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Harvard Business School professors tracking the ongoing coronavirus pandemic say it has already negatively impacted business operations at every level.
Though it is too early to determine the economic implications of the pandemic, professors say many small businesses will likely prove unable to weather the crisis.
In a blog post, Business School professor Willy C. Shih wrote that “service industries that have seen their revenues dry up” have become “the biggest losers from the coronavirus” in the business world. The hotel, airline, and travel industries, among others, are losing revenue that they may not be able to recover, according to Shih.
Business School professor Karen G. Mills ’75 said small businesses play a “critical part” in the U.S. economy, noting that “this part of the economy is under extreme duress because of the virus.”
Many small businesses have very low cash reserves, and a prolonged crisis threatens to permanently close many such businesses, according to Mills. In fact, Mills said, the average small business’s cash buffer could only sustain it for 27 days.
The macroeconomic consequences of the coronavirus have been dire, with the head of the International Monetary Fund declaring that the global economy has entered a recession and is unlikely to recover until at least 2021.
State and federal policymakers have tried to mitigate the impact of the pandemic on the American economy. Last week, Congress passed a $2 trillion relief package that included approximately $350 billion for small business loans.
“If we can get this bill implemented quickly, then it could provide some relief,” Mills said.
Despite the economic devastation, businesses should prioritize health and safety amid the pandemic, according to Mills and Business School professor Rosabeth M. Kanter.
“Anything a company does for safety is a really wise investment because, otherwise, there isn’t going to be anybody that comes to work,” Kanter said.
Despite the economic downturn, several Business School professors identified a few possible benefits that could come out of the pandemic.
Professor Ryan W. Buell said the pandemic has made clear the importance of having “thoughtful and innovative” human resource policies in place that protect workers financially and psychologically “both in the worst of times and the best of times.”
“I think that the silver lining could be that there’s a lot of chances for leaders of organizations to better understand and appreciate these interconnections between their workers and customers, Buell said.
Business School professor emeritus Michael Beer wrote in a blog post that corporate managers can use the crisis as an opportunity to improve communication and workplace culture.
“The coronavirus challenge, like any crisis, provides senior management a huge opportunity to develop a trust-based culture rapidly,” Beer wrote.
Kanter also said she hopes the pandemic will shine a light on societal disparities and prompt business leaders and others to address them.
“My hope is that this will make clear the importance of leadership and leadership for service to others,” she said.
—Staff writer Haemaru Chung can be reached at firstname.lastname@example.org.
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