Threat, mortality, and rigidity: how terror management and threat rigidity shaped small business responses to the COVID-19 crisis

At the onset of the COVID-19 pandemic, small business owners faced unprecedented challenges, including the looming threat of bankruptcy. In response, owners adopted various changes to their business models, with the extent of these adaptations, including pivoting to new strategies, increasing as the perceived threat of closure grew. However, owners who applied for Paycheck Protection Program (PPP) loans, marketed as government rescue funding, were less likely to make significant adjustments. This study introduces the ‘artificial rigidity’ concept to describe how PPP assistance may have delayed or deterred immediate, adaptive responses to environmental exigencies. Drawing on Terror Management Theory (TMT) and the Threat Rigidity Effect, we argue that the perception of a more distant threat—mediated by the expectation of financial support—encouraged owners to revert to existing, known practices instead of pivoting to new strategies. Using a dataset of 1083 small business owners surveyed in Utah between April and May 2020, we show that businesses facing higher bankruptcy threats were more likely to adapt, but PPP recipients were less likely to change. This study contributes to understanding how external interventions may push or pull adaptive behavior during times of crisis, with implications for both theory and practice.