Management Practices and Resilience to Shocks: Evidence from COVID-19

We use the spread of COVID-19 in Italy, the first Western country hit by the pandemic, to investigate the role of structured management practices in responding to a large shock. We exploit a survey eliciting expected sales growth for 2020 to set up a difference-in-difference analysis with repeated cross sections, leveraging the fact that the data collection began prior to the pandemic and continued throughout its spread. We find a sizable effect of such practices on firm performance: a one-standard-deviation increase in the management score increases expected sales growth by 2.3%, against an average drop of 8.3%. Results are confirmed with actual sales growth. Firms with more structured practices were more likely to implement a comprehensive set of changes, including a more intense use of remote work. This paper was accepted by Alfonso Gambardella, business strategy. Funding: This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme Grant agreement 835201. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2021.01341 .