. https://www. swadeshionline.in/)

In summary, the localist discourse brought forward three novel moments into the Swadeshi discourse while diluting the strength of Swadeshi rhetoric. These three key moments are: 1. 2. 3.

Development of the Indian market as a Swadeshi consumption marketplace by building the consciousness of consumers Development of India as a world manufacturing hub, and Countering the rise of China as an economic superpower by creating an alternative to it in the global supply chain.

7 Discussion 7.1 COVID-19 as an Event, and Its Materiality With respect to an event and the effect of its materiality on a discourse, Carpentier (2017, p. 37) clarifies that “the notion of the event refers to a material change that at least has the potential to dislocate a particular discourse.” While the discourse can attribute a meaning to the event, the event invites itself to be incorporated into the discourse. The COVID-19 pandemic became such an event for the Swadeshi discourse. The meanings attached to the pandemic were globally constructed and borrowed elements from localism discourses. Globally, various concerns were raised about Chinese businesses and their central relationship to the global supply chain. The over-dependence of global businesses on Chinese manufacturing hubs became the first point of discussion in the business and political world. Responding to these global concerns, “India […] significantly stepped up its pitch” as an alternative to China to attract investment flows from various countries, including the United States (Inamdar, 2020). One of the largest states in India, Uttar Pradesh, not only allocated land for such projects but it also relaxed labor laws. The COVID-19 pandemic also brought into the discussion the reduction of the “US lead over China as [the world’s] most powerful nation” and India’s weakening position in comparison (Bloomberg, 2020). Further, China was also blamed by rightwing politicians globally for not promptly disclosing to the world the presence and spread of the virus, thus making it responsible for the pandemic. Such discussions found favor among Hindu nationalists, both as a neighboring strategic adversary becoming stronger, and as an arch-rival suspected of foul play. Many wings of the Sanghparivar, in their internal meetings, have also sought to call the COVID-19, the Chinese virus. (Venugopal & Aulakh, 2020)

To surmise, China became the focus of foreignness and the prime threat in the Hindu nationalist imagination. As reported in the Findings section of this paper, the localism discourse emerged on the back of anti-Chinese sentiments that advanced due to the

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pandemic (as an event) and the pandemic’s materiality. Žižek (2014) describes the basic feature of an event as “the surprising emergence of something new which undermines every stable scheme.” Such a description of the pandemic fits the dislocation faced by the Swadeshi discourse. With the emergence of China as the key signifier of foreignness, and the challenges and opportunities posed by the set of events being the master signifier of the discourse, Swadeshi became weak and dislocated. Since the dislocation of the constitutive outside, the Other, is foreignness, the meaning of foreignness changed to China and became the focus. In this widespread discursive reimagination of the Swadeshi discourse, other foreign entities such as the United States and European countries lost their signification as “foreign” in a significant manner, as the immediate and material challenge that emerged to face the Swadeshi discourse was China. The pandemic became both a challenge and an opportunity. The shifting of the world’s manufacturing hub from China to India was a lucrative opportunity, which PM Modi referred to as “opportunity in adversity” in his speech. At the same time, the emergence of China as a global power right in the neighborhood drew adverse attention. The Atma Nirbhar Bharat (localism) movement, which had three key moments, marketplace, manufacturing, and sovereignty, took the focus away from the Swadeshi discourse. In the end, the Swadeshi discourse was dislocated by the materiality of the pandemic in such a manner that it lost some of its original meaning.

7.2 The COVID-19 Pandemic and the Dislocatory Moment of the Swadeshi Discourse From the discourse-theoretical perspective, all social phenomena and objects obtain their meaning(s) through discourse. Swadeshi as a discourse, and the pandemic as an event, have a socio-historical trajectory and political grounding, and their intelligibility is constructed through discourse. Indeed, their trajectories and foundations are contingent and non-essentialist and depend on the political maneuvering that agents circumscribe while drawing the frontiers of antagonism. The strength of the Swadeshi discourse lies in Hindu nationalism’s foundational principle of the geographic conception of nationhood. Where the nation as a geographical boundary and the nation as its people coincide, the “Hindu nation” comes into existence. Unfortunately, while drawing the borders and boundaries, whatever gets excluded becomes the outside, the foreign, the Other. The imagined community of the Hindu nation as a Hindu state remains threatened perpetually by what it defines to be foreign and what is constructed as “Indian.” In a global world order, where businesses are intertwined to an inseparable degree of knottiness, Swadeshi may become successful rhetoric for constructing a marketplace for preference over Swadeshi consumption, but it fails to exclude “foreignness” from incoming foreign capital and global supply chains.

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The key signifiers of foreignness in the Swadeshi discourse have always been opposition to MNCs and foreign investors, which have an alleged objective of “looting the wealth of India.” In other words, the Swadeshi discourse cannot remain Swadeshi if foreignness is removed from the discursive domain. “Swadeshi” and “foreignness” co-constitute and signify each other. The only way to dislocate the idea of Swadeshi is to dislocate the notion of “foreignness” by diluting the very idea of “foreign.” This dislocation was brought about by the materiality of the pandemic as an event. Localism, the Atma Nirbhar Bharat policy of PM Modi, invites MNCs and foreign investors to build manufacturing hubs in India as an alternative to pandemic-affected China. Such an invitation is a step that has implications for Western nations too. This call is a reversal of the strict boycott of MNCs and globalization and furthers the integration of the Indian economy into global trade and commerce. In other words, the Swadeshi discourse becomes weak and Western nations become allies in the opposition to China. Countries like the United States and Japan have started to find favor with the current regime, which goes against the regime’s core ideological commitment to Swadeshi. This stance of the government has sent mixed signals to these countries. While the government at the policy level favors foreign capital and businesses, politicized consumers and citizens are not prepared to accept them. The government is not doing much to clear the air about the Swadeshi discourse’s strong opposition to any foreign nation doing business in India and the “Swadeshi marketplace” still exists and is successfully catered to by Indian brands such as Patanjali Ayurveda Ltd. Given the ontological opposition of localism to Swadeshi, neither of the discourses is likely to dominate and replace the other anytime soon. The localism discourse has put a serious question mark on the original ideological foundations of the Swadeshi discourse, as illustrated in Fig. 6, without making much of an effort to assure Western nations of their greenfield investments. The implications of this confusion may result in chaotic outcomes when the pandemic-driven localism discourse subsides and the Swadeshi discourse makes a comeback.

8 Conclusion We critically examine the impact of the COVID-19 pandemic on the Swadeshi discourse of Hindu nationalism and the emergence of a localism discourse as articulated by PM Modi and later popularized by Swadeshi Jagran Manch. We find that the two discourses have become discursively incompatible and irreconcilable since the Indian government adopted Atma Nirbhar Bharat as its policy framework to boost Indian manufacturing as an alternative to Chinese manufacturing hubs. The irreconcilable and antagonistic objectives of the two discourses jeopardize the policy framework and it is pertinent to highlight that the incompatibility arose from the impact of the COVID-19 pandemic. It is important to note that the political discourse of Swadeshi became severely limited in its conceptualization due to the impact of an event, an event that engulfed the discourse and dislocated the key

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Fig. 6 COVID-19 as the event and the dislocatory moment of the Swadeshi discourse

signifiers structured within it. The significance of this study is that it highlights the precarity of discourses when they encounter events that have a colossal impact. The impact lies not only in the material change that these events bring to the social world but also in how the events are interpreted and how their materiality is construed. In post-structuralist parlance, the empty signifier of Swadeshi becomes a floating signifier due to the impact of a material event that dislocated the key signifiers and invited several elements from an infinite set of moments to construct a new structured reality. This study exemplifies the role played by the antagonist “the Other” in the constitution of the discourse. As we have shown, the moment the signification of the foreignness shifted from all countries outside Indian borders to China, the original conceptualization of the Swadeshi discourse became compromised and the localism discourse became another globalization project with various qualifiers and apologies. It is also expected that once the pandemic-induced localism discourse settles and the Swadeshi discourse makes a comeback, many “foreign” businesses making efforts to join the localism bandwagon may feel the heat of opposition and boycott by consumers and citizens, if not by the government.

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Pathak-narain, P. (2017, July 30). Inside Patanjali: Here’s what life is like in Baba Ramdev’s company. The Economic Times. https://economictimes.indiatimes.com/industry/cons-products/ fmcg/inside-patanjali-heres-what-life-is-like-in-baba-ramdevs-company/articleshow/598248 92.cms Sarkar, S. (2014). Modern times: India 1880s–1950s, environment, economy, culture. Permanent Black. Sreekumar, H., & Varman, R. (2019, February). The development of political consumerism in India. In The Oxford handbook of political consumerism (pp. 26–46). https://doi.org/10.1093/oxfordhb/ 9780190629038.013.27 Srivastava, S. (2015). Modi-masculinity: Media, manhood, and “traditions” in a time of consumerism. Television and New Media, 16(4), 331–338. https://doi.org/10.1177/152747641 5575498 Sutherland, C. (2005). Nation-building through discourse theory. Nations and Nationalism, 11(2), 185–202. Torfing, J. (1999). New theories of discourse: Laclau, Mouffe, and Zizek (Vol. 301). Blackwell Publishers Oxford. Varman, R., & Belk, R. W. (2009). Nationalism and ideology in an anticonsumption movement. Journal of Consumer Research, 36(4), 686–700. https://doi.org/10.1086/600486 Vikas, R. M., Varman, R., & Belk, R. W. (2015). Status, caste, and market in a changing Indian village. Journal of Consumer Research, 42(3), 472–498. https://doi.org/10.1093/jcr/ucv038 Venugopal, V. & Aulakh, G. (2020). Time to re-nehotiate equations with China: Swadeshi organisations to government. The Economic Times. https://economictimes.indiatimes.com/news/pol itics-and-nation/time-to-re-negotiate-equations-with-china-swadeshi-organisations-to-govt/art icleshow/75242555.cms?from=mdr Walton, S., & Boon, B. (2014). Engaging with a Laclau & Mouffe informed discourse analysis: A proposed framework. Qualitative Research in Organizations and Management: An International Journal, 9(4), 351–370. https://doi.org/10.1108/QROM-10-2012-1106 Žižek, S. (2014). Event: Philosophy in transit. Penguin UK. https://books.google.com/books?hl= en&lr=&id=IeILAQAAQBAJ&oi=fnd&pg=PT6&dq=zizek+2014o&ots=Duea2LhBuA&sig= oX2fTpmntm84UzF4-er_IgT2hkc

Shafiullah Anis has worked as Civil Engineer before pursuing an MBA from IIM Lucknow India. He has rich experience in marketing practice, working for top FMCG companies in India and Africa. He pursues research at the intersection of consumption, marketplace, and culture. His work is informed by social sciences and cultural studies theories. He is a PhD candidate at Monash University Malaysia. Dr. Juliana French is a senior lecturer in Marketing at Monash University Malaysia. Her research focuses on issues at the nexus of consumer culture, marketplace resources, and political consumerism, particularly within the Asian region. Dr. French is currently involved in research projects on consumer vulnerability as a result of sociocultural aspects of consumption. Her work has been published in the Annals of Tourism Research, the Journal of Macromarketing, the Journal of Marketing Management, and the Australasian Marketing Journal, amongst others.

FDI in the Era of the Pandemic: Public Health as a New Country Risk Measure Lianne M. Q. Lee, I-Chieh Michelle Yang, and Motoki Watabe

Abstract Since the 1980s, foreign investment flows from developed regions to developing countries have steadily increased. Asian countries, particularly the four Asian dragons (Hong Kong, Singapore, Taiwan, and South Korea) have been key recipients of FDI. In recent years, more developing countries in the Asia Pacific region have sought to attract FDI to improve their economies and countries such as Vietnam and Myanmar have enacted considerable political and economic reforms to assure foreign investors of more effective infrastructure facilities and governance. The pandemic has constricted the flow of FDI to the region as foreign investors have become more attuned to the vulnerability of countries in successfully managing public health crises. As most Asian economies are dependent on FDI, changes in how country risk is assessed post COVID-19 will affect their attractiveness to foreign investors. Therefore, our research, which proposes a new risk measure based on the pandemic, is timely, relevant, and contributes to the scholarly understanding of investor behavior and international finance. Keywords COVID-19 · Foreign direct investment · Asian economies · Risk assessments · Healthcare · Pandemics

L. M. Q. Lee (B) Department of Economics and Finance, Sunway University, Petaling Jaya, Malaysia e-mail: [email protected] I.-C. M. Yang Graduate School of Management, Kyoto University, Kyoto, Japan e-mail: [email protected] M. Watabe School of Business, Monash University Malaysia, 47500 Bandar Sunway, Malaysia e-mail: [email protected] Sunway University Business School, Sunway University, 47500 Bandar Sunway, Malaysia © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 A. O. J. Kwok et al. (eds.), COVID-19 and the Evolving Business Environment in Asia, https://doi.org/10.1007/978-981-19-2749-2_5

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1 Introduction The COVID-19 pandemic has created a state of chaos for business and trade activities. Shining a spotlight on the vulnerabilities of international business, the pandemic has precipitated dramatic changes in investments between countries. According to a recent report by OECD, foreign direct investment (FDI) declined globally by 30% in 2020, and the decline is expected to persist for an extended period. As FDI is one of the key indicators of economic vitality, attracting foreign investors has typically been a key strategic focus for many countries. Foreign investors have traditionally relied on the two dominant risk measures of socio-political risk and economic risk to determine their level of exposure to country-specific risks before making investment decisions (Hayakawa et al., 2013; Madura, 2017; Saini & Bates, 1984). Developing countries such as Myanmar and Malaysia have focused on political and economic reforms aimed at reducing country risk to attract foreign investors. Yet as COVID-19 has demonstrated, public health risk and the associated vulnerability of countries have become amplified in the face of the pandemic, reversing promising FDI trends in certain developing countries. The collapse of public health infrastructure and the lack of an adequate crisis response may discourage new or existing FDI. It is also plausible that there will be considerable transformations in country risk assessments post-COVID-19, with pandemic-related risk factors being prioritized alongside socio-political and economic risks. A recent survey commissioned by the World Bank found that approximately 51% of multinational enterprises (MNEs) considered the global pandemic a severe business risk that will influence future investment decisions. This finding, albeit descriptive, provided a precursory insight into how foreign investment will change during or after the pandemic. To address this and the lack of scholarly conceptualizations of pandemic-related risk factors, we propose a new country risk factor to extend the current theoretical knowledge of country risk assessment in international finance scholarship. In our research, we draw on correlation analysis to identify connections between our identified variables relating to COVID-19 and FDI. Using a sample of seven Asian countries (Singapore, South Korea, Japan, Taiwan, Indonesia, Malaysia, and India) and Hong Kong, a special administrative region (SAR) of China, we define a new country risk measure that advances the current conceptual underpinnings of the conventional country risk assessment measures and helps to identify potential factors that affect country risk ratings and jeopardize inbound FDI. Referring to Table 1, it is observed that all selected countries experienced negative change in the GDP from 2019 to 2020, except Taiwan. As FDI is essential to a country’s GDP growth, we argue that this new risk measure should be included in future FDI risk assessments to better understand investor behavior and international finance. It is pertinent to highlight that this conceptual paper proposes public health risk as a new risk factor that is an important dimension of FDI risk assessment. Our key theoretical contribution is the extension of the conventional risk assessment framework to consider healthcare-related factors.

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Table 1 GDP and the growth rate of selected countries (USD, billion) Year

Hong Kong

Indonesia India

Japan

South Korea

Malaysia Singapore Taiwan

2010

228.6

755.1

1675.6

5.7

1.1

255.0

239.8

2015

309.4

860.5

2103.6

4.4

1.5

301.4

308.0

534.5

2018

361.7

1042.3

2701.1

2.7

1.7

358.7

376.0

609.2

2019

363.02

1119.1

2870.5

5.06

1.7

364.7

374.4

612.17

2020

346.6

1058.4

2623.0

5.4

1.6

336.7

340.0

668.51

−9.19%

9.20%

3.49%

4.09%

Change −4.53% −5.42% %

−8.62% −0.32% −0.98% −7.68%

Growth 4.16% %

4.48%

3.38%

−1.21% 3.54%

2.78%

444.3

Note Change % = % change in GDP from 2019 to 2020; Growth % = average annual growth rate from 2010 to 2020 Source World Bank; National Statistics, Taiwan

This chapter is structured as follows: Sect. 2 provides the research context as it is related to the COVID-19 pandemic. Sect. 3 provides a discussion of the conceptual background of FDI country risk assessments, while our study’s data and methodology are outlined in Sect. 4. This is followed by a presentation of findings in Sect. 5 and a discussion of findings and their contribution to the literature and to policy recommendations in Sect. 6. Finally, to conclude this chapter, Sect. 7 highlights the limitations of our study and provides suggestions for further research.

2 Conceptual Background: Country Risk FDI, as a form of private capital, has garnered substantial academic interest, especially with the pivotal role it plays in the growth and development of economies. Of particular importance is how FDI facilitates job creation and technology transfers from developed to developing economies to promote better economic and political development (Maher, 2015; Pazienza, 2014). Asian countries have considered the inflow of FDI to be crucial to economic growth and have made considerable efforts through the implementation of policy reforms and tax relief to attract foreign investors. Yet, given the damage inflicted on many economies from the effects of the COVID-19 pandemic, the conventional approach to attracting FDI may no longer be applicable in the post-pandemic era. At the outset, FDI appears to be an attractive business decision that is beneficial to both the investor and the host country. Yet, multinational companies often undertake extensive risk evaluation before making any major investment decisions (Leavy, 1984; White & Fan, 2006)) as FDI subjects a firm to unfavorable risks related to the volatility of returns, cash flows and, sometimes, the safety of expatriate staff (Click,

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2005; Li et al., 2017). FDI risk assessment refers to the strategic and meticulous assessment of all potential risk factors inherent in a country before an investment is made. To build the conceptual background of this research, we reviewed existing scholarship on FDI, with a specific focus on FDI during crises and FDI risk assessment. FDI is treated as the dependent variable whereas risk factors are independent variables (Li et al., 2017). The extant literature has identified political risk, financial risk, economic risk, and natural risk, as key factors in risk assessment. These risk factors will be elucidated further in the following sections.

2.1 Political Risk According to Howell (2001), political risk is defined as “the possibility that political decisions or political and social events in a country will affect the business climate in such a way that investors will lose money or not make as much money as expected” (p. 4). Assessment of political risk therefore entails a careful evaluation and forecasting of a country’s political stability (Leavy, 1984). Political and social events associated with political stability include corruption, civil war, and even bilateral relationships. Corruption involves bribery, often of government officials by business enterprises for convenience and unequal access (Liu, 2019; Nikoli´c et al., 2011). To illustrate, the energy sector in developing countries, one of the fastest-growing sectors for FDI, has been a central focus in FDI literature due to the benefit it brings to host destinations (Gatzert & Kosub, 2016; Jiang & Martek, 2021). Jiang and Martek (2021) found that the level of corruption in a country can significantly impact FDI because foreign investors believe that corruption implies a lack of stringent energy policies and regulatory frameworks, which may increase the cost of operation and reduce revenue over the long term (Liu, 2019). Some scholars have also found that companies sometimes resort to bribery for easier access to lucrative deals and convenience in conducting business (Kalyuzhnova & Nygaard, 2008) and that such under-the-table arrangements foster unfair competition, resulting in unfavorable and illegal treatment of foreign investors (Liu, 2019). High levels of corruption in a country can indirectly translate into “low transparency, poor accountability and weak governance” (Liu, 2019, p. 4). Civil war is a result of the militarization of domestic political conflict and is another form of political risk that can severely impede FDI (Driffield et al., 2013; Resnick, 2001). During a civil war, assets are destroyed, increasing operating costs to firms, and threatening employee safety (Madura, 2017; Maher, 2015). MihalacheO’Keef and Vashchilko (2010) stated that countries marred by civil war or political violence project a negative image to foreign investors. Li et al. (2017) conducted a more elaborate study and found that the level of political risk associated with civil war varies according to the economic sector. For instance, FDI in the primary sector, which includes oil and gas, is less susceptible to the negative effects of civil war.

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On the other hand, FDI in secondary (manufacturing), and tertiary (services) sectors involving renewable energy, consumer products, and tourism may be significantly impacted by the effects civil war, which can be detrimental to plants, equipment, and sometimes employees. Barry (2018) highlighted that it is important to consider the duration and intensity of a civil war as it could subjectively impact FDI. Therefore, conflict abatement is a crucial policy consideration for countries involved in civil wars, if they want to attract foreign investors (Barbieri & Reuveny, 2005; Li et al., 2017).

2.2 Financial Risk Financial risk refers to the “risk that a country may not be able to repay its foreign liabilities” (Hayakawa et al., 2013). A country with a high level of financial risk is likely to undergo a financial crisis, posing a severe threat to foreign investors as FDI cannot often be repatriated quickly. A financial crisis is an outcome of severe disruption in financial markets resulting in the inability of a country to “channel funds to those who have the most productive investment opportunities” (Mishkin, 1992, p. 118). In some instances, a financial crisis triggered by a national bank failure, stock market crash, or sovereign bond spreads may have a drastic domino effect on foreign investment, as foreign investors may adopt a “herd mentality” (Moon et al., 2011, p. 123) and suddenly withdraw their investments and commitments en masse (Weisbrot, 2007). Kellard et al. (2020) found that sovereign risk, which largely depends on the host government’s financial vitality and discipline, is considered a significant risk factor that may drive off foreign investors in Europe (Beck et al., 2016). Fischer and Dötz (2010) investigated the 2010 European financial crisis and found that countries such as Greece and Spain experienced a sharp increase in their sovereign bond spreads, heightening financial risk perception from within the region. Hayakawa et al. (2013) found that financial risk plays a less prominent role than political risk in risk assessment. In contrast, Alfaro et al. (2004) found that countries with strong financial market governance and a well-developed financial infrastructure tend to attract a higher inflow of FDI.

2.3 Economic Risk Unlike financial risk, which is concerned with a country’s financial markets, economic risk is related to a country’s fiscal policies. Economic risk is concerned with factors in a country’s macroeconomic environment, such as exchange rate, interest rates, or inflation. (Boateng et al., 2015; Bouchet et al., 2003). Agudze and Ibhagui (2021) investigated the effects of inflation on FDI and demonstrated that high levels of inflation reduce the inflow of FDI in both developing and industrialized countries.

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More importantly, the effects of high inflation can greatly dampen FDI in developing countries where financial governance and fiscal policies may not be as well developed as in their industrialized counterparts. The foreign exchange rate is another key component of macroeconomic risk (Solomon & Ruiz, 2012). High volatility in foreign exchange rates, such as the sudden and drastic devaluation of the Mexican Peso in 1995, and the devaluation of Asian currencies during the 1998 Asian financial crisis, has a direct impact on FDI attraction. This is because high volatility creates heightened uncertainty of both costs and revenues for foreign investors (Bouchet et al., 2003). Xing (2006), for instance, argued that China has been able to attract a large volume of foreign investors since the devaluation of the Chinese Yuan and the pegging of the Yuan pegging to the U.S. Dollar because the devaluation of the Chinese currency meant lower costs when they decided to invest.

2.4 Natural Risk Natural risk, as defined by Bouchet et al. (2003), refers to “the natural phenomena that may negatively impact the business conditions” (p. 16). Natural risks are often associated with seismic and weather events, both of which may cause drastic destruction of plants and other business facilities, resulting in greater trading costs (Hood et al., 2013; Oh, 2017). In his work on how hurricanes impact FDI, Yang (2008) noted that natural disasters may temporarily halt local production and disrupt supply chains and infrastructure. To illustrate, the 1999 earthquake in Turkey led to the destruction of production plants owned by multinational companies’ supply chain. As a result, businesses’ supply chains were negatively implicated due to the destruction of production facilities (Bouchet et al., 2003). Another area of focus in natural risk research is public health crises such as epidemics and pandemics. In their study of the economic impact of the severe acute respiratory syndrome (SARS) in Taiwan, Chou et al. (2004) found that foreign investors were discouraged by the government’s handling of the pandemic, as they feared that a lack of transparency would negatively impact business conduct in the country. Hanna and Huang (2004) showed that the number of new foreign investments in China fell drastically during the peak of SARS. For instance, the flow of FDI in July 2003 was 19% lower than the same month in 2002. In a study commissioned by Deutsche Bank, Ma (2003) found that 58% of investors were concerned about China’s handling of the pandemic at the height of the pandemic, but that this decreased to 33% when the pandemic was better contained by the government. Despite the extensive and often adverse impact of natural disasters, scholars have paid limited attention to epidemics and pandemics and the existing body of research has focused on political and financial risks. A plausible explanation as to why public health crises have received significantly less attention than other country risk factors could be attributed to the lack of conceptualization of public health crises as a risk factor. We argue that the current treatment of public health crises (e.g., epidemics

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and pandemics) as a type of natural risk understates their impact on global business and the flow of FDI. In more recent work, Ho and Gan (2021) explored how the COVID-19 pandemic might affect FDI by investigating key pandemics such as SARS and Ebola from 1996 to 2019. Their findings suggest that pandemics directly reduce FDI, as foreign investors face uncertainties about the host nation’s capacity to contain the virus, the transparency in the country’s handling of the pandemic, and the pandemic’s duration. Indirectly, the reduction in FDI resulted in high unemployment and slowed economic growth in Asian countries. Their insights are consistent with our argument that public health crises, as evidenced by COVID-19, are characteristically different from other natural disasters. For instance, natural disasters such as hurricanes and earthquakes tend to be episodic, whereas public health crises such as COVID-19 are prolonged and extensive. In addition, the impact of natural disasters is much less extensive than the impact of pandemics. As such, the characteristic difference between natural disasters and public health crises leads to different risk assessments (Jahari et al., 2021; Yang, 2008). The global pervasiveness and extent of the impact of the COVID-19 pandemic highlight the vulnerability of international finance, which emerged from increasing global connectivity and continues to be highly influenced by global events. As a result, we argue that it is imperative to re-examine the conventional risk assessment framework. To this end, we propose a new risk factor, public health risk, and posit that in the post-pandemic business world, public health risks such as pandemics will be an important risk consideration for foreign investors. Specifically, we argue that investors will pay more attention to a country’s public health governance, healthcare expenditure, and regulatory quality, in assessing the risk of a country’s ability to favorably cope with a public health crisis.

3 Research Context: COVID-19 and Foreign Direct Investment The COVID-19 virus was first discovered in Wuhan, China in December 2019. Since then, this highly infectious and deadly virus has made its way to virtually all parts of the world, resulting in at least 200 million confirmed cases and more than 4 million deaths (as of August 2021). From a serious public health threat to a global economic downturn, the impact of the pandemic has been extensive (Fang et al., 2021), and the world is still grappling with a virus that continues to mutate and frustrate efforts to contain it. One of the most immediate economic impacts of the COVID-19 pandemic has been on FDI. According to the United Nations Conference on Trade and Development (UNCTAD, 2020), FDI activity dropped by 50% between 2019 and 2020. A World Bank (2020) survey found that 85% of foreign investors experienced reduced revenues during the first quarter of 2020. A more recent figure provided by UNCTAD

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(2021) showed that global FDI declined by 35% by the end of 2020, hitting its lowest level since 2005. The impact is likely to persist as the pandemic continues. In Asia, where the largest FDI recipient countries are located, inbound FDI has contracted significantly by the end of 2020. For instance, the flow of FDI to Singapore fell by 21% in 2020, negatively impacting the country’s GDP. In their study on the 2003 SARS outbreak, Hanna and Huang (2004) raised whether the economic shocks from the SARS outbreak would be permanent or temporary. We ask a similar question: “Will the economic shocks from COVID19 be permanent or temporary?” We argue that unlike pandemics such as SARS and Ebola, COVID-19 has pushed governments to re-examine their respective healthcare governance and infrastructure (Hanna & Huang, 2004). The pandemic has also sensitized foreign investors to the vulnerability of global business to the effects of such a widespread public health crisis. It is plausible that investors, who were already risk-averse before the pandemic, might become even more conscientious about FDI risk assessments considering the deep and massive negative impacts resulting from COVID-19. The Organization for Economic Cooperation and Development (OECD) further highlighted that the impact of COVID-19 on FDI will depend on the effectiveness of public health and economic policy responses in the FDI host destination.

4 Data and Methodology 4.1 Data This section introduces the study’s data sources and variables. In this study, we propose that healthcare infrastructure is an important determinant of a country’s FDI inflow. Our study comprised a total of 88 observations regarding FDI from seven Asian countries (Taiwan, Singapore, Japan, South Korea, India, Malaysia, and India) and one special administrative region of China (i.e., Hong Kong) between 2010 and 2020. We selected these countries and regions as our sample due to their dependence on FDI. We obtained data from various sources (see Table 2). We collected COVID19 mortality rates and the total number of cases from ourworldindata.org, which provided information related to reported cases and mortality rates by country. These data were as of April 2020. We also gathered information about healthcare infrastructure from the World Bank database. Healthcare expenditure as a percentage of GDP is the proxy for healthcare infrastructure. This is consistent with the prior studies of Berwick and Hackbarth (2012) and Sharma et al. (2021). We also collected data from the Human Development Index (HDI), which measures a country’s overall achievement in its social and economic dimensions of “a long and healthy life, knowledge and decent standard of living.” In addition to considering healthcare infrastructure, we argue that a multinational company contemplating FDI should consider assessing the feasibility of doing so

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Table 2 Variables, definitions, and data sources1 Variable

Definition

COVID mortality

COVID-19 as the cause Daily of death reported

Sampling frequency

ourworldindata.org

COVID cases

COVID-19 cases reported

ourworldindata.org

Healthcare infrastructure

Health expenditure as a Annual percentage of GDP

World Bank; National Statistics, Taiwan

Human Development Index (HDI)

Measures a country’s Annual overall achievement in its social and economic dimensions based on the health, knowledge, and standard of living of its people

United Nations Development Programme

Regulatory quality

Measures the ability of Annual the government to formulate and implement sound policies and regulations that permit and promote private sector development

World Bank Database

FDI inflow

The value of direct investments made by foreign investors in the reporting economy

Annual

World Bank; National Statistics; National Statistics, Republic of China (Taiwan)

GDP per capita

Country’s GDP divided Annual by its total population

World Bank; National Statistics; National Statistics, Republic of China (Taiwan)

Unemployment rate

Unemployment (%) per Annual country

World Bank; National Statistics; National Statistics, Republic of China (Taiwan)

Daily

Data source

based on host government policies, which may hamper FDI. Therefore, to identify the governance of the host country, we also considered regulatory quality. We obtained the regulatory quality indicator data from the World Governance Index (WGI), which also evaluates voice and accountability, political stability, the absence of violence/terrorism, government effectiveness, the rule of law, and the control of corruption. However, we only focused on regulatory quality as this indicator measures the ability of governments to formulate and implement sound policies and regulations that permit and promote private sector development. 1

This study follows a similar sampling as in Sharma et al.’s (2021) study. In their study, they use a mixed sampling frequency (i.e., daily and annual data) in their analysis.

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We gathered information about FDI inflow, GDP per capita, and unemployment rates from the World Bank. We note that data on healthcare and FDI inflow were not available for the most recent year (2020) for all the sampled countries.2

4.2 Methodology Classic macro-assessment of country risk considers all variables that affect FDI except those that are unique to a particular firm or industry. This type of assessment is useful because it remains the same for any given country regardless of firm or industry type. Typically, when the financial and political variables have been measured for some time, quantitative models can attempt to identify country risk characteristics. Given the novelty of the current pandemic, the limited availability of data has restricted our ability to examine longitudinal data to derive deeper insights. As a result, we used correlation analysis to study the strength of the relationship between variables to draw preliminary insights. This type of analysis is suitable to determine connections between variables and has been popularly used in other studies (e.g., Barnes et al., 2001; Howell, 1992; Solnik et al., 1996) to investigate the degree of correlation between country risk factors.

5 Findings Table 3 presents the statistical results of our correlation analysis. Based on the results, we have identified six key relationships (Table 4) that may be crucial to developing a new risk factor for FDI during the pandemic. We also present the cross-country comparison between healthcare expenditure, COVID mortality and FDI inflow. Each of these relationships will be further elucidated.

5.1 FDI Inflow and COVID Mortality The first key relationship identified is between FDI inflow and COVID mortality. The correlation coefficient (r = −0.31) suggests an inverse relationship between the two variables, meaning that low COVID mortality levels are associated with higher FDI inflows. The relationship is statistically significant even at the 1% level. The inverse relationship between COVID mortality and FDI inflows can be construed as

2

Sharma et al. (2021) studied the role of governance and healthcare infrastructure in COVID-19. The authors faced the same limitation where the data on healthcare and FDI inflow from World Bank were not available for the year 2020.

(8) Healthcare expenditure

***Correlation significant at 1% level (2-tailed)

−0.9018*** 0.4820***

0.9018*** −0.6317***

−0.9328***

0.6930***

0.4499***

(7) Regulatory quality 0.4798***

0.8094***

−0.5274***

−0.0381

−0.3267***

−0.3978***

(6) COVID cases

0.4856***

0.8842*** −0.7376***

0.4010***

−0.1426***

1.00

(4)

(5) Unemployment rate

−0.6894***

1.00

(3)

(4) GDP per capita

1.00 −0.8010***

0.3304***

−0.3142***

(3) COVID mortality

(2)

(2) HDI

1.00

(1)

(1) FDI inflow

Table 3 Correlation matrix

−0.3904***

0.7008***

0.3631***

1.00

(5)

−0.7131***

0.8625***

1.00

(6)

0.9707***

1.00

(7)

1.00

(8)

FDI in the Era of the Pandemic: Public Health as a New … 87

88 Table 4 Key relationships

L. M. Q. Lee et al. Variable 1

Variable 2

Correlation coefficient (r)

FDI inflow

COVID mortality

−0.3142***

FDI inflow

Regulatory quality

0.6930***

FDI inflow

Healthcare expenditure

0.4499***

Healthcare expenditure

Regulatory quality

0.9707***

COVID mortality

Healthcare expenditure

−0.6317***

COVID mortality

GDP per capita

−0.6894***

a greater willingness of foreign investors to invest in countries with lower COVID mortality, as lower mortality illustrates a country’s ability to cope with the pandemic.

5.2 FDI Inflow and Regulatory Quality The second key relationship is between FDI inflow and regulatory quality. The correlation coefficient (r = 0.69) suggests a positive relationship between the two variables, suggesting that high levels of regulatory quality are associated with higher FDI inflow. The relationship is statistically significant even at the 1% level. The highly significant relationship between FDI inflow and a country’s regulatory quality can be seen as critical consideration of foreign investors when selecting host countries to invest in.

5.3 FDI Inflow and Healthcare Expenditure A third key relationship is between healthcare expenditure and FDI inflow. The correlation coefficient (r = 0.45) suggests that high levels of healthcare expenditure are associated with higher FDI inflows. The relationship is statistically significant even at the 1% level. This important relationship is observed when countries such as Hong Kong with high healthcare expenditure investment reported relatively higher FDI inflow (refer to Table 5).

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Table 5 Cross-country comparison of association between healthcare expenditure, COVID mortality and FDI inflow Country

Healthcare expenditure (per capita, in USD billion)

Total COVID mortality (annual)

FDI inflow (USD billion)

Hong Kong

$25,258

144

$119.23

Taiwan

$11,197

2

$8.80

Japan

$4,453

3,225

$10.25

Singapore

$2,825

26

$90.60

South Korea

$2,550

755

$20.75

Malaysia

$427

428

$14.60

Indonesia

$112

22,002

$23.40

India

$73

148,703

$81.72

5.4 Healthcare Expenditure and Regulatory Quality The fourth key relationship we identified is between healthcare expenditure and regulatory quality. The correlation (r = 0.97) suggests a strong positive relationship between the two variables, indicating that high levels of healthcare expenditure are associated with higher levels of regulatory quality. The relationship is statistically significant even at the 1% level. This strong relationship can be construed that strong regulatory quality is also imperative to facilitate heavy investments in healthcare facilities.

5.5 COVID Mortality and Health Expenditure The fifth significant relationship we identified is between COVID Mortality and healthcare expenditure. The correlation coefficient (r = −0.67) suggests a strong inverse relationship between the two variables. Intuitively, this suggests that low levels of COVID mortality are associated with higher levels of healthcare expenditures. The relationship is statistically significant even at the 1% level. As reported in Table 5, it can be observed that countries such as India reports the lowest expenditure reports the highest COVID mortality, whereas countries such as Taiwan have high healthcare expenditure reported the lowest COVID mortality.

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5.6 COVID Mortality and GDP Per Capita Lastly, the sixth relationship we identified is between COVID mortality and GDP Per Capita, The correlation coefficient (r = −0.69) suggests a strong inverse relationship between the two variables. This suggests that low levels of COVID mortality are associated with a higher level of GDP per capita. The relationship is statistically significant even at the 1% level. This relationship may infer that a country’s ability to cope with COVID, represented by lower mortality is associated with higher GDP Per Capita.

6 Discussion This paper proposes a new country risk factor for FDI risk assessment. Building on the classical risk assessment framework of Bouchet et al. (2003) and Madura (2017), we show that the existing conceptualization of risk assessment in the investment literature might not adequately consider the risk of public health crises, such as COVID-19. In this section, we will discuss the contribution of our study to the literature and to policy formulation.

6.1 Contribution to the Literature The COVID-19 pandemic has caused major disruptions to global business, most prominently to the flow of foreign investment (World Bank, 2020). In the foregoing sections we reviewed the existing risk factors in FDI country risk assessments and argued that research to date has yet to recognize the role played by public health in influencing the inflow of FDI. A plethora of research has focused on political risk, financial risk, and economic risk, over-emphasizing the importance of these risk factors on foreign investment decisions. We acknowledge the importance of these risk factors and that political risks such as civil war and corruption can have a detrimental impact on foreign investment. The point we wish to highlight through our current research is that the impact of the COVID-19 pandemic on international finance is unprecedented and far exceeds the impact of the other risk factors because the pandemic has occurred on a global scale and affected almost every nation. This makes a re-examination of the conventional risk assessment framework imperative. To this end, we propose a new risk factor, public health risk. We define public health risk as the possibility that public health crises, such as epidemics and pandemics, will cause economic devastation and heighten the risk perception of investors. As part of this study, we conducted a brief correlation analysis to understand the association between FDI inflow and variables related to COVID-19, such as COVID mortality, healthcare expenditure, and regulatory quality. Our correlation

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analysis highlights some important relationships between a country’s public health governance (such as healthcare expenditure and regulatory quality) and the inflow of FDI. While the information presented in this study is limited due to the unavailability of some data and the recency of the pandemic, we can still draw some valuable preliminary conclusions from the correlation analysis. As reported in Sect. 5, we show that the healthcare expenditure of the sample countries correlates directly with the COVID mortality figures and FDI inflow. The inverse relationship between COVID mortality and healthcare expenditure suggests that countries that invest heavily in healthcare infrastructure experience a lower incidence of COVID mortality. Specifically, countries with higher expenditure would have more robust public health management systems and better healthcare facilities to manage the pandemic. This implies that regulatory quality is vital at every stage of a pandemic to help resolve the health crisis and its economic and social effects, as evidenced by the positive association between regulatory quality, FDI inflow, and healthcare expenditure. A country’s healthcare expenditure can directly lead to a lower mortality rate as a country is able to provide quality care and treatment for patients. A recent study by Sharma et al. (2021) found that increasing healthcare expenditure (i.e., the percentage of GDP spent on healthcare) can substantially enhance a country’s COVID response, including access to diagnostics, and lower numbers of confirmed cases and deaths. We also found that lower levels of COVID mortality are associated with higher levels of FDI inflows. In addition, we see those lower levels of COVID cases are associated with higher FDI inflows. The results highlights that public health matter (healthcare expenditure and COVID mortality) may be an important risk consideration for foreign investors. The results also highlight a possible spill-over from public health risk to economic risk. Based on the correlation analysis, we see a positive relationship between COVID mortality and GDP. Referring to Table 5, Taiwan is the only country that reported single-digit COVID mortality and the only country that reported a positive change in GDP growth from 2019 to 2020 (see Table 1). Specifically, higher healthcare expenditure may be translated into lower pandemic mortality as well as higher GDP per capita, further illustrating that healthcare expenditure is vital for healthy economic growth during the pandemic (such as in Taiwan) and may present greater investment opportunities.

6.2 Contribution to Policy Formulation This paper contributes to policy making, especially for countries dependent on FDI. The importance of a substantial expenditure in healthcare in both containing COVID-19 cases and mortality and attracting FDI highlights the essential role that healthcare investment plays in allaying the concerns of foreign investors. While past research highlighted the importance of financial stability and attractive FDI policies in attracting foreign investors, the results of our research emphasize that healthcare

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policies may be a prioritized risk factor in times of health crises such as pandemics. Countries that have neglected healthcare investment, such as Indonesia and India (Table 5), have also been adversely affected by the pandemic, as evidenced by their high numbers of deaths; if these countries are dependent on foreign investment, such effects of the pandemic might heighten the perception of risk amongst investors. It is therefore vital for policymakers to reconsider their current healthcare investments to enhance their country’s investment attractiveness and stimulate FDI. In addition, regulatory quality, i.e., the formulation and implementation of sound policies and regulations that permit and promote private sector development (such as those associated with foreign investment) as well as healthcare infrastructure, is also associated with FDI inflow. The COVID-19 pandemic has made it imperative for trusted, coordinated, and well-enforced regulations to be in place to deal with healthcare crises. Without them, the potential consequences include the overwhelmed healthcare facilities and the healthcare systems, stalled economic recovery and, more importantly, declining investor confidence. Policymakers within a country should consider ensuring the effective coordination of various agencies of governments and healthcare systems (Sharma et al., 2021).

7 Limitations and Directions for Future Research In this study, we presented a new risk factor, public health risk, and argued that it is a potent risk factor when foreign investors assess the attractiveness of a country for investment. The preliminary results from a correlation analysis of economic and COVID-19 pandemic-related data provide some important insights into how FDI inflow is impacted by a country’s management of public health risks. Nevertheless, our study has several limitations. For one, the pandemic continues to unfold and the empirical data in this study are limited due to non-availability. Therefore, the samples we obtained for each country differ. We relied on public sources of data as we could not obtain the most current data in some cases (e.g., healthcare expenditure as a percentage of GDP in 2019). This subsequently limited the type of analysis we could conduct and, consequently, we are not able to draw strong conclusions from our findings. Future research may need to obtain more data and consider a longer sample period (e.g., 2020 and beyond) to capture the full effects of the COVID-19 pandemic. Consideration should also be given to using a more robust quantitative methodology to understand the impact of a public health crisis on a country’s economy. Moreover, there may be a need to account for several other factors in the proposed public health risk measure to better capture the relationship between a country’s regulatory quality and healthcare investment and shed more light on their connection with the country’s inflow of FDI.

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Kellard, N. M., Kontonikas, A., Lamla, M. J., Maiani, S., & Wood, G. (2020). Risk, financial stability and FDI. Journal of International Money and Finance, 102232. Li, C., Murshed, S. M., & Tanna, S. (2017). The impact of civil war on foreign direct investment flows to developing countries. The Journal of International Trade & Economic Development, 26(4), 488–507. Liu, J. (2019). Investment in the energy sector of Central Asia: Corruption risk and policy implications. Energy Policy, 133, 110912. Leavy, B. (1984). Assessing country risk for foreign investment decisions. Long Range Planning, 17(3), 141–150. Ma, J. (2003). The Impact of SARS on FDI in China—An investors’ survey. Global Markets Research (Deutsche Bank, Hong Kong). Maher, D. (2015). The fatal attraction of civil war economies: Foreign direct investment and political violence, a case study of Colombia. International Studies Review, 17(2), 217–248. Madura, J. (2017). International financial management (13th ed.). Cengage Learning. Mihalache-O’Keef, A., & Vashchilko, T. (2010). Chapter seven: Foreign direct investors in conflict zones. Adelphi Series, 50, 137–156. Mishkin, F. (1992). Anatomy of a financial crisis. Journal of Evolutionary Economics., 2, 115–130. Moon, H.-C., Cheng, J. L. C., Kim, M.-Y., & Kim, J.-U. (2011). FDI, economic decline and recovery: Lessons from the Asian financial crisis. The Multinational Business Review, 19(2), 120–132. Nikoli´c, D. M., Jednak, S., Benkovi´c, S., & Poznani´c, V. (2011). Project finance risk evaluation of the electric power industry in Serbia. Energy Policy, 39(1), 6168–6177. Oh, C. H. (2017). How do natural and man-made disasters affect international trade? A country-level and industry-level analysis. Journal of Risk Research, 20(2), 195–217. Pazienza, P. (2014). The relationship between FDI and the natural environment: Facts, evidence and prospects. Springer International Publishing. Resnick, A. (2001). Investors, turbulence and transition: Democratic transition and foreign direct investment in nineteen developing countries. International Interactions, 27(4), 381–398. Saini, K. G., & Bates, P. S. (1984). A survey of the quantitative approaches to country risk analysis. Journal of Banking and Finance, 8, 341–356. Solnik, B., Boucrelle, C., & Le Fur, Y. (1996). International market correlation and volatility. Financial Analysts Journal, 17–34. Sharma, A., Borah, S. B., & Moses, A. C. (2021). Responses to COVID-19: The role of governance, healthcare infrastructure, and learning from past pandemics. Journal of Business Research, 122, 597–607. Solomon, B., & Ruiz, I. (2012). Political risk, macroeconomic uncertainty, and the patterns of foreign direct investment. The International Trade Journal, 26, 181–198. UNCTAD. (2020). From global pandemic to prosperity for all: Avoiding another lost decade (Trade and Development Report 2020). UNCTAD. (2021). From recovery to resilience: The development dimension (Trade and Development Report 2021). Weisbrot, M. (2007). Ten years after: The lasting impact of the Asian financial crisis. Center for Economic and Policy Research. White, C., & Fan, M. (2006). Risk and foreign direct investment. Palgrave Macmillan. World Bank. (2020, October). The impact of COVID-19 on foreign investors: Evidence from the second round of a global pulse survey. https://blogs.worldbank.org/psd/impact-covid-19-foreigninvestors-evidence-second-round-global-pulse-survey Xing, Y. (2006). Why is China so attractive for FDI? The role of exchange rates. China Economic Review, 17(2), 198–209. Yang, D. (2008). Coping with disaster: The impact of hurricanes on international financial flows, 1970–2002. The B.E. Journal of Economic Analysis & Policy, 8(1).

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Dr. Lianne Mei Quin Lee is currently a Lecturer at the Department of Economics & Finances, Sunway University. She received her Bachelor of Business and Commerce (First Class Honours) degree and her Ph.D. in Banking & Finance from Monash University. Her research interests revolve around banking and finance, and she uses the economics of religiosity as a lens to explore issues related to financial intermediation, financial markets, and fintech. Dr. I-Chieh Michelle Yang is currently an Assistant Professor at the Graduate School of Management, Kyoto University. She received her Ph.D. in Marketing from Monash University. Her research interests are centered on the sociological and political aspects of consumption in Asian contexts, with a specific focus on consumer agency and institutions. Her works have been published in top-ranked journals such as the Annals of Tourism Research, the Journal of Marketing Management, and Current Issues in Tourism, among others. Professor Motoki Watabe After graduated and obtained MA in Hokkaido University, Japan, Motoki obtained Ph.D. in sociology at University of California, Los Angeles. Specific major was social psychology and organizational behavior. He started his academic career at Kyoto University, Japan, and he moved to Waseda University in 2007. He joined Monash University, Malaysia in 2013 as an associate professor at Department of Management, School of Business, and served as the vice-director of Neurobusiness Behavioural Laboratory from 2014 to 2018, the director of Graduate Research from 2015 to 2018 and the director of Neurobusiness Behavioural Laboratory from 2018 to 2022. He joined Sunway University, as a professor and the head of Department in Management, Sunway Business School. He has been working on the emergence of trust, fairness, and cooperation in organization and society with behavioral experimental and neuroscientific methods.

Business Innovation and Strategy

E-Commerce Adoption by Women Microentrepreneurs in Malaysia Grace H. Y. Lee and Mohd Haidir Anuar Bin Zubir

Abstract The COVID-19 pandemic has forced businesses to embrace technology to move online. As the pandemic continues to negatively disrupt lives and livelihoods globally, women microentrepreneurs are disproportionately affected. Although a growing body of research is examining the drivers of the adoption of e-commerce, the adoption of e-commerce by women microentrepreneurs and the role that a growth mindset plays in this are still relatively unknown. This study examines the serial mediating role of the perceived ease of use and the perceived usefulness of technology to explain the relationship between a growth mindset in technological ability and e-commerce adoption by women microentrepreneurs in Malaysia. Our empirical analysis indicates that women microentrepreneurs with a greater growth mindset are more likely to perceive that technology is easy to use and useful and, therefore, have a higher propensity to adopt e-commerce for their business. The results provide valuable insights and implications in the realm of e-commerce adoption and entrepreneurship. Keywords Women microentrepreneurship · E-commerce adoption · Growth mindset · Technology acceptance model

1 Introduction The impact of the current health and economic crises caused by the COVID-19 pandemic across the global economy is profound. In Malaysia, the percentage of individuals who live below the poverty line grew from 5.6% in 2019 to 8.4% in 2020. In addition, over half a million middle-income group (M40) Malaysian households have been pushed into the bottom 40% (B40) category due to income reduction and job G. H. Y. Lee (B) Monash University Malaysia, Subang Jaya, Malaysia e-mail: [email protected] M. Haidir Anuar Bin Zubir Amanah Ikhtiar Malaysia, Kuala Lumpur, Malaysia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 A. O. J. Kwok et al. (eds.), COVID-19 and the Evolving Business Environment in Asia, https://doi.org/10.1007/978-981-19-2749-2_6

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losses.1 Emerging evidence from the United Nations (UN) suggests that compared to men, women are less capable of absorbing adverse economic shocks as they typically have a lower level of income with less secure jobs in the informal sector of the economy. As such, the COVID-19 pandemic has affected women disproportionately. The social and structural hindrances that women face limit their economic participation, denying communities from enjoying greater inclusive socio-economic growth. Entrepreneurship is known to be a key mechanism to redress this inequality and the associated impediments to inclusive and sustainable development. It represents a powerful tool to fight poverty and empower the poor economically. The Malaysian government has imposed a series of lockdowns of varying severity since March 2020 to prevent the spread of COVID-19. The strict Movement Control Orders (MCOs) imposed by the government and the self-imposed social distancing practiced by individuals have moved consumers dramatically toward online channels of commerce. Online shopping is now part of the new normal, and the pandemic has forever changed the way that consumers shop online.2 Digital tools have replaced physical interactions and transactions and information and communications technology (ICT) has been identified as an essential tool to facilitate the empowerment of women in emerging economies (Haya et al., 2014; Maier & Nair-Reichert, 2008). ICT opens new doors for education, communication, and information sharing that can provide greater opportunities to women microentrepreneurs to access information more efficiently to reduce uncertainties and participate in economic activities more competitively. As a result, the social status and quality of life for women could be improved with its use. The rapid rise in the use of ICT is boosting e-commerce in Malaysia. According to the Department of Statistics Malaysia (DOSM), e-commerce income increased by 32.7% between 2019 and 2020 and stood at RM896.4 billion. In the first quarter of 2021, income from e-commerce increased by a further 30% yearon-year. However, not everyone has benefitted equally from e-commerce. According to an October 2019 by the UN, approximately 150 million people representing 31% of the adult population of Southeast Asia have been digitally excluded due to a lack of access to communication technologies or low digital literacy levels.3 Factors associated with this digital divide include age, disability, gender, illiteracy, income level, and the urban–rural division of economic activities. Despite the efforts of the Malaysian government and NGOs to increase e-commerce adoption during the

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Based on data provided by the Department of Statistics Malaysia (DOSM). Malaysia’s current Poverty Line Income (PLI) is set at RM2,208 per month. M40 refers to the middle 40% of Malaysian households whose income is between RM4,850 and RM10,959 per month. The M40 represents Malaysia’s middle class. B40 refers to the bottom 40% of Malaysian households whose income is less than RM4,850 per month. 2 According to the Department of Statistics Malaysia (DOSM), the percentage of households with internet access increased from 90.1% in 2019 to 91.7% in 2020. Transactions of goods and services through Facebook, telephone, and WhatsApp rose to 54.4% in 2020 from 22.5% in 2019. In addition, the purchase of goods and services through e-commerce platforms (e.g., Shoppe, Lazada, and Grab) increased from 35.2% in 2019 to 45% in 2020. 3 Cited in Dujacquier et al. (2021).

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pandemic, women microentrepreneurs who face social and structural hindrances might not be able to participate. While scholars and practitioners concerned with the use of ICT emphasize that users of ICT are crucial to its adoption, most of the research into the subject has focused on traditional models that emphasize users’ acceptance and adoption of technology based on their beliefs about its technological attributes, such as its ease of use and usefulness. Less research has examined the determinants of the technological attributes and why people voluntarily and actively engage in (or withdraw from) the use of new technology. We seek to address this gap by drawing from the research on implicit theories (Dweck et al., 1995; D. S. Yeager & Dweck, 2012) to examine how women microentrepreneurs in Malaysia rely on their general belief systems as guidelines for understanding e-commerce adoption, which influences their behavior (van Dijk & van Dick, 2009). We postulate that different general beliefs constitute different mindsets towards new technology and that these different mindsets influence women microentrepreneurs’ perceptions of, and responses to, ICT use differently. Theoretically-driven and empirically-proven solutions are needed to enhance the adoption of e-commerce among women microentrepreneurs. In this study, we contribute to the literature in two major ways. First, we illustrate the importance of the perceived ease of use and the perceived usefulness of ICT to the degree of ICT use.4 Second, we highlight how a growth mindset can be a promising theoretical approach that can enhance the perceived ease of use of ICT and the perceived usefulness of ICT, with downstream implications for the degree of ICT use. The remainder of the chapter is organized as follows: Sect. 2 provides the conceptual framework and the development of hypotheses for this study. Section 3 describes the data collected and the empirical approach used to analyze the data. Section 4 presents the empirical results of the data analysis. Section 5 provides a discussion of the findings and their practical implications. Section 6 discusses the limitations of this study and future directions for research. The closing section of this chapter provides our concluding remarks.

2 Conceptual Framework and Hypotheses Development 2.1 Technology Acceptance Model (TAM) This study draws upon the technology acceptance model (TAM) of (Davis, 1989), the most accepted and widely adopted model of user acceptance of technology, to understand e-commerce adoption among women microentrepreneurs. The two components that determine an individual’s attitude toward the acceptance of new technology are perceived ease of use (PEOU) and perceived usefulness (PU). TAM’s application in various areas of research is significant. For example, (Davis, 1989)’s 4

Throughout the chapter, we use ICT use and e-commerce adoption interchangeably.

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work on older technologies (e.g., workplace email) has been extended to measure new technologies, such as mobile technology (Hong et al., 2006) and social media (Rauniar et al., 2013). TAM is originally derived from the theory of reasoned action (Ajzen, 1980). The literature on TAM is diverse and explores a broad range of developments (King & He, 2006; H.-J. Lee, 2017; Lindsay et al., 2011). Researchers have highlighted the need to scrutinize the application of TAM to better understand how individuals interact with technology from a business perspective (H.-J. Lee, 2017; Y. Lee et al., 2003).

2.2 The Perceived Usefulness (PU) and Perceived Ease of Use (PEOU) of ICT PU is “the degree to which a person believes that using a particular system would enhance his or her job performance” (Davis, 1989), while PEOU refers to “the degree to which a person believes that using a particular system would be free of effort” (Davis, 1989). Although PU is found to be a significant determinant of ICT use, most studies have failed to establish the link between PEOU and ICT adoption (Davis, 1989; Davis et al., 1989; Gefen & Straub, 2000). Davis suggested that PEOU increases the degree of ICT use through PU. In the context of this study, we propose that women microentrepreneurs who perceive that the use of e-commerce platforms is easy will be more likely to perceive that the adoption of ICT will help them in their business. Therefore, we propose the following hypothesis: Hypothesis 1: PEOU has a positive effect on e-commerce adoption through its PU. However, the role of PEOU remains controversial as some empirical findings indicate that PEOU does directly influence self-reported ICT use (Venkatesh & Davis, 2000). Although TAM provides a useful analytic framework for the adoption of ICT through PU and PEOU, the model has been criticized for being overly simplistic, as TAM does not include variables relating to human and societal change process changes (Legris et al., 2003), and it does not provide any guidance to industry practitioners on how to make technology more accessible or useful (Y. Lee et al., 2003). Accordingly, researchers have extended TAM to TAM2 and TAM3. TAM2 incorporates social influence processes and cognitive instrumental processes (Venkatesh & Davis, 2000), while TAM3 (Venkatesh & Bala, 2008) integrates four determinants of PU and PEOU (i.e., individual differences, system characteristics, social influence, and facilitating conditions). In addition, the unified theory of acceptance and use of technology (UTAUT) and its subsequent versions (Venkatesh et al., ) have further expanded the model to include facilitating conditions and habits to improve the understanding of technology adoption (Dwivedi et al., 2019). Although these theories have been widely applied in research, their effectiveness depends primarily on the context of the study (Lowe et al., 2019); using them in the context of e-commerce adoption by women microentrepreneurs requires further examination. We argue that

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the possession of a growth mindset by women microentrepreneurs regarding technological ability can potentially enhance their perceptions about the ease of use and the perceived usefulness of ICT, thereby increasing their use of ICT.

2.3 Fixed Versus Growth Mindsets and Technology Acceptance A fixed mindset is a belief that personal characteristics, such as intelligence and ability, are fixed and unalterable, while a growth mindset is a belief that these characteristics can be developed and improved over time (D. S. Yeager & Dweck, 2012). These beliefs are based on two implicit theories: the entity theory and the incremental theory.5 According to the entity theory, individuals hold a fixed mindset, believing that intellectual abilities are fixed personal attributes that are unchangeable over time, even with training and experience. The incremental theory postulates that individuals have a growth mindset, believing that intelligence and ability are personal attributes that can be developed with greater effort and learning strategies. Previous studies have found that individuals with more of a fixed mindset tend to shy away from challenges and difficulties, while those with more of a growth mindset will thrive and improve in the face of adversity (Dweck & Yeager, 2019).

2.4 Growth Mindset as a Determinant of the Perceived Ease of ICT Use Identifying and analyzing the attributes of e-commerce adoption is usually complex and challenging. Social cognition research shows that people rely on general beliefs when they make judgments about individuals or tasks, as this presents a more efficient cognitive processing strategy compared to analyzing the attributes in detail (Fiske et al., 2007; Milkman et al., 2012). Research by (van Dijk & van Dick, 2009) reveals that employees’ general beliefs affect their perception of, and interaction with, new technology. As a result, the digital mindset of women microentrepreneurs can be a pivotal factor in determining their willingness to accept and adopt ICT for use in their business (Solberg et al., 2020) posit that employees’ beliefs regarding a fixed/growth mindset can influence the extent to which they view new technologies as providing the means for them to achieve increased competency at work. The authors found that employees’ views of situational resource availability also affected their perception of and willingness to adopt new technology. Therefore, an employee’s growth or fixed mindset belief can be characterized as one of the most important aspects of their digital mindset. This gives rise to the following hypothesis: 5

See Solberg et al. (2020)’s endnote 18 and 19 for a list of references on implicit theories.

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Hypothesis 2 Having a growth mindset will increase PEOU. As mentioned earlier, a growth mindset refers to the belief that one’s intellectual ability and technical prowess can be improved (D. Yeager & Dweck, 2020). Research linking the growth mindset with technology acceptance shows that individuals with a growth mindset are more likely to perceive new technology as useful (Solberg et al., 2020). Such individuals also have a commitment to learning how to use new technology, which leads to more positive perceptions of ease of use. Additionally, (Dragoni, 2005) shows that leaders who adopts a learning goal orientation (consistent with growth mindset beliefs), are able to influence their subordinates’ preferences for learning and mastery. This occurs because followers are motivated to use new processes due to their belief in constant learning and improvement. One may, therefore, suppose that such tenacity to learn and commit to adopting new processes might apply to new technologies. As a result, there is a growing need for additional research concerning the role of the growth mindset in the TAM. Drawing on the empirical and theoretical evidence, we test the following hypotheses: Hypothesis 3 PEOU and PU mediate the relationship between a growth mindset and the degree of e-commerce adoption. Hypothesis 4 There is a positive relationship between a growth mindset and the degree of e-commerce adoption. Figure 1 illustrates the conceptual model of the relationship between the possession of a growth mindset in technological ability and the degree of e-commerce Perceived ease of use

a3

(M1)

Perceived usefulness (M2)

b2

a1

Growth mindset in technological ability

c1’

(X)

Hypothesis 1: Indirect effect of M1 on Y through M2 in serial = a3b2 Hypothesis 2: Direct effect of X on M1 = a1 Hypothesis 3: Indirect effect of X on Y through M1 and M2 in serial = a1a3b2 Hypothesis 4: Direct effect of X on Y = c1’

Fig. 1 Conceptual model (Hayes Model 6)

Degree of ecommerce adoption (Y)

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adoption, and how the perceived usefulness and ease of use of technology mediate the relationship. This study postulates that a growth mindset in technological ability (X) initiates the first serial mediator (M1) and subsequently the second serial mediator (M2), and that the degree of ICT use (Y) is the outcome. Figure 1 presents the corresponding path directions of X, Y, M1, and M2.

3 Data Collection and Empirical Results Analysis 3.1 Questionnaire Design and Sample Description We used a survey questionnaire to collect data for this study. To ascertain that the phrasing of questions and the response categories included in the questionnaire were appropriate, we shared a draft of the questionnaire with two residents of Malaysia who work closely with women microentrepreneurs from the B40 group. We then pretested the questionnaire with ten women microentrepreneurs from the B40 group and made revisions based on their input. We tested the revised version of the questionnaire with another ten women microentrepreneurs and made additional changes to the survey instrument based on their feedback. These changes were primarily a result of the misunderstanding by testers of questions within the same construct (e.g., testers did not see the difference between questions within the same construct and were confused). To address this, we either reworded or removed the problematic questions. The survey was administered online and targeted women microentrepreneurs from the B40 group in Malaysia. It was rolled out to the clients of two NGOs that provide funding, training, and other business support services to women microentrepreneurs.6 The survey was open for 20 days in August 2021 and 248 valid responses were received during that period.7 We sent the invitation to participate in the survey through WhatsApp messages that contained a link to the Google form containing the questionnaire. Table 1 summarizes the demographic characteristics of the respondents. While over 95 percent were Malay, the sample represents a wide range of ages and education levels across different states in Malaysia. In terms of the income generated by their microenterprise, 15% of the 240 respondents who replied to the question ‘How much was your profit last month?’ reported no income, while only 10.8% reported income that was over the national poverty line of RM2,208 per month. Figure 2 indicates the self-reported degree of e-commerce adoption by the respondents’ businesses. Our survey indicates that 32.26% of the 248 respondents have never 6

The NGOs are Amanah Ikhtiar Malaysia and Women of Will. Both NGOs use a stringent evaluation process that includes an interview and a home visit to ensure that the beneficiaries of their programs are members of Malaysia’s B40. 7 We removed 21 straight-liners who gave identical answers to items in a battery of questions using the same response scale.

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Table 1 Demographic information of respondents Description

Frequency

Percent

Age 15–24

13

5.26

25–34

63

25.51

35–44

89

36.03

45–54

54

21.86

55–64

5

10.12

65 and above

3

1.21

What is the highest level of education you have completed? No formal education and some primary education

32

12.9

Some secondary education

140

56.5

Pre-university or equivalent

46

18.5

Degree and above

30

12.1

Marital status Married

201

81.05

Other (e.g., divorced, widowed, single)

47

18.95

How much was your profit last month? RM0

36

15.0

RM1–RM500

119

49.6

RM501–RM1000

35

14.6

RM1001–RM2208

24

10.0

>RM2208

26

10.8

In which state do you live? Selangor

12

4.84

Johor

27

10.89

Negeri Sembilan

2

0.81

Melaka

14

5.65

Pahang

30

12.10

Kelantan

18

7.26

Terengganu

13

5.24

Perak

11

4.44

Pulau Pinang

1

0.40

Kedah

10

4.03

Sabah

66

26.61

Sarawak

44

17.74

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107

100

80

60

40

35.5

31.45

32.3

20 0.81

0 Not at all

A few times a month

A few times a week

Daily

Fig. 2 Self-reported degree of E-commerce adoption by respondent businesses. Note The figure presents responses to the survey question ‘How often do you use social media platforms (e.g., Facebook, Instagram, WhatsApp) for your business?’

used social media platforms for their business, or do not use them very often for that purpose, while only 32.3% of respondents mentioned that they use them very often for their business. Figure 3 shows the impact of the COVID-19 pandemic on the What impact has the COVID-19 pandemic had on your business? 100

80 61.7

60

40 23.0

20 5.6

5.6

4.0

0 Significantly positive impact

Slightly positive impact

No impact

Slightly negative impact

Significantly negative impact

Fig. 3 Impact of the COVID-19 pandemic on respondents’ businesses. Note The figure presents responses to the survey question ‘What impact has the COVID-19 pandemic had on your business?’

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Table 2 Regression analysis of COVID-19’s impact on business

Dependent variable: COVID-19 impact on business E-commerce use

−0.203**

Constant

5.195***

(0.0975) (0.577) Control for state effects

Yes

Observations

247

R2

0.038

Note Self-reported e-commerce use was measured by asking the respondents ‘How often do you use social media platforms (e.g., Facebook, Instagram, WhatsApp) for your business?’ The frequency was rated on a scale with values ranging from 1 (not at all) to 4 (daily). To measure the impact of COVID-19 on respondents’ businesses, we asked respondents to rate, on a scale with values ranging from 1 (significantly positive effect) to 5 (significantly negative effect), ‘What impact has the COVID-19 pandemic had on your business?’ The regression controls for age, education, and marital status. Robust standard errors in parentheses. ***p < 0.01, **p < 0.05

respondents’ businesses.8 Most respondents (61.7%) reported that the COVID-19 pandemic had a significantly negative impact on their business. Table 2 presents the results of a simple regression analysis indicating that women microentrepreneurs who used e-commerce platforms more frequently experienced less of a negative impact of COVID-19 on their business.

3.2 Data Analysis and Methodology We employed the PROCESS macro model developed by (Hayes, 2012) and implemented in the IBM SPSS version 20.0 software to analyze the collected data. PROCESS contains 92 pre-programmed models dedicated to path analyses with observed variables. It provides a computation tool for estimating and testing various causal pathway relationships, including direct and indirect effects, conditional effects, and conditional indirect effects, making it particularly suitable for mediation, moderation, and conditional process analysis. The survey questions employed to test the hypotheses were based on instruments taken from the extant literature and adapted for the context of this study. The main independent variables in this study are PEOU, PU, and growth mindset. We employed 8

During the pre-tests, a significant percentage of respondents did not understand ‘ICT’ and ‘ecommerce,’ so we replaced the terms with ‘social media platforms.’

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Table 3 Components of PEOU and PU Components of PEOU PEOU1

My interaction with the social media platform is clear and understandable

PEOU2

Learning to use the social media platform is easy for me

PEOU3

It is easy for me to become skillful in using the social media platform

Components of PU PU1

Using the social media platform improves my business performance

PU2

Overall, social media platform is very useful and beneficial for my business

PU3

Using the social media platform for microenterprises is a good method

PU4

Using the social media platform for my business enables me to accomplish tasks more quickly

PU5

Using the social media platform for microenterprises is a good idea

Note We measured all the PEOU and PU variables on four-point Likert scales with the values of 1 = totally disagree, 2 = disagree, 3 = agree, and 4 = totally agree

four-point Likert scales (with values of 1 = totally disagree, 2 = disagree, 3 = agree, 4 = totally agree) to understand women microentrepreneurs’ PEOU and PU of the social media platforms used in their business (see Table 3). Growth mindset in technological ability was also measured using a four-point Likert scale (with values of 1 = totally agree, 2 = agree, 3 = disagree, 4 = totally disagree), with respondents rating their agreement with the statement ‘Ability in technology is something that cannot be changed.’9 The dependent variable in this study is self-reported e-commerce use. To measure the extent of e-commerce use in their business, we asked respondents the following question: ‘How often do you use social media platforms (e.g., Facebook, Instagram, WhatsApp) for your business?’ Respondents rated the frequency of their use on a scale from 1 (not at all) to 4 (daily). To enable comparisons, we standardized all these variables into a z-score, such that it has a mean of 0 and a standard deviation of 1.

9

We removed two other commonly used questions in the growth mindset literature as the respondents were confused during the pre-tests and asked why we “repeated” the questions. The questions we removed from the initial questionnaire were: ‘You have a certain amount of technological ability, and you can’t really do much to change it,’ and ‘To be honest, you can’t really change your technological ability.’

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3.3 Determination of the Number of Factors Since several items on the questionnaire measure PEOU and PU, we employed the commonly used principal component analysis (PCA) to reduce the number of dimensions in the data set. For instance, we measured the women microentrepreneurs’ PEOU of social media platforms by asking how agreeable they were with the three different statements presented in Table 3 (i.e., PEOU1, PEOU2, and PEOU3). PCA allowed us to determine if we could use a single factor to represent the three PEOU items.

3.3.1

Kaiser-Meyer-Olkin (KMO) and Bartlett’s Test

Since the use of PCA is only justified if the items are sufficiently correlated, we report the pairwise correlation matrix of the PEOU and PU components in Tables 4 and 5, respectively. The results indicate that most of the variables are highly correlated, with correlation coefficients of at least 0.50. We also used the Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy to conduct the evaluation. The measure examines the proportion of variance in the variables that might be a common variance. A value of less than 0.50 indicates that the results of the factor analysis might not be useful. The analysis results in Table 6 reveal that the KMO values for the measures of PEOU and PU are 0.715 and 0.758, respectively, which is “middling” (Kaiser, 1974). In addition, we also employed Bartlett’s test of sphericity to test the null hypothesis that the variables are orthogonal (i.e., uncorrelated). The results shown in Table 6 Table 4 Correlation matrix for the PEOU components PEOU1

PEOU2

PEOU3

PEOU1

1.000

0.638

0.566

PEOU2

0.638

1.000

0.638

PEOU3

0.566

0.638

1.000

Table 5 Correlation matrix for the PU components PU1

PU2

PU3

PU4

PU5

PU1

1.000

0.488

0.527

0.592

0.775

PU2

0.488

1.000

0.802

0.440

0.487

PU3

0.527

0.802

1.000

0.471

0.522

PU4

0.592

0.440

0.471

1.000

0.734

PU5

0.775

0.487

0.522

0.734

1.000

Note Refer to Table 3 for a description of each component

E-Commerce Adoption by Women Microentrepreneurs … Table 6 Results of the Kaiser-Meyer-Olkin (KMO) and Bartlett’s tests

111

Components of PEOU

Components of PU

0.715

0.758

Approx. Chi-Square

274.688

767.625

df

3

10

Sig

0.000

0.000

KMO measure of sampling adequacy Bartlett’s test of sphericity

indicate that the null hypothesis is rejected in both cases at the 1% significance level, indicating that the variables for PEOU and PU are related. All the evidence presented here shows that PCA is appropriate for use.

3.3.2

The Kaiser Criterion

To determine the number of factors used in the empirical model, we followed the popular approach called the Kaiser criterion to extract all the factors with an eigenvalue greater than 1. This approach allowed us to extract factors that accounted for more variance. Based on the Kaiser criterion (see Table 7), we settled on one factor for PEOU and PU, respectively, because the second factor’s eigenvalue was lower than one (0.434 for PEOU2 and 0.870 for PU2). The one factor accounts for 74.29 and 66.78% of the variance for PEOU and PU, respectively, which is satisfactory. Besides the Kaiser criterion, we also employed a scree-plot of eigenvalues against Table 7 Principal component analysis Initial eigenvalues Total

% of variance

Extraction sums of squared loadings Cumulative %

total

% of variance

Cumulative %

2.229

74.291

74.291

3.339

66.783

66.783

Component of PEOU 1

2.229

74.291

74.291

2

0.434

14.481

88.772

3

0.337

11.228

100.000

Component of PU 1

3.339

66.783

66.783

2

0.870

17.409

84.192

3

0.408

8.162

92.354

4

0.197

3.946

96.299

5

0.185

3.701

100.000

Note Refer to Table 3 for a description of each component

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the PCA components, another popular approach, to extract the desired number of factors. We obtained consistent results and display and discuss them in the Appendix.

4 Results We conducted an empirical analysis of the data using PROCESS Model 6 (Hayes, 2018) to examine the mediating effect of PEOU and PU on the relationship between growth mindset and the degree of e-commerce use. Sarstedt et al. (2020) highlight the merit of using PROCESS in estimating mediation and conditional processes for single-item observable variables. In this study, we employed the serial mediation model, which incorporates the two potential serial mediators of PEOU and PU to assess the direct and indirect effects of having a growth mindset in technology on the degree of e-commerce use. The mediation analysis consisted of testing hypotheses H1, H2, and H3, which are constituent components of the indirect effects in the relationship between growth mindset and e-commerce adoption. H4 examines the direct relationship between growth mindset and e-commerce adoption. Using separate ordinary least squares (OLS) regression analyses, PROCESS produced all the estimates of the parameters and generated bootstrap confidence intervals as part of its estimation output for performing statistical inferences on the indirect effects. Bootstrapping has been advocated as the preferred method for investigating indirect effects (Mackinnon et al., 2004; Preacher & Hayes, 2004; Preacher et al., 2007) as it does not require distributional assumption. Compared with alternative approaches (e.g., those that rely on a normal distributional assumption), inferences generated using the bootstrapping procedure are expected to be more accurate where the probability of committing a Type II error is lower Hayes (2013). Bootstrapping generates an empirical estimate of the sampling distribution of the indirect effects through a sampling-with-replacement strategy from the original data set until a large number of bootstrapped samples is generated. PROCESS constructs a 95% confidence interval around the indirect effects by default, and the confidence interval must not contain zero to support the presence of a mediating relationship. We generated 5000 bootstrapped samples to estimate bias-corrected 95% confidence intervals for the mediation effects. The control variables used in this study are a standard set of demographics (e.g., age, education, and marital status) and the state effect. While these control variables are independent variables, which are not part of the research study, their influence cannot be ignored. Table 8 presents the results of the mediation analyses. We first assessed the effect of women microentrepreneurs’ growth mindset on the frequency of their use of technology directly and indirectly through their perceived ease of use of technology. We further tested the hypothesis that the perceived ease of use of technology influences the frequency of technology use indirectly through the perceived usefulness of technology. That is, microentrepreneurs who think that social media platforms are easy to use would perceive the platforms to be useful to their business, increasing the frequency of their use. This corresponds to the conceptual

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Table 8 Mediational regression analysis using Model 6 of PROCESS Dependent variable GROWTH

PEOU

PU

ADOPT

0.170***

0.106

0.145*** 0.471***

PU 0.285***

PEOU

-0.043

Control variables Age

0.064

-0.082

-0.087

Married

0.092

0.149

0.276

Education

0.188**

0.127

0.069

State effect

Yes

Yes

Yes

R2

0.107

0.175

0.353

Total, direct, indirect effects of growth mindset on the degree of e-commerce adoption Total effect

0.210

Direct effect

0.145

Indirect effects Total

0.0654 (0.005, 0.135)

GROWTH—PEOU—ADOPT

−0.0074 (−0.038, 0.017)

GROWTH—PU—ADOPT

0.0500 (−0.011, 0.115)

GROWTH—PEOU—PU—ADOPT

0.0228 (0.003, 0.051)

Note Values in parentheses represent 95% confidence intervals. * p < 0.05, ** p < 0.01

model depicted in Fig. 4, where Z = the growth mindset in technological ability (GROWTH), M1 = perceived ease of use (PEOU), M2 = perceived usefulness (PU), and Y = degree of e-commerce adoption (ADOPT).

4.1 Hypotheses Testing Results Hypotheses 1–4 propose that having a growth mindset and higher levels of PEOU and PU will have a positive relationship with e-commerce adoption. The path relationships between. GROWTH and PEOU (β = 0.170, p < 0.01), PEOU and PU (β = 0.285, p < 0.01), and PU and ADOPT (β = 0.471, p < 0.01) were all positive and significant at the 1% level. The total effect is statistically different from zero (c1 = 0.210, p < 0.01). The direct effect of c 1 = is 0.145 is statistically significant (p < 0.01), and there is one specific indirect effect at the 5% significance level as the 95% bootstrapped confidence interval does not contain the value 0. The indirect effect of GROWTH on ADOPT passes through both PEOU and PU in sequence (“a1 a3 b2 ” in Fig. 4), supporting the

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Perceived ease of use

a3 0.285***

(M2)

(M1) a1 0.170***

Growth mindset in technological ability

Perceived usefulness

a2 0.106

b1 -0.043 c1’ 0.145***

(X)

b2 0.471***

Degree of ecommerce adoption (Y)

Indirect effect of X on Y through Mi only = ai bi Indirect effect of X on Y through M1 and M2 in serial = a1a3b2 Direct effect of X on Y = c1' Fig. 4 Statistical diagram—mediating effect of PEOU and PU on the relationship between GROWTH and ADOPT. Indirect effect of X on Y through Mi only = ai bi

claim that PEOU and PU are significant mediators between GROWTH and ADOPT. It is estimated as a1 a3 b2 , or 0.023, with a 95% bootstrap confidence interval of 0.003 and 0.051. Therefore, the hypothesized relationships are supported. Overall, our empirical findings imply that women entrepreneurs who hold more of a growth mindset are more likely to perceive that it is easy to use e-commerce platforms (a1 = 0.170), which leads to a greater level of perceived usefulness of e-commerce (a3 = 0.285) and, ultimately, greater use of e-commerce (b2 = 0.471).

5 Discussion and Practical Implications A growing body of evidence suggests that people with a growth mindset tend to thrive despite adverse situations and react more adaptively to challenges (Dweck, 2000, 2006). We confirm this finding in the present study: women microentrepreneurs who possess a growth mindset in their technological ability are more likely to perceive ICT as being easy to use. This perceived ease of use (PEOU) drives the perception that ICT is useful (PU), and the combination of these two factors positively impacts the degree to which women microentrepreneurs adopt e-commerce to support their businesses. Our research illuminates PEOU and PU as mediators in the relationship between a growth mindset and the degree of e-commerce adoption. By introducing new mediators, we have extended the previous research to further understand the

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mechanism by which a growth mindset contributes to the propensity of e-commerce adoption. It takes time and effort to learn how to use new technology. Women microentrepreneurs’ belief about their technological ability is relevant in the context of ICT use. People who hold more of a growth mindset about their technological ability are more likely to seek opportunities to learn and increase their competence (Solberg et al., 2020), thereby perceiving that the technology is easy to use. They will assess their existing technological skills and believe in their abilities when faced with difficulties and challenges, which in turn increases their degree of ICT use. These findings are consistent with the incremental theory. The knowledge that the venerable line of research on growth mindsets is adaptable to the context of e-commerce adoption among women microentrepreneurs provides important practical implications. Since women microentrepreneurs with a growth mindset are more likely to look for and accept help to use e-commerce, as they believe this information may be useful to attaining their goals, relevant training programs should be made available to them to enhance their understanding and use of e-commerce. Practitioners and policymakers alike—anyone interested in increasing e-commerce adoption among microentrepreneurs—can now draw on this literature to promote growth mindsets in technological ability.

6 Limitations and Future Directions for Research While this study has some practical implications, we note both its potential limitations and suggest avenues for further research. First, the nature of the crosssectional data collected constraints the results to reflect a single point in time; further research could examine the results over time via a longitudinal study. Second, this study focuses only on women microentrepreneurs belonging to the B40 group in Malaysia. Building on our findings, future work could examine how growth mindsets in technological ability function in more diverse geographic, ethnic, and socioeconomic status contexts. Finally, while the current study highlights the importance of a growth mindset, the findings do not offer implications for cultivating the underlying beliefs about learning and intelligence. Therefore, we suggest that future work should focus on natural experiments or deliberate intervention mechanisms designed to enhance growth mindsets and their subsequent impact. For example, the findings of (Burnette et al., 2019) suggest that an easy and inexpensive growth-mindset message intervention could increase entrepreneurial self-efficacy and task persistence amongst undergraduate students. Future work could bolster growth mindsets among women microentrepreneurs using inexpensive, efficient, and effective intervention mechanisms.

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7 Conclusion This study examines the impact of having a growth mindset in technological ability among women microentrepreneurs on their PEOU and PU and how that, in turn, influences the degree of e-commerce adoption. Overall, our work extends the TAM by offering another potential antecedent to the perceived ease of use and usefulness of technology: a growth mindset in technological ability. This study also extends existing knowledge of the determinants of e-commerce adoption among women microentrepreneurs. Our model predicts that PEOU and PU lead to greater e-commerce adoption by businesses. These findings add to a growing collection of studies that examine the effect of PEOU and PU on the use of ICT. Importantly, we show that the degree of ecommerce adoption among women microentrepreneurs increases substantially in the presence of a growth mindset. Here, the direct and indirect effects of a growth mindset on e-commerce adoption hold even after controlling for age, education, marital status, and state effects. The finding that having a growth mindset could positively predict PEOU and ICT use corresponds with recent theory and research indicating that people with a growth mindset are more likely to perceive new technology as useful and are more likely to be committed to learning about new technology. The current research that demonstrates the importance of these belief systems in the domain of ICT use and entrepreneurship also makes a theoretical contribution to the implicit theory or mindset literature. Overall, our new evidence highlights how cultivating a growth mindset may be a promising channel to foster greater e-commerce use, with important implications for entrepreneurial outcomes (Dujacquier et al., 2021). Acknowledgements This work was supported by the Fundamental Research Grant Scheme (FRGS) from the Ministry of Education Malaysia [grant number FRGS/1/2019/SS08/MUSM/02/2]; and the Monash University Malaysia-ASEAN Sustainable Development Research Grant Scheme 2019 [grant number ASEAN-2019-03-BUS].

Appendix The scree plot typically has a distinct break called the “elbow,” which shows the “correct” number of factors (Cattell, 1966). All factors above this break contribute most in explaining the variance in the data set and should therefore be retained. Figure 5a, b indicate that there is an “elbow” in the line at two factors. Since the desired number of factors is suggested to be one factor less than the elbow indicates, we conclude that one factor is appropriate for both PEOU and PU. In other words, only the first principal component of PEOU and PU (e.g., PEOU1 and PU1) allows the data variance to be described, as observed by the deep change in the slope between the first and second principal components. Consistent with the findings based on the Kaiser criterion, these results confirm that PEOU1 and PU1 are synthetic and representative measures of PEOU and PU.

E-Commerce Adoption by Women Microentrepreneurs …

(a) PEOU components

(b) PU components

Fig. 5 Scree plots

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Dr. Grace H. Y. Le is the Head of the Economics Department at Monash University Malaysia. She is currently leading a team of researchers from Australia, Indonesia, Thailand, Vietnam, and Malaysia on a project entitled “Rural Women Empowerment Through Entrepreneurship.” In addition, she is the principal investigator for Malaysia for the World Values Survey (WVS) (Wave 6 and 7). WVS is a global network of social scientists that has been studying changing values and their impact on social and political life in over 100 countries since 1981. Her principal areas of interest are applied economics and experimental and behavioral economics, and she has supervised many Honors and Ph.D. students in these research areas. She has received various teaching awards, including a Pro-Vice-Chancellor’s Award for Excellence in Teaching and Research, and a Vice-Chancellor’s Award for Honors Supervision. Mohd Haidir Anuar Bin Zubir is the Senior Manager of the research unit of Amanah Ikhtiar Malaysia (AIM), the largest microfinance agency in Malaysia. He is currently leading a research project on increasing returns and maximizing the impact of microfinancing for women borrowers. He obtained his bachelor’s degree in industrial management from the University of Selangor (Unisel) and earned a master’s degree in human resource development from University Putra Malaysia (UPM).

COVID-19 and the Metamorphosis of the F&B Industry in Malaysia Siti Aqilah Jahari , Juliana Angeline French , and Aminath Shaba Ismail

Abstract In 2020, the prolonged lockdown imposed due to the COVID-19 pandemic caused considerable disruption to the F&B industry, forcing food operators to move their business operations to digital platforms. Dominated by small and medium enterprises (SMEs), F&B industry players have found it challenging to embrace digital technologies with the limited resources they possess. Underpinned by the business model articulated by (Teece, Long Range Planning 51:40–49, 2018a), this chapter illustrates how F&B businesses have used their dynamic capabilities to sense and seize new opportunities and subsequently transform the way they operate. This study adopts a constructivist grounded theory approach as its methodology, based on media and online reports on the F&B industry published between January 2020 and June 2021. The findings reveal that some food operators have revised their value propositions by altering their product portfolio, some have formed synergies with external partners (e.g., GrabFood and FoodPanda) to create a seamless customer journey experience, while others have embraced transformative change through the emergence of cloud kitchens. The findings also show that the extent of change is strongly influenced by a firm’s entrepreneurial and organizational competencies, which it uses to orchestrate resources and execute operational strategies to embed digital technologies in its business operations. Indeed, the pandemic has become a force for change that has revolutionized F&B business operations by encouraging the industry to embrace digitalization. Keywords Digital transformation · Dynamic capabilities · F&B industry · Business models · B2B partnerships · Innovation

S. A. Jahari (B) · J. A. French · A. S. Ismail Monash University Malaysia, Subang Jaya, Malaysia e-mail: [email protected] J. A. French e-mail: [email protected] A. S. Ismail e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 A. O. J. Kwok et al. (eds.), COVID-19 and the Evolving Business Environment in Asia, https://doi.org/10.1007/978-981-19-2749-2_7

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1 Introduction The COVID-19 pandemic has demonstrated the importance of digital progress to economies worldwide, as well as the necessity of developing their digital capabilities to ensure economic survival and resilience when confronted with such crises. In a recent Harvard Business Review (HBR) study that analyzed the current level and pace of digital development in 90 economies, Malaysia was classified as a standout economy, alongside Qatar, the UAE, South Korea, Singapore, and Hong Kong. According to the study, these economies have demonstrated a high level of digitalization to date and have achieved strong momentum in the pace of their digital evolution, owing to their versatility (with respect to technological adaptation) and strong institutional support systems. In comparison, many EU countries have already reached digital maturity, substantially limiting their capacity to advance further in the digital economy (Chakravothi et al., 2020). In Malaysia, the COVID-19 pandemic has forced many industries to participate, albeit unwillingly, in the global digital revolution. One of the industries to experience a striking digital transformation has been the food and beverage (F&B) industry. Unlike the developed countries of the West, the business processes in Malaysia’s F&B industry are heavily labor-intensive, like their equivalents in neighboring states. As a result, the wave of digitalization stimulated by the pandemic has demanded a substantial cultural transformation at the industry level as companies transition toward becoming less labor-intensive and more digitally enabled. This cultural transformation has enforced a change in business processes per se, as well as a drastic behavioral change among both consumers and service providers as they adapt to the new normal, which is becoming increasingly synonymous with the digital economy (Bragg, 2018). For these reasons, Malaysia’s F&B industry provides an interesting context in which to explore the impact of the COVID-19 pandemic, particularly given Malaysia’s reputation as the country with the most digital consumers in Southeast Asia (Afandi, 2020). Despite the rapid digital transformation of Malaysia’s F&B industry, the COVID19 pandemic has significantly damaged the industry. Data gathered via SYCARD (a retail data analytics and business intelligence cloud platform maintained by local market research company Innergia Lab) revealed that F&B businesses in Malaysia lost approximately 90% of their revenue between March and April 2020, compared to the same period the previous year (Malay Mail, 2020). This industry also recorded the highest rate of job losses following the outbreak of the pandemic, compared to other industries (World Bank, 2020). As Malaysia’s national lockdown was prolonged, seemingly indefinitely, many companies were forced to close and countless others struggled to stay afloat. Meanwhile, some businesses in the industry have managed to successfully capitalize on the situation and flourish, either by identifying new markets or by adapting to the new normal. For instance, a fine-dining restaurant, Babe, had to devise an entirely new menu that recognized delivery time turnaround (Choo, 2021). The restaurant,

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Roost, on the other hand, organized its own delivery system due to the high commissions and limited geographic ranges set by the more established delivery partners (Kanagaraj, 2020). These examples illustrate the substantial changes in the value propositions offered to the market because of COVID-19, based on alterations to product/service offerings and customer needs. The examples also demonstrate how F&B businesses have been forced to innovate through the digitalization of various business operations to withstand the unprecedented shocks created by the pandemic. Whilst this shift to embrace digitalization has been necessary, it has also been contingent on the versatility and capability of companies in allocating their resources in that direction. In response to the imposition of movement and business restrictions to contain the pandemic, the urgent need to integrate digital business operations suggests that F&B businesses must not only re-shape their customer value propositions by considering digital content and online customer engagement (e.g., through social media and customer experience), they must also modify their business operating models by establishing partnerships with other businesses (e.g., delivery companies) that have an existing digital presence. The successful adoption of digital transformation in the F&B industry means that companies must be versatile in their capabilities so they can identify new opportunities, channel and deploy their resources appropriately, and reform their organizational culture effectively (Teece, 2018a). Underpinned by the dynamic capabilities framework developed by Teece (2018a), as illustrated in Fig. 1, this chapter provides insights into how F&B businesses in Malaysia have

Fig. 1 The dynamic capabilities, business model, and strategy framework developed by Teece (2018a)

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embraced digital transformation in response to the COVID-19 pandemic. Based on media and online reports collected over a one-year period, this chapter demonstrates how F&B businesses in Malaysia have combined their dynamic capabilities and strategies to create viable business models that have guided their transformation. Using Malaysia as a context, we aim to answer the following research question: How has the COVID-19 pandemic contributed to the transformation of Malaysia’s F&B industry? To answer this question, we review the literature on business models, dynamic capabilities, and digitalization in the next section. We then describe the methodology used in this study and follow this up with a presentation and discussion of the study’s findings.

2 Literature Review 2.1 Business Model In a dynamic business environment, organizations are constantly challenged by external forces, and the ongoing viability of their business operations may be threatened to some extent. Much business success is contingent on a coherent and sound business model and the ability to deploy resources efficiently (Ritter, 2014; Teece, 2018a). According to Teece (2010), a business model illustrates how organizations employ their resources to create and deliver value to customers, such that the latter are willing to pay for this value, thus creating a profitable organization. Serving as a blueprint, a business model outlines and articulates how businesses should operate by utilizing technological innovation and expertise to ensure a sustainable and long-term profit stream (Teece, 1986, 2006). While several scholars have developed comprehensive lists of components that a business model should include (Osterwalder & Pigneur, 2010; Schön, 2012), the components can be broadly synthesized into three categories. These include value propositions (i.e., customer needs, products, and services), revenues (e.g., pricing), and cost models (i.e., core assets and capabilities) (Teece, 2018a). These elements should be internally aligned within an organization and supported by strategies so that the organization’s overall goals can be achieved (Chesbrough & Rosenbloom, 2002; Ritter, 2014; Teece, 2018a). While business models have been regarded as conceptual, scholars have suggested that their use can offer organizations a competitive edge, provided that the model employed is well designed and complemented by differentiated products and services that will pose difficulties for new competitors wishing to enter the market (Teece, 2010). However, business model literature discussions tend to be isolated from those in related fields, with scholars in the innovation management, strategic management, and entrepreneurship literature emphasizing the need to consider various angles (Schneider & Spieth, 2013; Zott et al., 2011), as this synergy reflects how business operations are interrelated. Increasingly, and due to the development of

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the internet and digitization, scholars have reiterated the importance of innovating business models in response to changing environments (Chesbrough, 2007, 2010; Lindgardt et al., 2009). Hence, businesses must refine their business model to remain relevant in such conditions. An important feature of business models is the concept of dynamic capabilities, which refers to a firm’s ability to utilize both its internal and external resources to develop competencies and efficiently deploy its resources to confront the everchanging business environment (Teece et al., 1997). In fact, when a business model is designed and implemented correctly, a firm can attain superior positioning in an industry that provides it with a competitive advantage. To position themselves competitively, firms draw on competencies from various business areas, such as research and development (R&D), product innovation, intellectual property, and organizational learning (Teece et al., 1997). While scholars recognize the importance of competitive advantage as a focal point of differentiation between firms, achieving it depends to a great extent on factors such as the stability of market demand, the ease of replicability that allows firms to expand internally, and the ease to which competitors can imitate and duplicate the business (Teece et al., 1997). A firm’s dynamic capabilities facilitate the assimilation of internal and external resources that are necessary to understand novel sources of competitive advantage while addressing the changing business environment (Teece et al., 1997, 2016). As such, a firm’s ability to constantly innovate its business model allows it to capture and utilize different value creation streams in highly volatile markets (Schneider & Spieth, 2013). With recent initiatives such as Industry 4.0 and digitalization, business models need to be modified in tandem with technological advancements. Combining elements of dynamic capabilities and strategies, Teece (2018a) developed a business model (depicted in Fig. 1) that exemplifies how firms can identify new opportunities and integrate technology in their business operations. The model identifies three distinct but interrelated competencies or processes, namely, sensing, seizing, and transforming, that collectively constitute a firm’s dynamic capabilities (Teece, 2007). The collective strength of these three dynamic capabilities ultimately depends on a firm’s success in achieving a tight fit between them and its business environment (Sirmon et al., 2007; Teece, 2007). Firms generally engage with each of these dynamic capabilities in a continuous or a semi-continuous manner but not necessarily in sequential order (Teece et al., 2016), with some firms demonstrating greater proficiency in certain capabilities compared to others (Teece, 2018a). The subsequent sections provide a brief overview of each of the dynamic capabilities as they relate to the model developed by Teece and his colleagues.

2.2 Sensing Sensing entails “the identification, development, co-development, and assessment of technological opportunities (and threats) in relationship to customer needs” (Teece

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et al., 2016, p. 18). It is imperative to note that this function extends beyond technological opportunities to include other forms of opportunities and threats, such as those stemming from changes in the business environment (Yeow et al., 2018). For this reason, the importance of this dynamic capability is further heightened during critical junctures as it contains the distinctive dimensions of entrepreneurship and asset orchestration (Teece & Leih, 2016). Although it can sometimes be bought, entrepreneurial ability/competence is generally developed over time, thus, it is scarce and difficult to imitate (Teece et al., 2016).

2.3 Seizing Seizing entails capturing value in the resource mobilization process to address needs and opportunities (Teece et al., 2016). Firms with strong seizing and transformation capabilities tend to be more resilient when they encounter shocks that require rapid alignment (Teece & Leih, 2016). As Teece (2007) has argued, in most cases, managerial competency in developing and refining business models constitutes a core feature of a firm’s dynamic capabilities with respect to a firm’s ability to seize new opportunities. The importance of this has only expanded with the acceleration of digitalization and technological innovation in contemporary innovation economies (Teece, 2018a).

2.4 Transforming Transforming capabilities relate to the continued renewal of a firm’s asset alignment and (re)deployment strategies (Teece, 2007), and involve the distribution and redistribution of organizational resources to adapt to fluctuations in the business environment (Yeow et al., 2018). Although transforming capabilities play a crucial role in enabling organizations to capitalize on radical, new opportunities as and when they arise, their usefulness extends to the more mundane by helping firms soften the rigidities that develop over time as a result of “asset accumulation, standard operating procedures, and insider misappropriation of rent streams” (Teece, 2018b, p. 450). Therefore, maintaining a strategic alignment of organizational assets vis-àvis its ecosystem has become a prerequisite for firms looking to attain evolutionary fitness (Teece, 2018b). As Teece et al. (2016) have argued, business enterprises must build strong dynamic capabilities to cultivate the organizational agility needed to effectively manage situations involving deep uncertainty.

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2.5 The Impact of Digitalization and COVID-19 on the F&B Business Model Digital transformation has influenced business operations considerably. From managing their relationships with consumers, suppliers, and other stakeholders, to pushing the boundaries of existing business models, businesses have been forced to innovate to create value for their customers (Bresciani et al., 2018; Matarazzo et al., 2021; Scuotto et al., 2019). According to Verhoef et al. (2019, p. 1), digital transformation refers to the way “a firm employs digital technologies to develop a new digital business model that helps to create and appropriate more value for the firm.” Making a similar argument, a recent study suggests that when confronted with turbulent crises, businesses should depart from the traditional “make-and-sell” business model and adopt a more proactive approach by employing the “sense-and-act” business model, which entails a systematic review of costs and benefits (Köbnick et al., 2020). In following such a model, firms must align the activities that underpin their business processes with proper governance to minimize costs and maximize benefits (Köbnick et al., 2020). This suggests that F&B operators whose business model emphasizes the traditional bricks-and-mortar dine-in customer experience would have lost their competitive advantage, regardless of their positioning as a high or low-end restaurant. Likewise, the initial lockdown during the pandemic changed the demand for restaurant food and beverages and revitalized the eat-at-home culture. Given these challenges, how have F&B businesses innovated to address the multifaceted changes that have swiftly transformed their industry? As the relationship between business and society is symbiotic and interdependent (Sheth, 2020), F&B businesses must understand changing market demands and innovate their product offerings accordingly to create value for their customers. The codependence of business and community makes it imperative for each party to nurture and support the other. While businesses invest in and support the local community, the community, in turn, commits its resources to protect these businesses. For example, Grab Malaysia introduced the GrabFood Small Business Program to assist small F&B businesses as they adapt and transition to the increasing demand for delivery services. The program consists of three key areas: (1) online solutions, (2) marketing campaigns to build recognition and awareness of GrabFood, and (3) learning and development opportunities (Hew, 2021). Despite recognizing the necessity to embrace digital transformation as the natural approach to confronting challenges posed by the COVID-19 pandemic, SMEs find it challenging to adopt new technologies as a result of limited resources, skills, and commitment, as well as their frequent lack of understanding of digital opportunities (Giotopoulos et al., 2017). Moreover, SMEs face greater risks because an unexpected crisis exposes them to greater liquidity issues, forcing them to seek access to additional resources (Eggers, 2020). Nonetheless, others argue that it is easier for smaller firms (e.g., start-ups) to redesign and change their processes as there are fewer resources and procedures to revamp, in comparison to mature firms (Teece,

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2018a). In other words, smaller firms have the advantage of being able to modify their operations without having to make major investments, thus giving them the agility to adopt, improve, and discard new ideas (Teece, 2018a). This is highly relevant for internet-based business models that leverage social media or online platforms. Furthermore, much of a firm’s success in being able to do so is underpinned by the management team’s entrepreneurial ability to sense new digital opportunities, alter the firm’s interactions with its customers, and co-create value with them (Matarazzo et al., 2021). While it is evident that digital technologies are critical to supporting value creation and customer engagement (Matarazzo et al., 2021), it is important to assess the readiness of F&B businesses to embrace digital technologies in their business operations in response to the effects of the COVID-19 pandemic.

2.5.1

Strategies

The COVID-19 pandemic has seen businesses move from physical spaces to the digital realm. This is a significant shift in the marketplace that highlights the importance of adopting digital technologies to facilitate business operations. The term digital servitization has been coined to refer to this strategy, which aims to leverage digital breakthroughs that connect businesses and customers with smart connected products, internet platforms, and digital offerings, amongst others (Ardolino et al., 2018; Paschou et al., 2020). One of the goals is to ensure minimal contact and human interaction (Rapaccini et al., 2020). Undertaking servitization also suggests a need to transition from product-logic to service-logic business processes that emphasize customer value creation that fulfills the needs of consumers (Baines & Lightfoot, 2014; Kowalkowski et al., 2017). Although digital servitization may appear to offer a future route for F&B businesses, scholars have argued that the uptake of digitalization is a long-term process (e.g., Tronvoll et al., 2020) that requires careful deliberation to balance its costs, capabilities, and benefits. While digital servitization might arguably enhance a firm’s resilience to the economic shock associated with the COVID-19 pandemic (Rapaccini et al., 2020), Teece (2010) cautions against adopting any technological innovation without complementing it with sound strategies, as innovation alone does not automatically guarantee success. Drawing from a strategic management perspective to support digital servitization, a pertinent solution for F&B businesses relates to the revision of their operational strategies, primarily by forming strategic alliances with external partners that offer complementary services. A strategic alliance refers to a “cooperative arrangement between two or more firms to improve their competitive position and performance by sharing resources” (Ireland et al., 2002, p. 1). This synergy is beneficial as it allows for both an expansion of existing consumer markets (Ireland et al., 2002) and the diffusion of technology (Elmuti & Kathawala, 2001). Using this strategy, the eventual aim is to establish value creation by enhancing the consumer journey and providing a seamless experience on a digital platform. Importantly, the entire customer experience must be delivered with accuracy, speed, and efficiency.

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Apart from leveraging the competencies of external partners, a business must also establish an organizational culture that promotes a digital approach that communicates values such as creativity, change, and innovation within the organization (Köbnick et al., 2020; Matarazzo et al., 2021). According to Köbnick et al. (2020), top management and employees need a strong degree of interdependence to initiate a cultural transformation when implementing digital change in the organization. As digitalization is often perceived as a threat to job security, organizations need to communicate and provide operational support to reassure employees and convince them to freely adopt a digital approach (Köbnick et al., 2020). This might involve upskilling current employees with new skills and knowledge while hiring new employees with the necessary expertise to streamline and bridge the knowledge gap (Matarazzo et al., 2021; Teece et al., 1997). Hence, by viewing digitalization as a learning process, organizations can develop their capabilities effectively to pursue new organizational goals, such as digital transformation (Wang, 2008). Aside from strategies that promote digital servitization, scholars have also highlighted the importance of product diversification as a risk reduction strategy, as this generates income beyond the primary source of business operations (Busch & Kick, 2009). According to Kim and Kogut (1996), the ability to diversify products rests on a firm’s accumulation of expertise and capabilities. When the level of related product diversification is low to moderate, a firm tends to perform better (Benito-Osorio et al., 2012). In contrast, when product diversification is unrelated at moderate to high levels, a firm’s performance declines (Benito-Osorio et al., 2012). Nonetheless, the more experience a firm has in adopting technology, the greater the likelihood it will be able to diversify (Kim & Kogut, 1996). Examples of diversification could include devising new product innovations or lines that cater to different target markets or market segments. Hence, F&B business operators must consider diversifying their product portfolio.

3 Study Context and Methodology We adopted a constructivist grounded theory methodology for this study using media and online reports on Malaysia’s F&B industry published between January 2020 and June 2021. Grounded theory was selected because it provides a theoretically rigorous approach to undertaking qualitative research (Charmaz & Henwood, 2008) and guidelines for even a novice researcher. Grounded theory refers to systematic yet flexible guidelines for collecting and analyzing qualitative data (Charmaz, 2006). Data collection and analysis occur simultaneously, with the researcher moving iteratively between data and analysis. The data collection process began with the research team skimming through media articles and reports to become familiar with local discourses on COVID-19. Purposive sampling was employed and only articles highlighting the impact of COVID-19 on local food-related businesses were shortlisted. This produced a total of 135 articles that were sorted into two clusters: (1) articles dealing with specific F&B service

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organizations, and (2) articles about food-related manufacturers and service organizations. Data analysis began as soon as data collection had started, and data were collectively analyzed by all three authors who searched for meanings until patterns or themes emerged. Thematic or pattern analysis is a common tool used to analyze qualitative data. Thematic analysis was used to encode the information and develop themes or patterns found in the media reports, and prominent patterns were identified. Open coding is the process of identifying themes to create a preliminary framework of descriptive categories (Corbin & Strauss, 2008). In the initial stages of open coding, codes were formed in vivo (i.e., derive codes from the data itself) and a priori (i.e., derive codes ahead of time) to describe and classify the data. The researchers winnowed through the codes to ensure they were comprehensible, connected, and communicable. The data analysis spiral proposed by Creswell (2013) was used first to analyze the data multiple times to ensure that the underlying meanings were accurately captured and interpreted to extract relevant themes. Open coding was used to create descriptive categories as a preliminary analysis framework. Axial coding was used to re-examine the categories obtained through open coding and examine the relationships between the categories. This process was repeated until all three researchers agreed that the codes were categorized to correspond to the three stages of Teece’s (2018a) model—sensing, seizing and transforming.

4 Findings In this section, the study’s findings regarding the dynamic capabilities of Malaysia’s F&B businesses are discussed in the context of Teece’s (2018a) model, which incorporates the three capabilities of sensing, seizing, and transformation shown in Fig. 1.

4.1 Sensing The data highlight how F&B businesses have identified and developed opportunities presented by the COVID-19 pandemic. Three themes emerged from the analysis of the data: (1) the changing business landscape and customer preferences, (2) digitalization as a business opportunity, and (3) opportunities to ‘give back.’

4.1.1

The Changing Business Landscape and Consumer Preferences

The first theme that emerged was the change in the overall business environment and in consumer preferences. The COVID-19 pandemic has caused many lifestyle changes, including a switch in customer preferences from dining-in to alternative

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activities. As increasing numbers of customers are now working from home, many have substituted outside food with home-cooked meals. F&B operators were quick to experience these shifts as they suffered a major decline in the number of dinein customers and increased demand for takeaways and deliveries, as shown in the following excerpt shared by the CEO of Nando’s: For starters, it was disproportionately focused on dine-in customers and not enough on those who wanted takeaway or delivery. In fact, before the MCO period, dine-in accounted for 82% of business. We immediately lost that and could only continue with our takeaway and delivery businesses. (Jacobs, 2020b)

In fact, a nationwide survey of 1,100 respondents recently conducted by local market research firm Vase.ai revealed that 85% of Malaysians had been cooking at home since the start of the Recovery Movement Control Order (RMCO), a type of lockdown imposed by the Malaysian government (VASE, 2020). Some 24% of respondents reported that they opted for takeout, 23% ordered food for delivery, while 12% chose to dine out instead. The overlap in responses shows that some Malaysians are getting their meals from multiple sources. F&B business owners were quick to sense these changes in consumer lifestyles and behaviors and also realize that adapting to them would entail making substantial adjustments to their current operating procedures, product portfolios, and possibly even their business models. This is demonstrated in the excerpt below: When the MCO [Movement Control Order, a form of lockdown] was first implemented in Malaysia, eating out became impossible, while food delivery and home-cooked food became increasingly popular options. Even though restaurants were allowed to open for dine-in, there was an air of wariness surrounding eating out. As a result, many established business owners discovered that they [would] have to pivot and develop new products to cater to the new normal. (Durai, 2020a)

These changes in customer preferences, which initially appeared to threaten the traditional F&B business model, were soon viewed as an opportunity for a fundamental reset leading to the adoption of new operating procedures in the F&B industry. However, the standard operating procedures (SOPs) that formed part of the government-imposed lockdowns required restaurants to operate at half their physical capacity. In addition, government-mandated social distancing guidelines required restaurants to maintain a certain distance between dining tables, diners, and different groups of diners. Capacity reductions prevented businesses from catering to the essential supply of dine-in customers due to a lack of space. “It has been devastating for business,” says Isadora Chai, founder and chef of Bistro à Table. “Now that we are able to open, social-distancing rules have reduced our capacity to 35%, making space a premium and every reservation count. Last-minute cancellations, or worse, no-shows, hurt even more now. Perhaps taking deposits to secure bookings, like many establishments do abroad, may be the way forward for many restaurants.” (Khoo, 2020)

As a result, many F&B operators had to identify new opportunities that could be provided by technology and adjust their business model accordingly. Many realized that they had to transition away from the traditional dine-in-focused, bricks-andmortar restaurant model as digitalization was necessary for survival. This switch is explored in the next section.

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Digitalization as a Business Opportunity

Malaysia’s F&B enterprises quickly realized that digitalization might be the only way to ensure their survival during the pandemic. In the initial stages of the pandemic, they leveraged other businesses and retailers for support, as the next excerpt shows. The severity of the pandemic is not unique but is affecting the entire F&B industry. Zainal, [CEO of NZ Curry House], points out that they have several outlets in malls and office buildings, and multiple retail owners in buildings have gotten together and set up WhatsApp groups to support each other in [this] time of need. In these groups, participants share weekly updates and business tips on complying with the SOPs and the topic of digitalization started gaining momentum. (Lim, 2021)

Although NZ Curry House subsequently adopted digitalization, not all F&B enterprises were able to do so due to a lack of skills, funding, and related resources. Some had yet to accept that embracing digitalization entailed shifting away from the dine-in-focused, bricks-and-mortar restaurant model. This meant making substantial changes to the way they had traditionally operated, from changing the composition of their labor force to investing in upskilling their workers with digital competencies. This would ensure that they could handle the new jobs and responsibilities that arose after embracing digitalization. In general, these firms had to create a digital presence and a platform for their enterprise. The concept of pre-ordering, doorstep delivery and drive-through pick-ups will be more common as people will want to spend less time waiting in a restaurant for their food. [Companies] will probably need to focus more on customer service delivery staff and train people to handle online enquiries and food preparation efficiently. The look and feel of the actual outlet will also matter less. Previously, F&B establishments focused a lot on creating a nice ambiance for their shop. (Jacobs, 2020a)

As highlighted in the excerpt above, these fundamental changes in people, processes, and physical layouts (or servicescape) are important elements in designing and managing the customer interface (Wirtz & Lovelock, 2018). Some firms have also realized that embracing digitalization through the establishment of cloud kitchens may be a more cost-effective and profitable way to expand their business. Others consider cloud kitchens a lucrative opportunity to enter the F&B industry by capitalizing on the current pandemic situation and Malaysia’s nascent cloud kitchen market. With a ballpark figure of RM300,000 to RM1 million to start a physical restaurant, this provides a good motive for the shift towards cloud kitchens, while changing consumer habits have placed food delivery services [in] a [more] favorable position compared to conventional restaurants. Coupled with rising costs, shrinking margins and labor issues, the continued existence of the traditional restaurant model could well be seeing its demise, said Foodpanda’s Director of Operations. (Murugiah, 2020)

The ability of F&B operators to recognize the technological possibilities and opportunities offered by digitalization allows them to accommodate changing customer preferences and the shifting landscape of the F&B industry.

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Opportunities to ‘Give Back’

The final theme that emerged under sensing was the opportunity to give back and serve the community. During the traumatic upheaval that the pandemic caused among both customers and F&B operators, certain organizations and individuals identified opportunities to ease the burden of F&B operators and help fulfill customers’ unmet needs. E-commerce fashion site FashionValet has launched an online bazaar platform connecting food and beverage (F&B) sellers with customers throughout the month of Ramadan. FVBazaar is FashionValet’s initiative to help food vendors earn an income with zero fees and commissions, following the nationwide cancellation of food bazaars. FashionValet is only acting as a bridge to give sellers more exposure and will not be involved in transactions or deliveries as customers will contact sellers directly. (Chalil & Hassandarvish, 2020)

As the excerpt shows, key players from outside the industry acted to help ease the burden of smaller, informal F&B operators who were facing major difficulties during this time. The opportunity to give back benefited many different stakeholders— customers, whose needs were met; F&B operators, who found a way to sustain their operations; FashionValet, which displayed goodwill and received favorable publicity; and the general public, who became more aware of the challenges faced by the F&B industry. In identifying and recognizing these opportunities, many firms acted to seize them, as discussed in the next section.

4.2 Seizing The findings of this study illustrate that F&B operators responded by seizing the opportunities they could detect using their sensing dynamic capabilities and a combination of strategies. These strategies can be classified under three separate but often interrelated themes, namely: (1) changing the product portfolio, (2) embracing the digital revolution, and (3) engaging in corporate social responsibility.

4.2.1

Changing the Product Portfolio

Sensing the surge in demand for alternatives to dining-in, many F&B operators were able to devise innovative alternatives for their customers. One such alternative was the introduction of do-it-yourself (DIY) cooking kits. Also referred to as meal kits or recipe boxes, the kits have been viewed as a game-changer for the worldwide F&B ecosystem during the pandemic. Between 2021 and 2028, the global market for meal kit delivery services is expected to experience a compound annual growth rate (CAGR) of 13%. This represents a major expansion of a market that was valued at $10.26 billion in 2020 (Grand View Research, 2021). The excerpts below provide examples of F&B operators who introduced variations of DIY cooking kits to their

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existing product portfolios to capitalize on a customer base that was increasingly opting to cook at home. Joshua Liew, owner of Espressolab, a chain of specialty coffee outlets, says, “My sales are deteriorating but I still need to get my products into people’s homes.” To combat this loss in sales and in a bid to entice caffeine addicts working from home, Liew came up with two completely new products – coffee sachets and Nespresso machine-compatible capsules - [which are] delivered straight to consumers’ homes. Restaurants like MyPizzaLab and MyBurgerLab have come up with DIY pizza kits and burger kits. (Durai, 2020a)

As the excerpt illustrates, businesses have had to change and innovate their product offerings to increase sales and reach modern-day, pandemic-weary customers. To ensure that these kits are fail-safe, businesses supplying DIY kits must also provide clear instructions for their use through videos or other communication tools. These businesses have had to recognize opportunities in every problem they have encountered during the pandemic. Another alternative to traditional dining out is private dining, which has seen a rise in popularity among consumers wary of leaving their homes, as shown in the following excerpt: Friends Aaron Khor, 23, and Lee Wei Jian, 29, both studied culinary arts and worked at a number of restaurants for a number of years. Both found themselves at a loose end when the movement control order (MCO) hit and they had time to spare (and no income to boot). Private dining came up because of the MCO. So the idea was to bring the restaurant to you, instead of you coming out. (Durai, 2020c)

While some chefs were already practicing this before the pandemic, many new players started entering the market, especially chefs fresh out of cooking school who found themselves unemployed. The pandemic has allowed private dining to quickly become a new form of entertainment and socializing since most Malaysians had previously been more familiar with food catering services. The demand for private dining has accelerated as a result and the concept is one of the major trends propelling the fine-dining segment of the F&B sub-sector (Choo, 2021), as consumers in this niche seek safe alternatives that can recreate and deliver their usual fine dining experience.

4.2.2

Embracing the Digital Revolution

While F&B players are sensing and seizing the opportunities presented by digital technology, players in the food industry are likewise working with technology companies and revolutionizing the F&B industry. Many of these organizations are establishing cloud kitchens and e-commerce platforms to facilitate the online service process. The following excerpt describes one such example: Brahim’s Holdings Bhd is collaborating with Focus Dynamics Group Bhd for the Digital Kitchen Project. They will leverage Brahim’s existing central kitchen, logistics and supply infrastructure to create a central kitchen which will service Shadow Kitchen Network services, Cloud Kitchen, Ready-to-Eat Meals and Digital Food Trucks. Meanwhile, Focus will be responsible for the technology side of the venture. (Idris, 2020)

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Brahim’s, a leading Malaysian food services company, is involved in the complete food supply chain, from pre-packaged food manufacturing, the provision of inflight catering services, and the operation of airport-centric restaurant services, to the supply of warehousing and logistics services. Focus Dynamics, on the other hand, is an F&B, entertainment, and lifestyle group that uses digital technologies in all its businesses. This includes the integration of digital payments, food delivery services, and e-commerce in ongoing efforts to embrace the latest technologies. The strategic collaboration of these two leading F&B companies creates opportunities for struggling restaurants, entrepreneurs, food truck operators, and small businesses, and showcases the digital revolution in the F&B industry. The Chairman of the Oriental Group of Companies sees its restaurants adopting a radical takeout business model with bespoke services such as delivery and private dining options. Aside from investing in e-commerce and technology to cater to the takeout model, the Oriental Group will be streamlining its operations to be cost-effective. It is also looking at the possibility of packaging its signature dishes for the retail market. (The Edge Markets, 2020)

As the excerpts above demonstrate, pre-packaged food manufacturers are opening cloud kitchens, while established F&B dining groups are considering moving into food retailing. Digital technology is revolutionizing the F&B industry and obscuring the boundaries between different food industries. However, embracing the digital revolution in the F&B industry has not been a smooth process for all players. Technical hiccups and errors have had F&B operators hurriedly appeasing unhappy customers, as shown by the excerpt below: Local restaurant myBurgerLab recently apologized on Facebook after a hectic Saturday night at their Bangsar branch resulted in cancelled orders. The incident was due to overflowing orders that came in late in the evening due to a technical glitch from food delivery app, GrabFood. “The thing is, we got caught off-guard because we didn’t know the orders were pending on our side because it was being held on Grab’s cloud,” said the co-founder of myBurgerLab. They reported the incident to Grab, who were unaware of the glitch. The glitch has since been fixed. (Zikri, 2021)

As described in the excerpt above, seizing the opportunity to digitally transform has come at some cost to those in the F&B industry. In the early stages of transformation, some operators encountered digital blunders similar to those experienced by myBurgerLab, highlighting the hidden and unspoken cost of embracing the digital revolution in the industry. In terms of the monetary costs of digital transformation, many F&B outlets that have engaged food delivery platforms (GrabFood, FoodPanda, and others) to drive sales have complained that the high commission rates charged by the platforms eat considerably into their profits. The trade-off, however, is that a reduced profit is preferable to zero profit from zero sales.

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Engaging in Corporate Social Responsibility

Even as many players have suffered from drastic changes affecting the F&B industry, others have taken the opportunity to act by giving back to society. One example is Copper, a European restaurant run by a husband-and-wife team who decided to pivot their restaurant’s business model. On the day prior to the MCO, they saw an 80% drop in business and instructed their employees to work from home. The couple flipped the restaurant to serve the nation’s medical frontlines, supported by crowdfunding from family and friends. “This has enabled us to make lunch and dinner boxes, which support the livelihood of our staff, farmers, producers and basically our F&B ecosystem,” said the owner of Copper restaurant. This shift from fine dining cuisine to a more production-type product was a step out of their comfort zone. (Choo, 2020)

While major players such as Brahim’s were using their financial strength as a dynamic capability to expand into newer food industry fields, Copper took the opportunity to use its expertise to give back to society. Larger organizations have devised innovative ways to incorporate CSR into their pandemic-response strategies. As illustrated in the excerpt below, Nando’s Malaysia provides a good case in point, exemplifying a firm that was able to successfully implement such a strategy by collaborating with multiple stakeholders. Initially, the focus of its CSR activities was internal, with the company donating leftover raw materials and food to staff members in need, an act that also minimized food waste. Eventually, the company extended its CSR activities externally by collaborating with partner NGOs to donate food to affiliated charities to help the underprivileged and other members of the community, as shown by the excerpt below by the CEO of Nando’s: “Externally, we did a lot of food donations through our non-governmental organizations.” The company also introduced a “kind dining” program, where customers could donate a non-perishable food item for a 20% discount on their bill. Nando’s has introduced a program called “No chucking our chicken,” which has to do with preventing food waste. “We freeze the chicken, using our stringent compliance process to make sure the food is safe, and donate it through our charity partners,” he said. (Jacobs, 2020b)

Engaging in CSR initiatives helps firms to accumulate social capital at firm, industry, and societal levels by creating greater employee and customer satisfaction, greater trust and loyalty from major stakeholders, and a positive public reputation as a socially responsible business enterprise (Russo & Perrini, 2010). Examining the impact on customers alone from the ripple effects of engaging in such activities, a recent report published by Ernst and Young stated that approximately 62% of consumers said they were more likely to make purchases from companies they felt were doing good for society. Meanwhile, another 29% reported that they were even willing to pay a premium when purchasing from such companies (Rogers & Cosgrove, 2020).

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4.3 Transforming Although most F&B operators were adept at sensing key developments unfolding in their industry, very few were willing to make changes or were willing to transform their business models so they could adapt better to the challenges of the pandemic. However, this is unsurprising as there is often a time lag before innovations in business models respond to possibilities created by technological innovations (Teece, 2018a). The current findings illustrate that firms were at various stages of implementing transformational changes to their business model. Furthermore, an action regarded as transformation by one industry player might be regarded as seizing by a different industry player. Some firms were contemplating ways to implement a digital transformation, others were initiating it, and some firms had already begun and were launching their new business models. An owner who founded Siti Li Dining restaurant stated: Siti Li Dining is a traditional restaurant with a strong sense of community, as we are very personal and connected to our customers. In [a] short span of time, the team has learnt how to take online orders, pack the food and work with a third-party delivery partner. Now the team has picked up tech skills and everyone from the kitchen crew to the servers has digital roles to fulfil in addition to their duties at the restaurant. They should be proud of their ability to adapt, change and pick up new capabilities. (Boey, 2020)

As described in the excerpt above, the founders had to pivot from running a small, personal community restaurant to focusing on providing packed food for delivery. They also started an online food hall to sell frozen snacks, cookies, cakes, and other popular items from their menu. Other more established players, such as Nando’s, have already begun the process of digital transformation. Even before the crisis, Nando’s realized that things would have to change. It needed to beef up its takeaway and delivery capabilities and automate and digitize whatever processes it could to free up its staff to focus on more value-added tasks such as giving customers a good dine-in experience. So, it came up with a two-pronged approach — to employ a multichannel strategy and go on a digitalization drive. The company is also reintroducing its own delivery platform to be able to provide a better service to customers via its loyalty app, Peri Village. (Jacobs, 2020b)

As mentioned in the excerpt, Nando’s represents F&B firms that have purposefully changed their business model to accommodate a more complete digital transformation of their services. By employing a multi-channel approach, the company can leverage GrabFood and FoodPanda platforms to serve customers while developing its own in-house delivery service. Eventually, in-house delivery will add value to the company’s customer loyalty app, which will be used to reward customers. The company is also considering using QR codes in the near future to allow customers to place orders and make payments via their mobile phones. Elsewhere, other firms are developing road maps from their transformation process plans, as illustrated by Focus Dynamics whose CEO shared the following excerpt: “Our long-term plan is to automate the entire chain, capturing revenue and margins for all aspects of the digital F&B industry for the Klang Valley area. With a kitchen of this size

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and collaboration with Brahim’s, which already has an existing supply chain network, this grand plan is one step closer to being achieved,” he added. (Idris, 2020)

These findings highlight that the transformation of a business model occurs along a continuum that provides a range of opportunities and experiences for different players within the F&B industry. Some players, for example, have chosen to transform their business model to that of a cloud kitchen, as the following excerpts demonstrate. Cookhouse, arguably the Klang Valley’s first co-sharing cloud kitchen, helps established F&B players by offering a cheaper, faster set-up if they want to penetrate a different market. At Cookhouse, Huen has designed a large, functional 10,000 square foot space with five private cooking studios, a shared co-cooking space that can facilitate baking as well as Asian and Western cooking, and even a large event space. Since its inception, Cookhouse has quickly attracted over 10 F&B entities. (Durai, 2020b) kEATchen was launched as a cloud kitchen to help vendors navigate the backend systems of food deliveries. This is especially so for small-time street food vendors, who mostly derive their livelihoods from walk-in and dine-in customers. kEATchen provides a place for these vendors to prepare their dishes and operate [using] a delivery-only model. The founder of kEATchen believes that they have determined a niche [that helps] street food vendors stay competitive in a digital space while maintaining their authenticity and brand presence. (Tan, 2021)

The excerpts above show how the operation of a cloud kitchen is rapidly becoming a sustainable business model for many F&B players, from small street vendors to more established organizations that cannot transform to offer fully online food delivery. This can be attributed to the availability of resources and capabilities within an organization. As suggested by Teece (2018a), transformation encompasses a realignment of the organization’s structure and culture that also requires more time to achieve.

5 Discussion Malaysia’s extended COVID-19 lockdowns have resulted in the natural progression of firms in the F&B industry to embrace digitalization to create an online presence and gain access to existing and new consumer markets. This phenomenon has expedited the industry’s uptake of digital technologies and has revolutionized F&B business operations. More importantly, the transition from the physical to the digital sphere has challenged F&B operators to review their business model. Specifically, they have been encouraged to (1) modify their value proposition and the creation and delivery of their products, (2) realign their internal operations to steer resources in this new direction and, (3) build synergies with external parties to create a seamless consumer experience journey. The transition to online delivery platforms has arguably negated the competitive advantage of F&B operators, which originally hinged on the dine-in experience. Moreover, digitalization has created a more competitive market as most F&B operators have begun to use digital platforms to provide consumers with a wider choice of

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food and dining options. This suggests that existing F&B operators need to refine their value proposition as a point of differentiation to regain their competitive advantage. As the central concept in marketing revolves around creating value for the consumer, service organizations must closely monitor changes in consumer preferences (Kotler et al., 2010). In response to the COVID-19 pandemic, a clear distinction is observed in the value proposition that was originally centered on the dine-in experience but which is now centered on the concept of take-away. With the substantial reduction in dine-in opportunities, the focus of customers has shifted from the central experience of dining to the peripheral experience of the quality and attractiveness of takeaway meals and their packaging. Customer comparisons of the environmental and hygienic aspects of take-away packaging present an opportunity for firms to redefine their value proposition. While these improvements reflect minor short-term modifications to product offerings, firms that diversify by offering related products, such as frozen food or DIY kits, are arguably regarded as being more competitive. On the extreme spectrum of innovation, the identification of an important new opportunity has led to a radical transformation, with the emergence of cloud kitchens as a sustainable long-term business model. Such innovation is critical to a firm’s overall success. Although firms need to ride the digital wave, the success of many F&B operators is still largely contingent on their dynamic capabilities, which give them their competitive advantage. More specifically, entrepreneurial competencies that allow a firm to sense and identify new opportunities, and organizational capabilities that allow it to orchestrate resources to refine existing product offerings and identify new product innovations, are influential in steering the organization. This is especially pertinent for SMEs, where entrepreneurs play a critical role in interpreting environmental conditions and uncovering hidden opportunities to position their firm competitively (Man & Lau, 2000). Entrepreneurs that possess strong business acumen regarding the future of the F&B industry can break boundaries and transform the industry (as demonstrated by the cloud kitchen concept). Hence, the ability of firms to detect subtle changes and trends while effectively and efficiently capitalizing on them promptly forms the core of their dynamic capabilities (Dong et al., 2016; Teece, 2018b; Teece et al., 2016). Importantly, strategies need to support the efforts of F&B operators to seize new opportunities through the review and adaptation of their business operations. For example, the synergy between external vendors and internal systems requires coordination and the integration of processes. As services are intangible, customers find it difficult to evaluate them until they have experienced them. Until then, people, processes, and physical evidence often serve as indicators of service quality. Thus, service staff and others employed in the industry need to be trained to manage new technology and software and to respond to customer queries digitally. Service processes must be redesigned, and allowances must be made for fail points to ensure that service standards and performance remain high. Finally, while the business operations of physical restaurants have been somewhat marginalized, by the COVID-19 pandemic, online F&B platforms must compensate for this by being attractive, userfriendly, and easy to navigate. This can be enabled by building synergies with external

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parties, such as Grab and e-payment companies, to leverage their respective core competencies. As organizations start to employ a multi-channel strategy, they must focus on customer engagement while coordinating e-commerce, social media, and various customer touchpoints to ensure a seamless consumer experience. The coordination and implementation of information across an organization and cross-functional teams is a distinctive competency that must be conspicuous if F&B operators are to succeed (Matarazzo et al., 2021). In conclusion, the COVID-19 pandemic has been and is a force for change; the use of correctly embedded digital technologies will initiate a dramatic transformation of Malaysia’s F&B industry.

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Dr. Siti Aqilah Jahari is a Marketing lecturer at Monash University where she received her. Her research interests lie at the intersection of religious consumption and tourism marketing under the broader umbrella of consumer behavior. Dr. Jahari has published her work in various journals, such as Tourism Management, Tourism Recreation Research. She has also presented her research at several international conferences, including the European Marketing Academy Conference (EMAC), and conferences organized by the American Marketing Association (AMA), and the Society for Marketing Advances (SMA). Dr. Juliana Angeline French is a senior lecturer in Marketing at Monash University Malaysia. Her research focuses on issues at the nexus of consumer culture, marketplace resources, and political consumerism, particularly within Asia. Dr. French is currently involved in research projects on consumer vulnerability resulting from socio-cultural aspects of consumption. Her work has been published in the Annals of Tourism Research, the Journal of Macromarketing, the Journal of Marketing Management, and the Australasian Marketing Journal, amongst others. Dr. Aminath Shaba Ismail obtained her Ph.D. from Monash University Malaysia in 2021. Her research interests coalesce around the intersection of consumer behavior theoretics and perspectives from sociology and gender studies. She is keen on exploring the production and transformation of social stratifications, particularly along the lines of gender, with implications for reinforcing or challenging existing systems of privilege and oppression in societies.

The Perfect Storm: Navigating and Surviving the COVID-19 Crisis Fandy Tjiptono , Ida Bagus Gede Adi Permana , Andhy Setyawan , and I. Putu Esa Widaharthana

Abstract The COVID-19 pandemic has had detrimental effects on all industries, including tourism. The current study aims to identify and examine the business survival strategies that companies in the tourism and hospitality industry in Bali, the main tourism destination in Indonesia have pursued during the pandemic. A qualitative research approach was implemented by interviewing relevant stakeholders across six sub-sectors in Bali (travel agencies, hotels, restaurants, destination management organizations, gift shops, and event organizers). Based on a systematic analysis of themes, a typology of four main strategies is proposed: efficiency, adaptation, shifting the target markets, and innovation. These strategies provide important insights for other companies in this industry and other fields, within and beyond Southeast Asia. Keywords Business survival · Recovery strategy · Tourism and hospitality · COVID-19 · Bali · Indonesia

F. Tjiptono School of Marketing and International Business, Victoria University of Wellington, Wellington 6011, New Zealand e-mail: [email protected] I. B. G. Adi Permana (B) Department of Management, Faculty of Economics and Business, Universitas Airlangga, Surabaya 60286, Indonesia e-mail: [email protected] A. Setyawan Department of Management, Faculty of Business and Economics, Universitas Surabaya, Surabaya 60293, Indonesia e-mail: [email protected] I. P. E. Widaharthana Politeknik Pariwisata Bali, Bali 80361, Indonesia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 A. O. J. Kwok et al. (eds.), COVID-19 and the Evolving Business Environment in Asia, https://doi.org/10.1007/978-981-19-2749-2_8

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1 Introduction Since the first confirmed case of COVID-19 was reported in Wuhan, China (Kang et al., 2020), the virus has spread rapidly worldwide and was declared a global pandemic on 11 March 2020 (WHO, 2020). The virus has caused unprecedented disruption to human lives and workplaces to date (Zhang et al., 2020), and it is predicted that it will have a long-term negative effect on the global economy (World Bank, 2020). Global economic output in 2020 faced an estimated decline of approximately 5% (IMF, 2020) and. in total, the global economy was forecast to lose over US$ 12 trillion in two years (BBC, 2020). The IMF (2020) projected that developed countries would face economic downturns, with the economies of the UK, the US, Germany, and Japan expected to shrink by −10.2, −8, −7.8, and −5.8%, respectively. Furthermore, the COVID-19 pandemic has had detrimental effects on the tourism and hospitality industry, which plays an important role in many national economies (Berbekova et al., 2021; Sigala, 2020; UNWTO, 2020a). The imposition of social distancing, lockdowns, stay-at-home restrictions, and travel bans have negatively impacted the industry; the effects have included a 75% decline in the number of international travelers, a loss of about US$ 1.1 trillion in international tourism receipts, and the loss of 75 million jobs in related sectors (UNWTO, 2020a, 2020b; WTTC, 2020). Most countries, especially those dependent on tourism, now face severe recessions, due to the negative economic, social, health, and business consequences of the COVID-19 pandemic (Al-Shafi, 2020; Newsome, 2020; Sigala, 2020). Indonesia, the largest economy in Southeast Asia, was expected to experience an economic decline of 0.3% in 2020 due to the effects of the pandemic (Fauzia, 2020), with its average annual growth predicted to drop from 5 to below 3% (Olivia et al., 2020). As the world’s fourth most populous country with more than 275 million people in July 2021 (CIA, 2021), Indonesia is predicted to experience greater challenges than less-populated countries in addressing the impacts of the COVID-19 pandemic (Djalante et al., 2020). The country’s first two confirmed cases of COVID19 were announced by President Joko Widodo on 2 March 2020 (Ihsanuddin, 2020). Subsequently, the number of cases had increased dramatically to almost four million by August 2021, with more than 120,000 deaths (Worldometers, 2021). The first COVID-19 case in Bali, Indonesia’s main tourist destination, was identified on 10 March 2020, when a British tourist tested positive and died due to the virus (Jefriando, 2020). To mitigate the virus transmission, the Governor of Bali announced on 20 March 2020 that all tourist destinations in Bali would close (Divianta, 2020). Since the province contributes about 40% of the national tourism income (Susanto, 2020), the decision had a major negative economic impact on the tourism sector and on the Balinese in particular, who rely on tourism-related activities such as hotels, travel agents, gift shops, restaurants, event organizers, and destination management for their livelihood. It was estimated that tourism in Bali suffered a loss of around Rp 9.7 trillion per month in 2020. Around 96% of the island’s hotels were closed, as the airport was closed to tourists (Sugiari, 2020), and Bali’s tourism operations

The Perfect Storm: Navigating … (a) Ngurah Rai International

Source: Personal Documentation.

147 (b) Pandawa Beach

Source: Personal Documentation.

Fig. 1 Bali: before and during the regional lockdown. Source Personal Documentation

were effectively suspended for the better part of a year Gagne, 2021) (see Fig. 1). During past crises facing Bali’s tourism industry (e.g., the Bali bombings in 2002 and 2005 and the eruption of Mount Agung in 2017), tourism recovered quickly. Hotel occupancy rates declined by 20% after the Bali bombings, while the eruption of Mount Agung resulted in a 60% drop in occupancy (Sugiari, 2020). In contrast, during the COVID-19 pandemic, all tourism-related sectors were closed, resulting in the lowest point in the history of tourism in Bali (Wibisono, 2020) and the creation of a “perfect storm” for the province’s tourism industry. The current research aims to examine how the tourism and hospitality industry in Bali has responded and adapted during the COVID-19 pandemic and in the new normal. Bali was selected as the research context for two main reasons: (1) as the main tourism destination in Indonesia, Bali is heavily reliant on a tourism sector (Booth et al., 2020; Tajeddini et al., 2017) that offers attractive tourist activities ranging from nature-based and cultural tourism to paranormal tourism (McKercher et al., 2020; Pharino et al., 2018); and (2) Bali has survived several previous tourismrelated crises, so it is both interesting and valuable to gain various insights and learn from those experiences (Gurtner, 2016). The present study employs qualitative research using case studies across six sub-sectors comprised of travel agents, hotels, restaurants, destination management companies, gift shops, and event organizers. Data collected for the study includes archival data (both online and offline) and indepth interviews with relevant stakeholders in the sub-sectors under investigation. The findings contribute to the business survival strategy literature by proposing four main strategies (efficiency, adaptation, shifting the target markets, and innovation)

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that firms can implement to navigate and survive a global crisis. These strategies are relevant for other companies within the same industry in this region, as well as those operating in other industries or different geographic regions.

2 Literature Review The tourism sector is highly vulnerable to safety, security, and health issues, including catastrophic events such as volcanic eruptions, earthquakes, tsunamis, and pandemics (Berbekova et al., 2021; Fountain & Cradock-Henry, 2020; Gurtner, 2016). Rossello et al. (2020) suggested that different types of disasters have different impacts and require specific measures for the recovery of the tourism industry. Recently, the global tourism industry has been severely affected by the COVID-19 pandemic, a major catastrophic event. Mobility restrictions (e.g., regional quarantines, travel bans, stay-at-home orders, and the closure of tourist destinations) have badly affected the industry, resulting in travel cancelations and lost revenue (Ugur & Akbiyik, 2020). The global tourism industry, in terms of outbound and inbound travelers, was found to be negatively correlated with the number of confirmed COVID-19 cases in many countries (Farzanegan et al., 2020). The volatile environment resulting from the pandemic and measures implemented to try and contain it has changed tourism activities worldwide (Gossling et al., 2020). Sigala (2020) proposed that three stages of transformation should be followed during the pandemic: response, recovery, and reset. The three main stakeholders in the tourism industry (tourism demand, tourism supply, and destinations and policymakers) should actively coordinate the development of tourism according to “new” standards that accommodate the conditions of the COVID-19 pandemic. At the response stage, tourism players must be willing and able to change tourism behavior by prioritizing the health and safety of both tourists and employees. They must be able to provide solutions and make service adjustments (e.g., by changing and canceling trips, and/or providing refunds). As part of the recovery step, tourism supply must allocate the available resources and strive to alleviate the impact of the pandemic to ensure the sustainability of business activities. Furthermore, at the reset stage, tourism players need to redesign the tourism industry by applying health protocols and using technology that ensures the health and safety of tourists. Tourism service providers must be flexible and act quickly to redesign their businesses to meet demand and respond to pandemic conditions. Flexibility and agility are two critical attributes that the tourism industry requires to be able to transform during the pandemic as it responds to and recovers from the crisis, and resets the landscape of the industry to operate in the new normal era (Ugur & Akbiyik, 2020). Furthermore, the ways a business survives and recovers from a major crisis have attracted the interest of many disciplines, including tourism management. A crisis refers to an event/incident (or series of events/incidents) with the potential to seriously damage a firm’s long-term reputation, profitability, growth, or even survival (Campbell, 1999; Stafford et al., 2002). A crisis tends to have a major impact, and

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recovery from such an incident is often a long-term process (Guillet & Chu, 2021). Examples of the most disruptive crises include 9/11, the 2003 SARS outbreak, the 2004 Indian Ocean tsunami, the 2008 global financial crisis, and the COVID-19 pandemic. The crisis management literature on the hospitality and tourism industry focuses on planning for, responding to, and recovering from crises (Berbekova et al., 2021; Huang et al., 2008; Wut et al., 2021). For instance, following their review of crisis management models and approaches, Huang et al. (2008) proposed four essential actions that should be taken before, during, and after a disaster. These involve reducing potential impacts, ensuring readiness (by evaluating the level of exposure to a crisis and developing appropriate plans), responding to the immediate aftermath of an event, and recovering (i.e., resuming or continuing full business operations and returning to pre-crisis levels of business). In their qualitative thematic analysis of 207 research publications from 1986 to 2019, Berbekova et al. (2021) identified eight main themes of crisis management in the tourism literature, including the tourism and hospitality industry’s susceptibility and resilience to crises; the consequences of crises; risk perceptions and attitudes; crisis management models and approaches; crisis marketing; crisis communication; the role of the media; and dark tourism. A recent systematic review by Wut et al. (2021) covered crisis management studies undertaken after 2010. The authors highlighted four research areas: health-related themes, social media, political disturbances, and terrorism. They recommended that more research into crisis management should be conducted during and after the COVID-19 pandemic. In terms of business survival and recovery, previous studies have focused on several crisis contexts. A longitudinal case study by Gurtner (2016), for instance, found that the flexible and proactive relationship between tourism industry players and stakeholders had contributed to the collective capacity to restore tourism business activities in Bali after several catastrophic events (i.e., natural disasters and terrorist attacks). In their study on the effects of SARS and avian flu on international tourism in China, Hong Kong, Taiwan, Singapore, Vietnam, and Indonesia, Kuo et al. (2008) revealed that integrated planning and management involving relevant stakeholders (e.g., governments, companies, and consumers) could have helped to avoid the avian flu crisis. Another study of the Korean hotel industry during the SARS outbreak reported that five-star hotels minimized their operating costs and provided several health-related training and education programs to their employees as part of their crisis management initiatives (Kim et al., 2005). In the context of the COVID-19 pandemic, Yang et al. (2021) highlighted the importance of O2O (online-to-offline) food delivery services to the survival of fivestar hotels in China. Based on interviews with 13 hotel managers in three cities in Indonesia, Japutra and Situmorang (2021) identified seven strategies (i.e., service compromises, health and safety measures, package transformations, salary adjustments, contract re-negotiation, multi-tasking, and new normal preparation) that hotels had implemented to survive the pandemic’s repercussions (i.e., financial disruptions and low occupancy rates) and challenges (cost reductions, trade-offs in service, and duality in decision-making). Furthermore, following a review of the impact of the

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COVID-19 pandemic on China’s hotel industry, Hao et al. (2020) offered six major anti-pandemic strategies: leadership and communication, human resources, service provisions, CSR, finance, and disaster management standard operating procedures. However, as they specifically highlighted, the proposed strategies lack empirical exploration. Although these studies may have enhanced our understanding of how businesses can survive during a major crisis, Donthu and Gustafsson (2020) have argued that it is exceptionally difficult to predict the long-term effects of the COVID-19 pandemic because the crisis remains a current issue and few studies have been conducted on the long-term socio-economic and behavioral impacts of a global pandemic. Moreover, there is no empirical framework or typology of business survival and recovery strategies that can be used in the context of a global pandemic. Therefore, the current study aims to address this research gap by examining how firms in six sub-sectors of Bali’s tourism and hospitality industry have navigated and survived the COVID-19 crisis.

3 Research Method The current research employed a qualitative approach to systematically and comprehensively investigate how business players in Bali’s tourism and hospitality industry have responded and adapted throughout the COVID-19 crisis. While studies on crisis and disaster management have tended to focus on a single case study approach (Ritchie & Jiang, 2019), particularly in the hotel industry (e.g., Hao et al., 2020; Japutra & Situmorang, 2021; Kim et al., 2005), the current study uses multiple case studies (Yin, 2018) to capture a broader perspective by incorporating different business players from six sub-sectors (travel agencies, hotels, restaurants, tourism destination management, gift shops, and event organizers). The multiple case study approach can provide richer insights and deeper interpretations from multiple perspectives, leading to more perceptive conclusions (Alvesson & Sveningsson, 2003; Gibbert et al., 2008). Data were collected using a combination of in-depth interviews and online archival document observation. Interviews were conducted with 16 representatives of 15 organizations that had been operating for at least five years (see Table 1). The organizations consisted of four foreign and 11 local firms established between 1994 and 2014 that employed between five and 2,500 people. The interviewees consisted of business owners, CEOs, senior managers, and leaders of the tourism management community, and aged between 29 and 54. Due to social distancing regulations, all the interviews were conducted via Zoom and recorded with the participants’ consent. The interviews lasted between 40 and 60 min and were conducted in Indonesian. The interviews focused on three main issues: (1) the impact of the COVID-19 pandemic on their businesses; (2) how they had responded to the impact; and (3) the strategies implemented to manage the “new normal” situation. Follow-up interviews were held to clarify any issues or uncertainties.

Age

53

53

37

Name

HR

KDK

INKP

B

A

Firm

Financial manager C

CEO

Owner (Founder)

Position

Table 1 Profiles of the interview participants

Travel agent

Travel agent

Travel agent

Sub-Sector

2004

1994

2002

Year Established

Denpasar; Headquarters in Jakarta

Denpasar

Denpasar

Location

Local

Local

Local

Ownership

50

5

10

# of Employees*

Description

2.5 billion per month

• Market: international (90%), local (10%) • One of the biggest travel agents in Indonesia (continued)

350 million • Market: per month international (95%), local (5%) • Social and eco-tourism specialist

300 million • Market: per month international (60%), local (40%)

Sales (in Rupiah)*

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Age

31

30

29

Name

DJ

DA

AM

Firm

Sales director

Human resources manager

F

E

Financial manager D

Position

Table 1 (continued)

Hotel

Hotel

Hotel

Sub-Sector

2014

2001

2009

Year Established

Ubud

Ubud

Kuta

Location

International

International

Local

Ownership

95

50

60

# of Employees*

2.1 billion per month

6 billion per month

1.5 billion per month

Sales (in Rupiah)*

• Market: international and local • A blend of international and Balinese hospitality (continued)

• Market: international and local • Award-winning luxury five-star hotel

• Market: both local and international • Award-winning five-star hotel • Located in the heart of Kuta and part of a global hotel chain

Description

152 F. Tjiptono et al.

Age

35

42

41

35

Name

IGNAP

AG

SW

AN

Owner/CEO

Revenue manager

Operational director

Owner representative

Position

Table 1 (continued)

J

I

H

G

Firm

Restaurant

Hotel

Hotel

Hotel

Sub-Sector

2004

2004

2009

2011

Year Established

Tabanan

Nusa Dua

Bali

Ubud

Location

Local

International

International

Local

Ownership

65

70

74

35

# of Employees*

Description

• Market: international and local • Award-winning hotel

• Market: international and local • Villa management

750 million • Market: local per month (97%), international (3%) • Beautiful and strategic location (sunset site) • Award-winning restaurant in Bali (continued)

10–20 billion

1.2 billion per month

900 million • Market: per month international and local • An ethnic-based hotel design

Sales (in Rupiah)*

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Age

52

54

Name

CMR

NM

CEO

Founder/Owner

Position

Table 1 (continued)

L

K

Firm

Tourism destination management

Restaurant

Sub-Sector

2013

2014

Year Established

Badung (South Kuta)

Ubud

Location

Local

Local

Ownership

120

25

# of Employees*

50 billion per year

40 million per day

Sales (in Rupiah)*

• Market: international and local • One of the most attractive beaches in Bali • Winner of the Sustainable Ecosystem Award from the Indonesian Ministry of Tourism (continued)

• Market: international (98%), local (2%) • First certified plant-based restaurant in Bali

Description

154 F. Tjiptono et al.

Age

51

42

Name

WK

WW

Firm

Managing director M

Managing director L

Position

Table 1 (continued)

Tourism destination management

Tourism destination management

Sub-Sector

2010

2013

Year Established

Gianyar

Badung (South Kuta)

Location

Local

Local

Ownership

30

120

# of Employees*

• Market: international and local • One of the most attractive beaches in Bali • Winner of the Sustainable Ecosystem Award from the Indonesian Ministry of Tourism

Description

50–100 • Market: mostly million per international month tourists • Focusing on eco-friendly, spiritual, cultural, and sustainable tourism • Winner of an award for a pilot project with tourist villages (continued)

50 billion per year

Sales (in Rupiah)*

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41

31

AS

DN

Chief operating officer

Public relations manager

Position

Note *Before COVID-19 data

Age

Name

Table 1 (continued)

O

N

Firm

Event organizer

Gift shop

Sub-Sector

2012

2007

Year Established

Denpasar

Kuta, Denpasar, Singaraja

Location

Local

Local

Ownership

75

2,500

# of Employees*

20 billion per year

20 billion per month

Sales (in Rupiah)*

• Organizer of international events in Bali

• Market: international and local • The first and biggest one-stop shop for souvenirs in Bali • Open 24 h

Description

156 F. Tjiptono et al.

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In addition to the interview results data, the researcher also examined online newspaper articles and social media accounts (i.e., from websites, Instagram, and YouTube) connected to the participating firms. The aim was to collect additional information, such as company profiles, product and service details, marketing communication materials, pricing strategies, and other details related to the businesses. Both the archival data and the interview transcripts were content analyzed using three stages of coding (initial/open coding, axial coding, and selective/focused coding; Friedman, 2012), which ultimately identified the key themes (i.e., efficiency, adaptation, shifting the target markets, and innovation) associated with the ways that businesses in Bali’s tourism and hospitality industry responded to the pandemic. Results from the analysis of the data included the development of six case studies and a typology of survival and recovery strategies used by tourism businesses in Bali to respond to the pandemic.

4 Results, Discussion, and Implications 4.1 How the COVID-19 Pandemic Has Affected Six Tourism Sub-Sectors in Bali Case Study 1: Travel Agents (a local tour-and-travel agent—Firm A; a local ecotourism travel agent—Firm B; and a large travel agent group—Firm C). The travel agent sub-sector has been among the sub-sectors most seriously affected by social movement restrictions (physical distancing, regional lockdowns, stay-athome restrictions, and international airport closures) imposed in response to the COVID-19 pandemic. Booking cancelations and travel bans led to a substantial decline in sales for the three interviewed travel agents. In response to these challenges, they initiated several policies to reduce their expenses. Firm C, for instance, imposed unpaid leave, reduced the number of workdays, instituted a “work from home” regime, and made some employees redundant. Firm A and Firm B employed similar strategies but decided to retain their employees. While attempting to control their operational costs efficiently, the three travel agents were forced to explore new approaches to ensure business continuity. They announced special offers through their websites and social media accounts to attract customers. The offers included considerable discounts of up to 50%, and “pay now, stay later” promotions. The travel agents also offered virtual tour packages as a new, alternative form of service delivery. For instance, Firm C revealed that “We have started to offer virtual tour packages … It is more affordable for consumers” (INKP, financial manager). When the Indonesian government relaxed some restrictions after introducing a “new normal” policy, the three travel agents responded by switching their target markets to domestic travelers, at least for the short and medium terms. They followed the new COVID-19 health protocols and provided face masks and hand sanitizer to their employees and customers.

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Case Study 2: Hotels (two local hotels—Firm D and Firm G; and four international hotels—Firm E, Firm F, Firm H, and Firm I). Since many hotels in Bali relied on international guests, it is unsurprising that their occupancy rates dropped by more than 80% due to national and regional lockdowns and from tourists that returned home to avoid travel restrictions imposed by their own countries. Statista (2021) estimated that international tourist arrivals to Indonesia fell from 17.9 million in 2019 to only 6.64 million in 2020. While some hotels in Bali closed permanently during the pandemic (Mariano, 2020), the six hotels in the current study survived. Firm I, for example, decided to keep its hotel open during the outbreak to send a positive message to its current and potential customers that it was still operating and ready to serve them. However, most hotels struggled to cover their operating costs and looked for different revenue sources. Efficiency initiatives were focused primarily on the two principal contributors to hotel costs, labor and electricity (Detikcom, 2020). Initiatives included reducing the number of workdays, forced unpaid leave, instituting job rotation and work from home arrangements, enacting redundancy policies (especially among contract workers), reducing the use of air conditioners and elevators, and reducing the number of buildings used. For example, Firm I operated only one out of its four buildings while Firm E revealed that “We had to save the electricity costs, such as chillers, ACs, and pool cleaning and maintenance. …[We] also [introduced] temporary layoffs … and unpaid leave, where only 50% [of the] salary [was] paid and working days were only 15 days” (DA, human resources manager). Bali re-opened with the relaxation of rules during the “new normal” period, but only to domestic travel. Subsequently, both local and international hotel managers shifted their target market from foreign tourists to domestic travelers. Many initiatives were developed to generate income during this period, including making selected hotel facilities (e.g., restaurants and swimming pools) available to local residents who wanted to enjoy these facilities without having to stay at the hotels, offering home food delivery from their restaurants, and offering staycation packages. Contactless services (such as digital invoicing and payment) and strict COVID-19 health protocols were established to ensure the safety and comfort of both hotel guests and employees. Case Study 3: Restaurants (a restaurant serving domestic tourist groups—Firm J; and a plant-based restaurant serving mostly foreign tourists—Firm K). During the strict regional lockdown, only a few domestic tourists from different provinces (mainly Java) visited, so Firm J closed its outlet and made some employees temporarily redundant. The number of workdays for the remaining staff was reduced to 15 days per month. In contrast, Firm K, a boutique vegetarian restaurant with fewer employees than Firm J, retained all its employees during the pandemic. During the interview, Mr. CMR (Firm K’s the founder, owner, and chef) stated, “We are lucky because there are still some thousands of foreigners who [have] stayed in Bali during the COVID-19 pandemic. So, we can still have customers who are looking for healthy vegetarian food.” A story published by Antaranews.com confirmed that

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Fig. 2 Campground at Firm J. Source arnantyo

approximately 7,000 foreign tourists (mostly from Australia) were still in Bali in July 2020 (Pranishita, 2020). Interestingly, the two restaurants found innovative ways to remain sustainable. Firm J, for example, rented its large open space as a campground (see Fig. 2). The company began offering a package of accommodation, meals, and local tours to those wishing to explore the beauty of the nearby beach and the surrounding natural areas. Meanwhile, Firm K introduced a regular organic market every Saturday, selling its homegrown fresh vegetables. It also organized public cooking courses. Case Study 4: Tourism Destination Management (a beach-based tourism destination—Firm L; and an eco-friendly tourist village—Firm M). Based in one of the most attractive tourism destinations in Bali, Firm L used a community-based management system at the time of this writing. All the firm’s employees were members of the local community, while their leader was Firm L’s manager. Following government instructions during the regional lockdown, Firm L closed its business temporarily. As no visitors came, the firm had no income during that difficult time. No redundancies were made, but the number of workdays was reduced to control expenses. In preparation for the “new normal” operating environment, Firm L designed new attractions and prepared for compliance with government-mandated COVID-19 health protocols. Located in Gianyar regency, Firm M had offered a variety of agricultural and nature-based tourism activities prior to the pandemic. In 2019 the firm was awarded the title of “Best tourist village in Indonesia” by the Ministry of Tourism. This award encouraged many local government agencies and institutions to visit Firm

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M and learn about tourist village administration and waste management. During the pandemic, education-based tourism targeting government institutions became an important alternative market and source of revenue for Firm M. Prior to the pandemic, the target market was foreign tourists, who enjoyed its nature- and agriculture-based tourism packages (such as jungle trekking, farming activities, and cooking classes). Moreover, the destination also has religious and cultural attractions, such as a Hindu temple and a white cow conservation project (the cow is a sacred animal in Hinduism). Many Balinese Hindu devotees visit the destination for what the Balinese call tirta yatra (a holy or spiritual pilgrimage). Mr. WW (the managing director of Firm M) explained, “In the past, our packages included cycling and the like and cooking classes. Now our package is a combination of tirta yatra, waste management learning, and tourist village.” Case Study 5: A Gift Shop (Firm N, the largest souvenir shop in Bali, with various branches). Like other firms in the tourism and hospitality industry, Firm N experienced a significant drop in sales after the declaration of the pandemic in mid-March 2020. As a result, it closed its outlets and many employees were offered temporary redundancy. During this difficult time, the owner returned to his village, where he owned a large area of farmland. He began planting snow peas, a crop of considerable economic value. He invited a group of his employees to work on his farmland on a resultssharing basis. Meanwhile, other employees worked on a project to develop online marketing channels as alternative distribution routes for Firm N’s main souvenir products. During the “new normal” environment, some outlets were re-opened with strict compliance to COVID-19 health protocols (see Fig. 3). This is highlighted in the following quote from AS, Firm N’s public relations manager: “We must gradually re-open our outlets. We are afraid that our merchandise can be broken if we are closed too long. …The most important thing is that everyone is safe and is not infected by the dangerous virus.” Interestingly, snow peas are now sold at all Firm N’s outlets. Case Study 6: Event Organizer (a local company arranging international events in Bali—Firm O). Firm O has an excellent record of arranging major international events in Bali. During the pandemic, however, many planned international events had to be postponed or canceled. To survive, Firm O changed its focus from international to domestic events. It also adapted its business model to virtual event management. The firm invested time, money, and effort to upskill its employees in the use of new digital technologies, such as the Zoom and Google Meet applications. This is illustrated in the statement of Ms. DN, the chief operating officer of Firm O: “We try to go online. Competing in the virtual market is more difficult. The biggest challenges were the equipment and resources. …In 2020, we updated our system so we [could] achieve our target. …[In] around August 2020, we decided to focus on the domestic market and virtual method.”

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Source: Personal documentation.

Fig. 3 Examples of COVID-19 health protocols. Source Personal documentation

4.2 A Typology of Survival and Recovery Strategies Based on the results from the in-depth interviews and archival document observation, the survival and recovery strategies implemented by the 15 firms investigated can be classified into four types: efficiency, adaptation, shifting the target markets, and innovation (see Table 2). The first and most common strategy, efficiency, focuses on cost-cutting, organizational restructuring, the temporary closure of some outlets, and other initiatives to control operational expenses. Business survival is the priority when employing this type of strategy. Previous studies suggest that a key determinant of firm survival is the ability to create efficient business operations (Ebben & Johnson, 2005). Most firms in the current study indicated that they had adopted this strategy, with some variations, during the pandemic. Reduced work hours, temporary redundancies, and unpaid leave were among the most popular options employed. During the lockdown, temporary closures were unavoidable for the tourism destination management and gift shop companies. While a work from home (WFH) scheme was implemented by travel agents and hotels, this was impractical for restaurants. Meanwhile, the hotels focused on controlling their labor and electricity expenses. Firm L and Firm H used a slightly different approach. With its communitybased management, Firm L did not reduce the number of employees. Instead, it reduced and re-arranged activities and tasks by anticipating the new normal and postpandemic environment. Firm H restructured its operational system by shifting its B2B

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Table 2 Typology of survival and recovery strategies No

Strategy

Description

Examples

Firm

1

Efficiency

Cutting costs, restructuring, and temporarily closing business outlets to maintain business continuance

‘… working from home, unpaid leaves and also terminating casual workers…’

Firm C

‘… all jobs have been centralized to the head quarters…’

Firm D

‘So, the temporary closure Firm E of the hotel may save some unnecessary costs. For electricity, we can switch off chillers, AC, and also [save on] costs for cleaning and pool maintenance, and others.’

2

Adaptation

Synchronizing business processes by complying to the ‘new normal’ conditions (i.e., COVID-19 protocols)

‘we are doing a little bit of organization restructuring …’

Firm J

‘… each employee works for half a month…’

Firm N

‘Firm B is ready to implement CHSE (Cleanliness, Health, Safety, Environment) standards…’

Firm B

‘We also use digital invoices…’

Firm E

‘… put in place our Firm I corporate guidance. It’s called Firm I clean stay… Also, we launched [a]“work from paradise” program.’ ‘… my team has got Firm O certified event logistics and met CHSE standards. …’ ‘When customers come, Firm N they must wash their hands… our employees must wear face masks and also hand gloves…’ (continued)

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Table 2 (continued) No

Strategy

Description

Examples

Firm

3

Shifting the target markets

Shifting the target markets from international tourists to domestic travelers

‘We [have frozen] the international travelers at the moment… we are looking for the domestic [ones] now.’

Firm C

‘We can’t rely on tourists from China, so we have started targeting the domestic tourists…’

Firm F

‘… Our target segments are no longer Westerners, sir, but village administrators, and tourism task forces, and government tourism offices…’

Firm M

‘… So far, [the] domestic market is the choice as our borders are not opened yet…’

Firm O

Shifting from B2B (business-to-business) to B2C (business-to-consumer) markets

‘… since we have shifted Firm C to the domestic market, we [have] moved to B2C, sir.’

Extending into a new target ‘We [have prepared a] segment learning program for those institutions interested in learning … how to manage a tourist village. It’s a good market.’ 4

Innovation

Identifying and exploiting new entrepreneurial opportunities, which may become potential revenue-generating sources

Firm M

‘… is more towards Firm B community rural tourism.’ ‘Virtual tour is what we can do now.’

Firm C

‘… if customers want to enjoy the restaurant, pool…’

Firm F

‘We are preparing a sort Firm J of picnic area [on Firm J’s land] for camping… Now we are learning how to sell online.’ (continued)

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Table 2 (continued) No

Strategy

Description

Examples

Firm

‘We [have opened] an organic market.’

Firm K

‘… in this area we will build a man-made coral reef … that is for the future target… it’s for diving…’

Firm L

‘… now our package is a combination of tirta yatra, waste management learning, and tourist village…’

Firm M

‘Mr. A [the owner] Firm N decided to go to Buleleng to cultivate the land.’

(Business-to-Business) model as commercial/business villas into B2C (Business-toCustomer) model as residential accommodation. Hence, the costs and the maintenance and customer service activities connected with each individual villa could be reduced. The second strategy, adaptation, reflects the activities and actions undertaken by firms to align their business processes with the requirements of the COVID-19 health protocols. The Indonesian Ministry of Tourism and Creative Economy issued CHSE (cleanliness, health, safety, and Environmental sustainability) standards that had to be followed closely by all firms in the tourism and hospitality industry. Travel agents and restaurants followed social distancing policies and provided the necessary face masks and hand sanitizer to their employees and customers. Firm A worked closely with its potential collaborators (i.e., hotels and restaurants) to ensure compliance with the new health standards. Firm B decided to accept only VIP guests, with a maximum of four people per group. The three travel agents (Firm A, Firm B, and Firm C) began to use contactless internet marketing to attract customers. In addition to following the CHSE standards, hotels in Bali introduced contactless services more widely. For instance, reservations and check-ins could be made using WhatsApp, QR codes, and SMS, while a digital payment system called QRIS (Quick Response Code Indonesian Standard) was adopted (Maskur, 2020). All the hotels in Firm E’s network reduced their meeting room capacity to 50% and used digital invoices for guests. Firm H assigned a task force to clean all the important areas using disinfectant. All customers visiting Firm N’s stores were required to wash their hands and have their temperature checked and specific instructions about the COVID-19 health protocols were placed in the stores. The same health measures were implemented by tourism destination management companies Firm L and Firm M. Meanwhile, Firm

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O provided contactless services via Zoom and Google Meet to its clients during the outbreak. The third strategy in the typology, shifting the target markets, involved three initiatives: (1) shifting the target market from international visitors to domestic travelers; (2) changing the target customer segment from B2B (business-to-business) to B2C (business-to-consumer); and (3) extending the currently served market (existing market) into a new target segment. Without international tourists, Bali was “an unimaginable prospect” (Gagne, 2021). As Bali’s tourism ecosystem was badly affected by the travel bans and lockdowns introduced by most countries, its tourism and hospitality players were forced reduce their reliance on international visitors and seek alternative ways to survive. The closure of international airports led tourism and hospitality businesses to turn to domestic (national and local Balinese) tourists. This was reflected in the interviews, with participants stating, “Our target segments are no longer Westerners” (Firm M) and “We can’t rely on tourists from China, so we have started targeting the domestic tourists” (Firm F) (see Table 2 for additional feedback). Travel agents, hotels, destination management companies, and event organizers pursued the strategy of shifting the target markets. Hotels, for instance, targeted domestic honeymooners and millennial travelers as well as domestic tourists seeking staycations and/or to work from their hotel. The dates booked by honeymooners were believed to be more definite than those booked by other segments of travelers; thus, the reservations of newlyweds were less likely to be canceled. Firm G preferred millennials because of their specific behaviors and preferences for adventure, new experiences, and value-for-money offers. The staycation and “work from hotel” segments became attractive markets for hotels during the COVID-19 crisis. Traditionally, Firm C relied on foreign tourists who visited Bali in large groups. As the company shifted to serving the domestic market during the pandemic, it changed its focus from the B2B model to the B2C. In addition, Firm M, with its 2019 “Best tourist village” award, managed to identify a new target market segment in the form of government agencies or institutions from different regencies or districts that wanted to study best practices in tourist village management or comparative waste management practices. This was highlighted by Mr. WW, the managing director of Firm M: Many local regencies and districts want to implement tourist village programs. …Since the pandemic, many of them [have] visited us to learn how we manage homestays, parks, restaurants, inns, and local heritage. … They [are] also interested in [following] our training and education [in] waste management.

The last strategy in the typology is innovation. As an entrepreneurial strategy, innovation involves the use of technological breakthroughs, new ways of doing business, and recombining existing products or services to create new offerings (Peng, 2022). Innovation is closely related to the concept of new product development, whereby a product can be new to the market (it has never been seen before), new to the company (a product/service is already in the marketplace but it is offered by a particular company for the first time), new to the product line (it is an extension of

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the company’s current offerings), or new to the product (a specific product can be revitalized by modifications, enhancements, or improvements) (Elliott et al., 2021; Kerin & Hartley, 2019). During the COVID-19 pandemic, the fifteen firms under investigation demonstrated various innovative capabilities, especially in identifying and exploring new revenue-generating business opportunities. Driven by declining levels of demand and income, they employed a range of new and innovative practices that they had never employed before. Examples include staycations, self-quarantine facilities, and home food delivery services offered by the hotels; the virtual tours offered by the travel agents; the corporate outings offered by Firm C; the activitybased tourism and rural life experiences offered by Firm B; the “camping on the beach” package offered by Firm J; the regular organic market and cooking classes offered by Firm K; and the education- and religious-based tourism products provided by Firm M (see Table 2). For these firms, innovations were important for their shortterm survival and also potentially present new vehicles for business growth during and after the pandemic.

4.3 Implications The COVID-19 pandemic has posed a significant survival threat to many businesses worldwide, especially to those in the tourism and hospitality industry. Sigala (2020) asserted that building resilience to ensure firm longevity is essential to a company’s response, recovery, and reset. The current study provides important insights from the experiences of 15 firms across six sub-sectors of the tourism and hospitality industry in Bali, the largest tourist destination in Indonesia. As expected, all the firms interviewed encountered major operational difficulties during the pandemic due to airport and border closures and strict health and movement measures imposed by the government. However, the firms in this study demonstrated strong resilience by identifying, exploring, and implementing relevant and feasible business survival and recovery strategies. Despite some variations in approaches that reflected the firms’ different contexts, levels of flexibility, and capabilities, the strategies they chose can be systematically classified into four main categories of efficiency, adaptation, shifting the target markets, and innovation. This typology of strategies contributes to the literature on business survival during crises by highlighting how selected firms navigated and survived the global pandemic. The firms adopted measures to maintain business continuity by controlling their costs and restructuring their organization (an efficiency strategy); synchronizing business processes and service delivery in compliance with the required health protocols (an adaptation strategy); shifting and extending their existing target markets (a shifting the target markets strategy); and exploring and exploiting new business opportunities using technology, new ways of doing business, and by developing new products (an innovation strategy). The efficiency strategy focuses on short- and medium-term survival; in many cases, it reduces the scale and scope of a business. It may include downsizing

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and/or temporary closure. The adaptation strategy requires flexibility in adjusting a company’s current product or service delivery processes and procedures and may employ technology to provide contactless services that ensure the health and safety of customers and employees (Sigala, 2020). The strategy of shifting the target markets can provide an alternative revenue stream from exploiting untapped potential markets and by reducing a firm’s dependence on its existing target market(s) (Walker & Mullins, 2014). The tourism and hospitality industries of most countries have changed their focus, at least temporarily, and have begun to prioritize the domestic market during the pandemic (Brunton, 2021). Interestingly, despite the pressures they encountered, some firms developed innovative strategies (e.g., the “camping on the beach” package, virtual tours, and staycations). The shifting the target markets and innovation strategies may induce growth and not simply offer survival. While the circumstances of each crisis are unique and difficult to resolve with a generic solution, having a systematic risk management and mitigation framework can help firms to conserve their resources as part of their crisis management strategy (Sonmez et al., 1999). In terms of managerial implications, the present research offers relevant insights to various parties attempting to navigate the significant negative effects to business from the COVID-19 pandemic. Such parties include companies in the tourism and hospitality industry, companies in other sectors, as well as industries and companies in Southeast Asia or other parts of the world. For instance, the typology of the four survival and recovery strategies may be relevant to Western companies that are also navigating to survive the pandemic. These businesses may be able to use the four identified strategies and consider the specific examples provided in this study as starting points or benchmarks for business crisis and continuity strategy formulation and implementation in their own environments. In terms of specific implications for Bali and Indonesia, the strategies adopted by the businesses investigated in this study reflect the idiosyncratic crisis management situations and approaches identified in the unique socio-cultural setting and collectivistic society of Indonesia. For instance, Firm L, a community-managed tourism destination management firm, decided to retain all its employees (all of whom were locals from the neighborhood) during the period, despite earning almost no income because of regional lockdowns. The company attempted to control its costs by reducing and re-arranging its activities to prepare for the post-lockdown operating environment. Another unique strategic option, which may be effective for many Balinese tourism and hospitality companies, is to reduce reliance on international travelers and switch their focus to domestic visitors, at least for the short and medium terms. This strategy capitalizes on Bali’s popularity as a holiday destination among a substantial number of domestic travelers. Furthermore, this approach can be enhanced by tapping into the “Work from Bali” program, launched by the Indonesian Coordinating Ministry for Maritime and Investment Affairs in May 2021, whereby Jakarta-based civil servants were dispatched to work remotely from Bali (Ho, 2021; Ulung, 2021).

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5 Limitations and Future Research Directions The present study contains various limitations that may present opportunities for future research. First, it focuses only on one business sector (i.e., tourism and hospitality) in one country, which may limit the generalizability of the findings. Future researchers may consider exploring multiple business sectors or industries in multiple countries. A comparison between other industries and/or countries may provide a more holistic understanding of how firms navigate and survive a global crisis. Second, the timeline of the current study only covers the period of the COVID-19 pandemic and the associated new normal business environment. Future studies might expand the timeline to include the post-COVID-19 era, re-examining the companies and their strategies to extend our understanding beyond the pandemic and its immediate aftermath. In line with that, the typology of the four business survival strategies could be re-assessed. Third, the present investigation is exploratory and may benefit from further investigation using a larger survey sample size. Fourth, the current research involved business owners and managers. It would be interesting and informative to conduct a similar study with a more diverse group of stakeholders, such as government agencies and institutions, business associations, consumers, suppliers, distributors, and others.

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Fandy Tjiptono is a senior lecturer at the School of Marketing and International Business, Victoria University of Wellington (VUW). His main research interest is consumer behavior and marketing practices in Southeast Asia. His research has been published in several journals, including the Journal of Business Ethics, the European Journal of Marketing, the Journal of Retailing and Consumer Services, the Journal of Business Venturing InsightsPsychology and Marketing, Marketing Intelligence and Planning, the International Journal of Consumer Studies, Internet Research, Behaviour & Information Technology, the Journal of Cleaner Production, the Asia Pacific Journal of Marketing and Logistics, the Australian Journal of Management, and the Journal of Travel & Tourism Marketing. Ida Bagus Gede Adi Permana is a lecturer at the Faculty of Economics and Business, University of Airlangga, Surabaya, Indonesia. He holds a Master of Science in Human Resource Management from Universitas Gadjah Mada. His research areas are HRM, organizational behavior, leadership, and change management. He is active in presenting his research at national and international conferences, including the European Marketing Academy Conference, the International Conference of Organization Innovation, the International Conference on Entrepreneurship, and the Asian Forum on Business Education. His work has been published in several journals, including the International Journal of Psychosocial Rehabilitation, OPCION, the International Journal of Organizational Innovation, and the International Journal of Innovation Creativity and Change. Andhy Setyawan is currently a doctoral candidate at the Faculty of Economics and Business, Universitas Brawijaya, Malang, Indonesia. He is also a lecturer at the Department of Management, Faculty of Business and Economics, Universitas Surabaya, Surabaya, Indonesia. His primary research interests are consumer behavior and marketing practices in pro-environmental behavior, emerging markets, and responsible consumption. As an academic, he has actively presented his research at several regional and international conferences, including the European Marketing Academy Conference (EMAC), the International Social Innovation Research Conference (ISIRC),

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the International Research Society for Public Management (IRSPM) Conference, and the Asia Academy of Management. I. Putu Esa Widaharthana is a lecturer and researcher at Bali Tourism Polytechnic (Politeknik Pariwisata Bali), Indonesia. He holds a Master of Science in Human Resource Management from Universitas Gadjah Mada. His research areas are human resources management, change management, and entrepreneurship. He is currently the Head of Entrepreneurship & Career Development at Bali Tourism Polytechnic. Under his leadership, the unit has won several awards, including the Bronze Prize of “The Entrepreneurial Campus for Vocational Education” (an annual event organized by Indonesia Council for Small Business and Philip Kotler Center for ASEAN Marketing).

China’s Digital Commerce: The Recovery Strategies of Hospitality and Tourism Businesses During the COVID-19 Crisis Yean Shan Beh, Yit Sean Chong, and Xinyi Li

Abstract China is one of the first countries in Asia to gradually resume hospitality (e.g., lodging) and tourism activities (e.g., leisure travel, retail shopping) during the COVID-19 crisis. The widespread use of digital commerce in China is one of the key factors behind the swift resumption of the industry. The country is at the forefront of service innovation through its use of digital commerce, which includes both ecommerce and social commerce models. Against this backdrop, this chapter explains the basis of the recovery strategies adopted by China’s hospitality industry during the COVID-19 crisis from a digital commerce viewpoint. Our discussions include key examples of digital commerce features adopted by hotels and the Chinese travel industry as part of their recovery strategies. The chapter begins with an overview of the digital commerce landscape in Asia, primarily covering the trends and changes within it during the COVID-19 crisis. This is followed by a presentation of the strategies that industry players adopted to navigate through the crisis. The next section offers a discussion focused on dynamic capabilities as a new competitive advantage, digital service innovations, the adoption of social commerce, and strategic directives from the government. The chapter concludes with a summary of the key challenges and learnings from the discussion. Keywords Business recovery · Business resumption · Hospitality · Tourism industry · China’s digital commerce · Dynamic capabilities · Resource mobilization

Y. S. Beh (B) School of Economics and Management, Xiamen University Malaysia, Sepang, Malaysia e-mail: [email protected] Y. S. Chong School of Business, Monash University Malaysia, Subang Jaya, Malaysia e-mail: [email protected] X. Li The University of Hong Kong, Pok Fu Lam, Hong Kong © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 A. O. J. Kwok et al. (eds.), COVID-19 and the Evolving Business Environment in Asia, https://doi.org/10.1007/978-981-19-2749-2_9

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1 An Overview of China’s Digital Commerce Landscape Digital commerce (d-commerce) encompasses the exchange of goods and services using digital channels such as the internet, mobile networks, and commerce infrastructure (Roberts, 2021). It refers to an integrated set of personalized digital experiences through marketing activities (Kaur, 2021; Roberts, 2021). Some examples of d-commerce activities include facial recognition technology in retail and payment, cross-border payments, personalized marketing, product matching, and consumer behavioral tracking. In 2019, Asia accounted for 59.7% of global e-commerce sales (Statista, 2020). Due to movement restrictions imposed worldwide to curb the spread of COVID-19, there has been a surge in digital business transformations (McKinsey & Company, 2020), with China outpacing the rest of Asia in the accelerated adoption of d-commerce (LaBergeet al., 2020). Compared to the United States (U.S.), the e-commerce scene in China has flourished against a different environmental and cultural backdrop. Domestic online transactions accounted for over 50% of online transactions globally (Ninia, 2020). Unlike in the U.S., where e-commerce plays a prominent role in complementing the service convenience offered by physical stores, manufacturers in China are selling goods online in and from the country without any physical stores. This allows smaller businesses to directly reach a substantial market at a lower cost. China’s e-commerce environment is fast-paced, with new business models evolving rapidly. These include cross-border online shopping, and the online-tooffline (O2O) model in all business-to-business (B2B), business-to-consumer (B2C), and peer-to-peer (P2P) segments. The O2O model entices more participation and involvement from small and medium enterprises (SMEs) (Jiang et al., 2021). Traditional e-commerce platforms in China, including Alibaba.com, JD.com, and NetEase Koala, are under increasingly intense competition from social commerce (i.e., social media and e-commerce) giants such as WeChat by Tencent, Pinduoduo, and Xiaohongshu. Social commerce harnesses the power of artificial intelligence used in traditional e-commerce platforms, behavioral data from the social media activities of consumers, ease of payment, and the efficiency of logistics coordination (Brunet, 2019). In addition, the integration of social commerce among Chinese businesses is more holistic than in the rest of the world. For instance, the mini-applications feature of Tencent, virtual stores, information hubs, social chat functions, and payment functions all embedded in an application such as WeChat increase the attraction of consumers to the platform. Considering that the accessibility of a user-friendly internet platform for consumers to effortlessly receive real-time updates on products and services is a prominent feature of e-commerce, social commerce has strong positioning in the market to retain users and, ultimately, has a greater likelihood of converting potential customers. While it is a more straightforward case for tangible products to leverage the reachability of traditional e-commerce to survive the COVID-19 crisis, the ability of e-commerce to assist in the resumption of the hospitality and tourism industry may not be as simple. The industry relies heavily on human mobility for experience

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creation through close interactions among service providers, consumers, and people and objects in the service environment. Hence, concern about safety is one of the major factors influencing the propensity to travel. People are unlikely to travel to a destination when they perceive the location of interest as unsafe.

2 A Shift in Travel Patterns Due to Safety Concerns The pattern of domestic travel, in terms of the duration and mode of travel within China, experienced major changes during the COVID-19 crisis. Short excursions and mid-distance tours where local tourists travel within a certain radius from the point of residence were more common after the country experienced a full lockdown (Zhu, 2021). Self-guided and driving tours became the preferred mode of travel compared to other modes of travel (i.e., flights, trains, buses, and cruises). As a result, tourism involving self-driving tours recovered to about the same level as it had been in previous years for the same period (Yang, 2021). Crowd avoidance and the general perception of safety could be the primary reasons for the sustained level of selfdriving tours amid the crisis. As a result of the chain effect from short excursions and middle-distance travel, lodging businesses in rural areas recovered earlier than those in the cities. On the other hand, individuals from the high-end segment demonstrated more demand for and interest in personalized travel services (Chen et al., 2020). There was also a rising trend of self-driving tours involving motorhomes, as this mode of travel was perceived to be safer and offer more flexibility in setting itineraries for long-distance tours. This trend is set to increase in the coming years.

3 Dynamic Capabilities as the New Competitive Advantage Even with the urgency of resuming and recovering business in the hospitality and tourism industry, the need for physical distancing to curb the spread of COVID-19 remains. Using marketing activities to create personalized digital experiences has become one of the major strategies to running a business with minimal interactions among people. Owing to the inseparable traits of services, the industry’s speed of response and its ability to foster a perception of a safer environment for travelers serve as the basis for developing the new competitive advantage of service distinctiveness (Xia et al., 2020). The speed and ability of industry players in responding to the crisis are determined by the dynamic capabilities of businesses, which are tied to the availability of resources. From a resource-based view (RBV), when individual resources (i.e., skills, knowledge, and experience; technology, data, and information; location and processes) are combined, they create capabilities. Distinct from dynamic capabilities, the traditional view of the RBV theory of capabilities assumes that resources that fit the VRIN criteria of (V-value, R-rare, I-imperfect imitable, N-non-substitutability) enable firms

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to develop value-enhancing strategies. VRIN is a basic framework of the RBV theory that proposes (1) that a resource must be of value to a firm in exploiting market opportunities or reducing threats, (2) that it must be difficult for potential competitors to locate, (3) that it must be challenging for competitors to achieve similar performance with it, and (4) that it cannot be replaced by alternative resources. Before the outbreak of COVID-19, when physical distancing was not a necessity, in-person service distinctiveness offered by hospitality and tourism businesses fulfilled the VRIN criteria. However, with physical distancing becoming a fundamental part of the new normal, service distinctiveness diminished as service touchpoints and experience creations are digitized where human interactions are reduced to a minimal. Hence, dynamic capabilities (i.e., the speed and ability to respond to the impact of the COVID-19 crisis), rather than capabilities, are a new competitive advantage to businesses. The following section discusses the digital commerce strategies implemented by the Chinese industry players at different touchpoints of a typical journey of travelers after the first wave of the COVID-19 crisis (Fig. 1).

Strategies: 1. Effortless experience creation through the strategic collaboration of cross-platforms strategic collaboration 2. Delivery of a contactless stay experience and a cloud travel experience 3. Status and intrinsic needs through social commerce activities 4. Personalized digital experience

Capabilities: 1. Speed of response 2. Ability to respond to the needs

Dynamic capabilities

Resources: 1. Strategic: the ability to recognize the availability of digitization channels 2. The knowledge and experience of human resources in actualizing new innovationinnovation Fig. 1 Elaboration of the development of dynamic capabilities for the hospitality and tourism industry

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3.1 Business Resumption and the Recovery of Digital Commerce Activities at Different Touchpoints 3.1.1

Pre-purchasing—An Effortless Experience

As for any brand purchase experience, travelers typically go through three main phases in a travel journey, starting with the pre-purchase experience, followed by the actual purchase experience and ending with the post-purchase experience (Shaw & Williams, 2009). During the pre-purchase experience, a potential traveler researches how to reach the destination (i.e., mode of transportation and route), the destination, and lodging. The information-gathering process and the completion of booking activities often use direct websites, advertised information, and/or travel agents. To attract potential guests that match hotels’ targeted profiles, lodging service operators established strategic collaborations with online travel agencies (OTA) such as Ctrip and Omar with the aid of artificial intelligence and analytics. The preferences, habits, and profiles of travelers were studied by machines being fed real-time data, resulting in a highly personalized experience. Real-time data collected through these exchanges and internet activities allowed an upward spiral of precise audience retargeting, resulting in a higher conversion of potential customers. The collaboration matched travelers with specific needs to the service providers that could meet them. This enhanced the dynamic capabilities of individual hotels in meeting market needs while also creating a highly personalized experience for travelers with precise service matching (Brunet, 2019). OTAs have also provided itinerary planning tools that are useful in mapping routes for self-driving travelers. As discussed earlier, most of these OTAs support the social commerce model and, hence, everything from customer service support to payment finalization is completed at one touchpoint. For instance, with cross-platform strategies, Ctrip places precise advertising on the “moments” of WeChat. If an audience is interested in the advertisement, research on subsequent information, customer support, bookings, and transactions can be completed within a singular platform, WeChat (Fig. 2).

3.1.2

Actual Purchase—The Contactless Stay Experience

Ensuring a seamless and safe experience for travelers is the primary goal of businesses in the hospitality and tourism industry. Given that hotels rely on services to create a competitive advantage, they play an even more crucial role in enhancing the actual purchase experience than attractions. Taking the FlyZoo hotel in China as an example, data shared from the pre-purchase phase results in the creation of tailored services that are more efficient. Travelers check-in to their room through facial recognition technology, eliminating the need for physical ID or process-based verification procedures. This reduces the need for face-to-face contact. The use of this technology extends to automated lift and room door access. Along the journey, facial recognition technology is also complemented by several other essential measures,

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Fig. 2 Typical touchpoint activities of travelers. Source Elaboration adapted from Hu and Olivieri (2020)

Postpurchase experience

Prepurchase experience

Actual purchase experience

including real-time body temperature measurement and contact tracing within the hotel vicinity (Lau, 2020). In the mid-journey of the actual purchase experience, FlyZoo adopted service robots and smart technology to create an unprecedented contactless experience for concierge, in-room services, floor services, housekeeping operations, and food and beverage services. The overall contactless yet anthropomorphic experience was inspired by the smart home concept, where voice assistance technology is simulated in guest rooms so that guests can activate room functions (e.g., switching lights and televisions on and off using voice commands).

3.1.3

Actual Purchase—The Contactless Travel Experience

The sense of belonging among travelers and the cultural connection to the hosts plays a prominent role in motivating travelers to visit destinations. In addition to traveling for leisure purposes, Chinese tourists often travel to reaffirm their status by publishing their travel experiences on social networks (Jiang et al., 2021). Approval from others in virtual communities is associated with higher self-esteem and status reaffirmation. While such a practice is not unique to Chinese tourists, live-streaming video platforms are ubiquitous in China, compared to the rest of the world. Text and asynchronous experience sharing platforms such as WeChat, Xiaohongshu, and Weibo allow one’s travel itinerary to be a reference guide for others and also function as a path for personal branding in the social space. Interactive social media platforms allow travelers to be participative or proactive in the commercial activities of businesses as part of an experience co-creation process (Lau, 2020). With enforced physical distancing, the trend of bringing other online users into a cloud travel experience through live-streaming platforms has become even more prominent during the COVID-19 pandemic. The interactive features of live-streaming

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platforms such as Douyin and Kuaishou support various marketing activities, tipping functions, membership subscriptions, and gifting. They enforce a powerful sense of social belonging among travelers in which businesses tap into the content of actual travelers to run promotions and virtual tours (Fannin, 2020). Similarly, using artificial intelligence connectivity and live promotions, OTAs are actively exploring the feasibility of cloud travel for various attractions, mainly to diversify revenue streams through tours and the online sale of themed merchandise (Zhang, 2021). The co-creation of travel offerings takes place at this point. A hotel in Shanghai, for example, attempted to hold a static cloud event, such as an afternoon tea in the cloud, that targeted affluent young people, as this market segment is more receptive to new technology-based experiences (Chen et al., 2020).

3.1.4

Actual Purchase—Infrastructure as the Major Enabler

While the propensity of digital commerce activities is determined by the microenvironment and business resources, it is crucial to note that the widespread use of mobile payments, cloud travel, and the acceleration of digital commerce activities were overarchingly enabled by macro-environmental factors. Strategic directives and infrastructure support at the national level have laid the foundation for the recovery of the hospitality and tourism industry from the impacts of the COVID-19 pandemic. Infrastructure such as 5G networks has enabled innovation beyond traditional boundaries. The advancement of 5G networks within the country has contributed to the fast-paced development and adoption of augmented reality (AR) and virtual reality (VR) by businesses. These technologies are particularly prominent in virtual tours, retail shopping, and tourism advertising. For instance, an aquarium in Guizhou incorporated AR technology to provide visitors with an interactive experience with a touch-sensitive virtual jellyfish. Excessive movement by travelers can be eliminated through AR and VR experiences (Loureiro et al., 2020). In addition, AR and VR innovations, including services provided by autonomous vehicles and devices, are essential for an omnichannel experience to serve travelers at various destinations (Chen et al., 2020). Without the advancement of 5G networks, all related innovations may have stayed at the ideation phase (Lau, 2020). In short, 5G networks enable connectivity between artificial intelligence, the blockchain, cloud computing, and the Internet of Things (IoT), which translates to greater commercialization and availability of 5G use among consumers. All digital commerce activities and innovations adopted by travel industry players for business resumption and recovery (e.g., cloud travel, real-time tracking, and virtual travel) rely on the availability and stability of 5G networks. Revenue from mobile data and internet services accounted for 46.6% of total telco revenue in China, which reinforces the importance of supporting infrastructure in the recovery of the hospitality and tourism industry (Shen & Chen, 2018).

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Post-purchase—An Integrative Personalized Experience

After a purchase experience, businesses can trace real-time records of customer loyalty benefits and rewards by leveraging blockchain technology. Travelers may receive precise matching upsells, requests for reviews from service providers, or personalized recommended redemptions from respective loyalty programs. Automated membership tier status tracing and service recommendation form part of a seamless digital experience for guests without requiring much proactive effort on their part. The recommendation may be supported from the previous experience reviews and sharing from the guests. If the previous experience was a rather unpleasant occurrence, the automated service recommendation system may offer some forms of compensation such as a complimentary room upgrade along with the recommended service. Concisely, human touch—which was the base to build a competitive advantage is now being gradually replaced by the speed of response and ability to create a personalized experience for travelers.

3.2 Other Determinants Contributing to a Fast Recovery The overarching directives by the Chinese government were constructive in aiding the recovery of the industry. The implementation of the ‘zero-case-first’ strategy helped to keep COVID-19 infection rates low, resulting in a higher level of travel confidence. This, coupled with other accommodative policies for travelers, resulted in a strong recovery for domestic tourism (Chen et al., 2020). To regain the confidence of travelers and stimulate post-pandemic domestic travel demand, the Chinese government liberalized shopping policies to generate more opportunities for domestic tourists to shop duty-free within the country (Chen et al., 2021). The effectiveness of this policy is evident by the influx of tourist arrivals at various tourist destinations, especially during festive occasions (Zhang, 2021). Outdoor attractions are permitted to operate under various conditions, including new capacity measures (i.e., no more than 75% of the maximum carrying capacity), as well as the use of a health QR code for COVID-19 contact tracing (LeadLeo, 2021). The implementation of such controls can help to assure domestic tourists of their safety, which may be needed to motivate people to travel. The limitations of the carrying capacity were supported by digital commerce activities.

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4 Key Implications and Learnings 4.1 Challenges Resulting From Digital Commerce Activities Although emerging technologies undeniably provide the basis upon which industry players can reinvent their business service models, it is also crucial to note that the high digitalization rate among players in the subsectors (i.e., hotels, attractions, restaurants, retails, transportation operators) is a double-edged sword. The conventional VRIN traits of competitive resources are not reflected in digital commerce activities. It is the speed of response and the ability to respond to businesses that make the competitive advantage or uniqueness of a business difficult to replicate. Hence, with more businesses (regardless of scale) digitalizing their operations, the barrier to enter the industry may be lower than under the conventional model, which poses greater threats to existing players that have weaker dynamic capabilities. The understanding of market boundaries needs a redefinition as the conventional business model has now been disrupted. Digital service innovations that have replaced some essential HR functions in the industry (i.e., concierge, front office assistants, travel guides, travel agents, cashiers, room service personnel, and retail assistants) pose a risk of redundancy of roles, requiring businesses to either upskill their existing employees or to reassign them to suit the new business landscape. Striking a balance between technological precision and convenience and keeping the anthropomorphic aspect in the provision of services is now a pressing issue for industry players.

4.2 Learnings 4.2.1

Constant Reframing Efforts

All crises go through a dynamic trajectory that requires a constant reframing effort (Reeves et al., 2020). The COVID-19 crisis has certainly shifted the nature and structure of business by pushing the boundary of product and service innovation through digitalization. Structured around the audience experience, i.e., app-in-app social commerce activities along a broad spectrum (e.g., from rich content, Douyin to textual content, XiaoHongShu), the integrative ecosystem of digital commerce in China is one of the key differentiating factors that enabled the fast recovery of the country’s hospitality and tourism industry. Given the increasing need of consumers to share their data through a contactless experience, and their comfort in doing so, businesses need to be prepared for a contactless business landscape that includes the contactless last-mile delivery of services post-pandemic. The preparation for this should include mental preparation, dynamic operational skills, and an increase in hardware and software capacity needed to deliver service offers. Based on our elaboration of dynamic capabilities in Fig. 1, without enablers from the macro environment

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and the right resources (i.e., human resources with the right skills and knowledge), all digital commerce innovations would remain at the ideation phase. Hence, for markets with less stable infrastructure support or companies with fewer resources, cross-platforms collaboration may be a more viable option than standalone upgrades for hardware facilities. Collaborations and the innovation of business models are likely to be more relevant than hardware upgrades to SMEs.

4.2.2

Resource Mobilization

To address the challenges posed by the fast-paced digital commerce activities adopted by industry players, service-based businesses could adopt some useful practices from a non-service-based company, Lin Qinxuan. Instead of opting for large-scale retrenchment for its severely affected retail division, Lin Qinxuan redeployed its beauty advisors as virtual professional cosmetics advisors. The company leveraged various digital commerce tools with backend tracking and analytics to drive online sales (Reeves et al., 2020). Sales doubled from pre-pandemic levels during the same period. However, the ability of staff to cater to the needs of in-store customers versus customers in the virtual sphere may vary, depending on the personality of the employee. Lin Qinxuan’s business response to the abrupt lockdown during the COVID-19 crisis was successful and highlights the firm’s quick relocation of resources (the employees) by leveraging their transferable skills. Companies with a smaller pool of resources to respond to change must mobilize those resources efficiently to maintain or recreate a competitive advantage. For example, Kuaishou, a live-streaming social video platform with great editing features, expanded on its existing strength by offering new products and services. Seeing the tremendous need for remote conferencing and meetings, the company offered online education packages to compensate for school and university closures. Similar adaptations were made by major restaurant chains that offered semi-cooked dishes to the public. Both examples demonstrate a quick extension of product lines by mobilizing existing resources in situations where the requirement for new talent, new technologies, and equipment was minimal. Likewise, hotel and travel operators need to remodel their business operations by innovating new products using existing resources. Existing employees need to be upskilled to complement digital service innovations and service robots, in particular, offsetting the lack of empathy limitation of service robots. Existing employees might be made responsible for building long-term customer relationships through humorous engagements that cannot be replicated by non-human devices. The COVID-19 pandemic has revealed the limitation of centralized departmental operations in hotels. Decentralizing various operational divisions and profit centers within an establishment may prevent a total disruption to income sources if a situation like the current pandemic arises in the future. For instance, the housekeeping division might diversify its operations to retain staff and revenue by offering premium housekeeping services to households and businesses. The food and beverage division could focus on business models that are less inseparable (i.e., a cloud fine-dining experience with

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augmented reality). The trend in remote conferences, meetings, work, and education will likely stay post-pandemic due to its convenience and feasibility for certain industries. The conventional ‘day-use’ room concept might be rebranded to a ‘full-service work-from-home station’ or a ‘co-study space’ for students where the rental model is friendly to their routine. In addition, the demand for meeting, incentive, conference, and exhibition (MICE) facilities is expected to decline post-pandemic, with businesses switching some conferences and meetings to cloud-based events. Instead of expanding MICE facilities, hotel and MICE operators should consider repurposing such facilities to accommodate the expected change in demand. Finally, in terms of travel attractions and destinations, in-transport sightseeing may be a new travel model. Given personal safety considerations, self-guided tours are expected to remain, hence, travel companies should further solidify their digital capabilities to personalize travel experiences for individuals. Such personalization should include personalized travel routes, smart booking of itineraries and services based on search suggestions, real-time attraction and experience tracing, and posttour experiences. Through real-time data, companies may reap the advantage of viral moments to create travel ambassadors for traffic conversion.

References Brunet, I. B. (2019). AI in Hospitality in China: Are robots taking over the hotel industry? Daxue Consulting. https://daxueconsulting.com/ai-hospitality-china/ Chen, G., Enger, W., Saxon, S., & Yu, J. (2020, October 15). What can other countries learn from China’s travel recovery path? McKinsey & Company. https://www.mckinsey.com/industries/ travel-logistics-and-infrastructure/our-insights/what-can-other-countries-learn-from-chinas-tra vel-recovery-path-d-companies-over-the-technology-tipping-point-and-transformed-businessforever Chen, G., Enger, W., Saxon, S., & Yu, J. (2021, March 26). China’s travel sector is undergoing a nonlinear recovery: What should companies do? McKinsey & Company. https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/ chinas-travel-sector-is-undergoing-a-nonlinear-recovery-what-should-companies-do Fannin, R. (2020). Coronavirus outbreak spurs new innovations in high tech. East WestBank. http:// www.eastbanks.com Hu, L., & Olivieri, M. (2020). Social media management in the travelers’ customer journey: Analysis of the hospitality sector. Current Issues in Tourism, 24(12), 1768–1779. https://doi.org/10.1080/ 13683500.2020.1819969 Jiang, Y., Zhang, L., & Jin, Y. (2021). China’s e-commerce development and policy relevance. In M. Smeets, Adapting to the digital trade era: Challenges and opportunities, WTO Chairs Programme (pp. 140–157). WTO Publications. Kaur, D. (2021, January 28). China vs. US e-commerce—How they’re very different. Techwire Asia. https://techwireasia.com/2021/01/china-vs-us-e-commerce-how-theyre-very-different/ LaBerge, L., O’Toole, C., Schneider, J., & Smaje, K. (2020). How COVID-19 has pushed companies over the technology tipping point—And transformed business forever. McKinsey & Company. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/ourinsights/how-covid-19-has-pushed-companies-over-the-technology-tipping-point-and-transf ormed-business-forever

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Lau, A. (2020). New technologies used in COVID-19 for business survival: Insights from the hotel sector in China. Information Technology and Tourism, 22, 497–504. https://doi.org/10.1007/s40 558-020-00193-z LeadLeo. (2021). Tabulated data from the Ministry of Culture and Tourism of the People’s Republic of China, 2021 年文旅行业动态报告: 中国疫情后文旅政策梳理, 2020–2021年 [2021 China Tourism Industry Dynamic Analysis Report: A summary of post-COVID-19 Tourism Policies]. LeoLead. Loureiro, S. M. C., Guerreiro, J., & Ali, F. (2020). 20 years of research on virtual reality and augmented reality in tourism context: A text-mining approach. Tourism Management, 77, 104028. https://doi.org/10.1016/j.tourman.2019.104028 McKinsey & Company. (2020). How COVID-19 has pushed companies over the technology tipping pointand transformed business forever. https://www.mckinsey.com/business-functions/ strategyand-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the-tec hnology-tipping-point-andtransformed-business-forever Ninia, J. (2020, February 18). The impact of e-commerce: China versus the United States. Cornell SC Johnson College of Business. https://business.cornell.edu/hub/2020/02/18/impact-e-commercechina-united-states/ Reeves, M., Faeste, L., Chen, C., & Whitaker, K. (2020, March 10). How Chinese companies have responded to coronavirus. Harvard Business Review. https://hbr.org/2020/03/how-chinese-com panies-have-responded-to-coronavirus Roberts, T. (2021), Digital commerce: Top challenges, trends and steps to take. Bloomreach. https:// www.bloomreach.com/en/blog/2019/07/digital-commerce-explained.html Shaw, G., & Williams, A. (2009). Knowledge transfer and management in tourism organisations: An emerging research agenda. Progress in Tourism Development, 30(3), 325–335. https://doi. org/10.1016/j.tourman.2008.02.023 Shen, W., & Chen, J. (2018). Problems and countermeasures of e-commerce development in China. Science and Technology Economic Guide, 26(22), 5–7. Statista. (2020). Projected global retail e-commerce sales in 2020, by region. https://www.statista. com/statistics/311357/sales-of-e-commerce-worldwide-by-region Xia, H., Vu, H. Q., Law, R., & Li, G. (2020). Evaluation of hotel brand competitiveness based on hotel features rating. International Journal of Hospitality Management, 86, 102366. https://doi. org/10.1016/j.ijhm.2019.102366 Yang, X. H. (2021). 旅游行业研究报告 [The Tourism Industry Research Report]. China Lianhe Credit Rating. Zhang, H. (2021). 2021 年文旅行业动态报告: 种股票旅游市场复苏加速, 健康认证提 振国际 旅游市场信心 [2021 China Tourism Industry Dynamic Analysis Report]. LeadLeo. Zhu, T. (2021). China’s hotel market sees fast recovery from the epidemic and positive outlook for future development. Daxue Consulting. https://daxueconsulting.com/hotel-market-china

Yean Shan Beh is currently a principal consultant at a marketing consultancy firm. She is also an adjunct research fellow at Xiamen University Malaysia. Before joining her firm, she served as an assistant professor at several universities in Malaysia. Yean Shan graduated with a Ph.D. in Marketing from the University of Auckland Business School (UABS) and holds a Master of Science in Tourism Development from Universiti Sains Malaysia. Her research focuses on social media affordances, service recovery, special interest tourism, and the organizational adoption of emerging technologies. Yean Shan’s works have been published in renowned academic journals (A-ranked journals, ABDC list), including the Journal of Interactive Marketing and the Journal of Service Management. She has also presented her research at several conferences, namely, the Australasia and New Zealand Marketing Academy Conference, the SERVSIG conference, and the Global Marketing Conference.

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Dr. Chong Yit Sean is currently a senior lecturer and the Research Pathway Director at the School of Business, Monash University Malaysia, where she obtained a Ph.D. in Service Management. Prior to pursuing an academic career, she worked with Accenture where she delivered business solutions to major clients such as Shell Malaysia, the Hong Kong Stock Exchange, and Sakhalin Energy. Her broad research interests include service management, higher education, consumer psychology, and career change behavior. Her work has been published in leading journals such as Studies in Higher Education, Quality in Higher Education, Psychology & Marketing, and the Journal of Service Theory and Practice. Dr. Chong’s work has been acknowledged with the Highly Commended Award conferred by the Journal of Service Management (Emerald Publishing Group) and Best Paper awards in the service research bestowed by the Australia and New Zealand Academy of Management (ANZAM) and Academy of Marketing. Xinyi Li is currently pursuing a Master of Science in Business Analytics at The University of Hong Kong. She obtained her Bachelor of Arts degree in International Business from the School of Economics and Management, Xiamen University Malaysia. Her final year research project investigated the impact of social media impressions on consumers. An aspiring researcher, Xinyi assisted in several research projects in her final year of study. Xinyi’s current research interests revolve around the impact of Chinese social media attributes and celebrity endorsement on brand image, particularly for hospitality and tourism businesses. Xinyi secured two internship opportunities upon the completion of her undergraduate studies, gaining industry experience at the international business department of a bank in China and in the marketing department of a Chinese fund management company.

Socio-Economic Change

Effects of COVID-19 on Mental Health in Business: Increasing the Hikikomori-Like Workers in Japan Motoki Watabe , Hiroaki Kubo, Kazumasa Horie , Ryoko Katsuki, Itsuki Yamakawa , Shinji Sakamoto , and Takahiro A. Kato

Abstract Given the pandemic of COVID-19, many countries including Japan implemented curfew restrictions. Unlike other countries, there were no legal penalties for such restrictions in Japan. However, many citizens voluntarily imposed curfew restrictions. This review paper introduces the impact of this on mental health based on our recent survey studies of Japanese workers. The recent two survey research showed that after the pandemic, 33% of respondents were found to be in the “hikikomori (severe social withdrawal)” or “pre-hikikomori (potentially severe social withdrawal)” category on behavioral indicators. Four antecedents of hikikomori were Motoki Watabe and Takahiro A. Kato are equally corresponded. M. Watabe (B) School of Business, Monash University Malaysia, 47500 Bandar Sunway, Malaysia e-mail: [email protected] Sunway University Business School, Sunway University, 47500 Bandar Sunway, Malaysia H. Kubo Department of Neuropsychiatry, Graduate School of Medical Sciences, Kyushu University, Fukuoka, Japan e-mail: [email protected] K. Horie · R. Katsuki · T. A. Kato (B) Department of Neuropsychiatry, Graduate School of Medical Sciences, Kyushu University, Fukuoka, Japan e-mail: [email protected] K. Horie e-mail: [email protected] R. Katsuki e-mail: [email protected] I. Yamakawa Department of Health and Human Services, Faculty of Medical and Welfare, Tohoku Bunka Gakuen University, Miyagi, Japan I. Yamakawa · S. Sakamoto Department of Psychology, College of Humanities and Sciences, Nihon University, Tokyo, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 A. O. J. Kwok et al. (eds.), COVID-19 and the Evolving Business Environment in Asia, https://doi.org/10.1007/978-981-19-2749-2_10

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identified: (1) social anxiety, (2) achievement motivation, (3) new-type depressive tendencies, and (4) self-esteem. These results suggest that hikikomori-like behaviors induced by government policy would lead to real hikikomori behaviors. We also argue that continuous monitoring of Japanese online workers by the psychometric indictors is necessary for preventing further increase of hikikomori.

1 Introduction The global outbreak of COVID-19 led many countries to impose curfews on their citizens; in early 2020, countries such as China, Italy, India, Spain, and the U. K. implemented national lockdowns to control COVID-19. Although these policies helped contain the pandemic, it has been suggested that the lockdown had a negative impact on the public’s mental health (Gostin & Wiley, 2020; Hamadani et al, 2020; Imai et al, 2020; Kato, Kanba, et al., 2019; Kato, Katsuki, et al., 2019; Neill et al., 2020; Nonaka & Sakai, 2021; Tull et al, 2020; Ueda et al., 2020; Wu et al., 2019; Yong & Nomura, 2019). In Japan, the government declared a state of emergency on April 7, 2020, requesting the public to refrain from going out in the seven prefectures where the number of infected people had increased rapidly, with voluntary restrictions against out-going. A major difference between this policy and those in other countries’ was that, unlike the lockdowns in other countries, it was only a request and there were no legal penalties. Japanese are therefore expected to practice self-restraint behavior (SRB) (Regan & Ogura, 2021). As pointed out in a recent study in Japan (Katafuchi et al., 2021), people’s going out behavior was controlled to some extent only by request, without any legal compulsion, and this trend continued even after the declaration was revoked. This suggests that in Japan, not only government policies but also individual personalities could determine the degree of SRB, since many Japanese could decide if they would practice SRB by their own will. In this sense, it would be meaningful to use Japanese data to analyze the association between SRB and personality factors. We especially focus on the impact of Japanese version of lockdown on the mental health of the Japanese workers. One reason is that “hikikomori (severe social withdrawal) is now a major social problem in Japan. Kato, Kanba, et al. (2019), Kato, Katsuki, et al. (2019), Kato, Kanba, et al. (2020), who provide an international and psychiatric definition of hikikomori, define that hikikomori is “a state of pathological social avoidance or social isolation, the basic premise of which is staying at home and being physically isolated. The individual is distressed or dysfunctional with respect to these situations, or the family and surroundings are distressed.“ A person who has been withdrawn for more than 6 months is considered a pathological “hikikomori,” while a person who has been withdrawn for more than 3 months but less than 6 months is considered a “prehikikomori.” Behavioral indicators are defined as “mild” if they go out 2–3 times a week, “moderate” if they go out once a week or less, and “severe” if they go out once a week or less and rarely leave their rooms.

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Hikikomori entails great economic and emotional distress not only for the individual but also for close people such as their family. Many of hikikomori individuals have depression and anxiety disorders, and addiction on games and Internet is also likely to occur. According to a survey by the Cabinet Secretariat of Japan, as of 2019, there are more than 610,000 adult hikikomori over the age of 40, and it is estimated that the total number of youths may be more than 1 million (Cabinet Secretariat of Japan, 2020). Furthermore, reports of hikikomori are increasing not only in Japan, but also in many other regions such as East Asia, Europe and US. These reports point out the possibility that it could develop into a global problem (Kato et al., 2012; MalagónAmor et al., 2020; Yong & Momura, 2019.) More specifically, in this paper, we examine link between the problem of hikikomori and the pandemic by reviewing the recent two survey studies (Katsuki et al., 2021; Kubo et al., under review) on Japanese workers because we predict that government’s restrictions of out-going due to the pandemic can be a trigger to make the hikikomori problem more serious. Past studies have reported that there is a significant relationship between personality traits to avoid danger and susceptibility to anxiety and depression (Tateno et al., 2019). Furthermore, Qian and Yahara (2020) reported that personality traits of morality and ideology were associated with SRB during the COVID-19 epidemic in Japan. These results suggest that the tendency to control out-going behavior for fear of COVID-19 and possible emergence of pre-hikikomori. If this causes anxiety and depression, it can lead to a real increase in hikikomori. If this hypothesis is correct, COVID-19 would indirectly make the hikikomori problem more serious. In this chapter, we will present two recent research studies conducted by our group, interpret the results in an integrated manner, and discuss how government policies have the potential to increase the number of hikikomori.

2 Online Surveys to Analyze the Impact of COVID-19 Among Workers in Japan In 2020, we have conducted online surveys to analyze the impact of COVID-19 among workers in Japan (Katsuki et al., 2021; Kubo et al., under review). Here we re-analyzed the data from the large-scale survey described above with different focus topics: Katsuki et al. (2021) analyze differences in SRB behavior by region within Japan and the antecedents of SRB behavior, while Kubo et al. (under review) perform a time-series analysis of SRB. It explores changes in behavior and their causes. We first introduce the data collections common to both studies. A set of screening survey was sent to 2182 respondents and 1509 responded to the screening questions. Among them, 1178 respondents who were full-time employees as of April 2019 participated in the online survey between 10 June 2020 and 19, one year before the study. Trap questions were set to maintain the reliability of the

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responses and the data of 1053 respondents who passed the trap questions were used in the analysis. We also asked those 1053 participants to join in the second survey conducted six months later; 247 did not respond to our request and 806 agreed. They resided in all prefectures in Japan. Participants were recruited through an Online survey company (Cross Marketing Inc., Tokyo, Japan). In addition, participants were recruited to keep gender ratio equal in each age group (30 s, 40 s, and 50 s). In recruitment, participants were informed of the study: the survey was anonymous and completely voluntary. informed consent. The online survey was conducted twice with a six-month interval between the two surveys. The first survey was conducted in June, and second one was in December 2020 to obtain data on each questionnaire as described below. A variety of questionnaires were implemented in the two surveys as follows: (1)

Questionnaires implemented in June 2020 (baseline data)

SRB-related indicators We measured the degree of SRB in the COVID-19 pandemic, the degree of motivation for SRB, stigma toward COVID-19 (both stigma toward others and self-stigma), anxiety in COVID-19, and depressive feelings in COVID-19. The degree of SRB ranges 2–8, asking actual self-confinement behavior. The degree of motivation for SRB was assessed (score range 7–28) by asking for Stigma toward SRB means stigmatized feelings and attitude toward other people (score ranges 5–20). Anxiety (score ranges 6–24) and depressive feelings (score ranges 4–16) refer to the COVID19 related mental health alternation.

3 Mental Health Associated with Hikikomori We collected data with the following mental health related scales. 1. 2.

3.

Severity of hikikomori tendency among 6 months: the 25-item Hikikomori Questionnaire (HQ-25) by Teo et al. (2018) (Appendix A). Severity of depressive tendency: the Patient Health Questionnaire-9 (PHQ-9) (Kroenke et al., 2001) and The Center for Epidemiologic Studies Depression Scale (CES-D) (Shima et al., 1985) Modern-type depression (MTD) tendency: the 22-item Tarumi’s modern-type depression trait scale; Avoidance of social roles, Complaint and low Self-esteem (TACS-22) (Kato, Kanba, et al., 2019; Kato, Katsuki, et al., 2019) and the Interpersonal Sensitivity/Privileged Self Scale (IPS) (Murakana et al., 2017).

We would like to note that his modern-type depression measurement has three subtype categories; Avoidance of social role, Complaint, and Low self-esteem (Appendix B). 4.

Social anxiety tendency: the MINI-Social Phobia Inventory (MINI-SPIN) (Connor et al., 2001).

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5. 6. 7.

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Internet addiction tendency: Young’s Internet Addiction Test (IAT) (Young, 1998). Motivation: Achievement Motivation Scale (Horino & Mori, 1991). Resilience: Tachikawa resilience scale (TRS) (Nishi, et al., 2013). (2) Questionnaires implemented in December 2020

1. 2. 3. 4. 5. 6. 7.

Hikikomori Status We asked the number of days spent on going out for more than one hour per week. Severity of hikikomori tendency: HQ-25 (Teo et al., 2018). Mental health status Severity of depressive tendency: PHQ-9 (Muramatsu et al., 2007) and CES-D (Kroenke et al., 2001). Modern-type depression (MTD) tendency: TACS-22 (Kato, Kanba, et al., 2019; Kato, Katsuki, et al., 2019) and IPS (Murakana et al., 2017). Internet addiction tendency: IAT (Young, 1998).

4 Does COVID-19 Increase the Number of Hikikomori? The summarized outcomes of these two studies were integrated in Fig. 1. showing the aggregate change in SRB between December 2020, before the start of the large-scale pandemic in Japan, and December 2020, during the pandemic. Fig. 1 Behavioral change of SRB before and after pandemic. (re-created based on Katsuki et al. [2021] and Kubo et al. [under reivew])

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The results show that 1/3 of those who had normal outgoing behavior became hikikomori-like people as a result of the Japanese government’s policy. It suggests that SRB partially leads worker to hikikomori-like state. It implicates that a pandemic could make the hikikomori problem more serious via government policies. However, this is only a behavioral indicator. The psychological aspects need to be analyzed. In Katsuki et al. (2021), we mainly conduct a comparative analysis between epidemic and non-epidemic areas for SRB and effects of the psychological measurements mentioned above. For those results, please refer to Katsuki et al. (2021). In this chapter, we further analyze the psychological factors that would promote SRB from their analysis. We re-created Table 1 based on the data of Katsuki et al. (2021). In addition, Table 2 below is quoted by Kubo et al. (under review). Katsuki et al. (2021)’s analysis was ANOVA to examine interactions with region and psychological factors, so the effects of each psychological scale were transformed into a small number of categories. This had the disadvantage of lower test power. Table 1 ANOVA results to predict the degree of SRB (Re-created) Results of ANOVA with SRB degree as the Dependent Variable F value

p value

Interaction between regions and psychological factors

p value

Social Anxiety and Depressive tendency MINI-SPIN total

23.552 **