Stakeholder Governance Paradigm in Response to the COVID-19 Pandemic

Abstract

The COVID-19 pandemic has tremendous implications for people and organizations. It has influenced organization behavior and may trigger a paradigm shift regarding the way business organizations consider governance under the new normal. This study conducts a synthesis of the literature and provides an insight into the COVID-19 crisis and its impacts on organization behavior and corporate governance norms and measures. Stakeholder governance of protecting interests of all stakeholders presented in this paper is appropriate in addressing challenges brought on by the COVID-19 pandemic that affect organization behavior. These challenges and related changes will affect all aspects of business organizations from the oversight function by the board of directors to the managerial function by executives. Stakeholder governance is driven from the stakeholder primacy concept with focus on creating and protecting shared value for all stakeholders. Stewardship theory can predict changes that business organizations will make in modifying their stakeholder governance in the face of such an exogenous shock caused by the pandemic. Propositions are advanced and suggestions are provided for policy, practical, education, and research implications.