Rapid Product And Production Adaptation In A Social Emergency: Does It Pay Off?

This study focused on an emerging phenomenon amid the COVID pandemic—COVID-relieving product adaptation (CRPA), where manufacturers adapted production facilities to produce medical supplies that were essential for addressing the crisis and in short supply. We use an event study to examine whether CRPA actually improved manufacturers’ financial performance. The results revealed that under severe pandemic circumstances, CRPA significantly boosted stock returns, and this effect was stronger for firms with low political connectedness, low media coverage, and high operational uniqueness. An experiment offers further insights into the underlying mechanisms through which CRPA helps or hurts.