Effect of COVID-19 on the Hospitality Industry PDF

Journal of Open Innovation:
Technology, Market, and Complexity
Article
The Effect of COVID-19 on the Hospitality Industry:
The Implication for Open Innovation
Kanwal Iqbal Khan1 , Amna Niazi2,*, Adeel Nasir3,*, Mujahid Hussain4 and Maryam Iqbal Khan5
Citation:Khan, K.I.; Niazi, A.; Nasir,
A.; Hussain, M.; Khan, M.I. The Effect
of COVID-19 on the Hospitality
Industry: The Implication for Open
Innovation. J. Open Innov. Technol.
Mark. Complex. 2021, 7,30.
https://doi.org/10.3390/
joitmc7010030
Received: 26 November 2020
Accepted: 9 January 2021
Published: 13 January 2021
Publisher’s Note:MDPI stays neu-
tral with regard to jurisdictional clai-
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Copyright: © 2021 by the authors. Li-
censee MDPI, Basel, Switzerland.
This article is an open access article
distributed under the terms and con-
ditions of the Creative Commons At-
tribution (CC BY) license (https://
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4.0/).
1 Institute of Business & Management, University of Engineering and Technology, Lahore 39161, Pakista
[e-mail]
2 Humanities and Social Science Department, University of Engineering and Technology,
Lahore 39161, Pakistan
3 Department of Management Sciences, Lahore College for Women University, Lahore 54000, Pakistan
4 FAST School of Management, National University of Computer & Emerging Sciences, Lahore 54000, Pakis
[e-mail]
5 Institute of Technology and Management, University of the Punjab Lahore Campus, Lahore 54000, Pak
[e-mail]
* Correspondence: [e-mail] (A.N.); [e-mail] (A.N.); Tel.: [phone] (A
[phone] (A.N.)
Abstract:The current coronavirus pandemic (COVID-19) has led the world toward severe soc
economic crisis and psychological distress.It has severely hit the economy; but the service sector
particularly the hospitality industry,is hard hit by it.It increases the sense of insecurity among
the employees and their perception of being unemployed, adversely affecting their mental h
This research aims to contribute to the emerging debate by investigating the effect of economi
and non-employability on employees’ mental health through perceived job insecurity under
pandemic situation. It empirically examines the underlying framework by surveying 372 emplo
of the hospitality industry during COVID-19. Results indicate that perceived job insecurity med
the relationship of fear of economic crisis, non-employability, and mental health. Furthermor
contingency of fear of COVID-19 strengthens the indirect relationship of fear of economic cr
mental health through perceived job insecurity. The findings will provide a new dimension
managers to deal with the psychological factors associated with the employees’ mental healt
add to the emerging literature of behavioral sciences. The study also highlights the increasing
for investment in the digital infrastructure and smart technologies for the hospitality industry
Keywords:fear of economic crisis; fear of COVID-19; perceived job insecurity; non-employab
mental health; hospitality industry; COVID-19; digital infrastructure
1. Introduction
The world is always facing challenges due to technological advancements, natu
disasters, and demographic factors. However, the coronavirus (COVID-19) pandemic
emerged into the biggest challenge of the decade. It has affected the peoples’ lifestyl
had an inverse impact on their health, social, and financial conditions [1]. Coronavirus is a
contagious disease caused by a virus named SAR-CoV-2 (severe acute respiratory synd
Coronavirus 2) [2]. COVID-19 has been declared as a pandemic by the World Health
Organization (WHO) [3]. Coronavirus transmission occurs in droplets generated throug
the sneezing or coughing of an infected person [4]. In December 2019, the novel COVID-19
(coronavirus disease) appeared for the first time in Wuhan, China. Within months, ma
countries were affected by it, and the number of patients increased drastically [5]. At the
initial stage of this pandemic, different countries managed to control the virus, but
there are no estimations that soon how many of the nations will be affected due to
second wave of COVID-19 [6].
J. Open Innov. Technol. Mark. Complex. 2021, 7, 30. https://doi.org/10.3390/joitmc7010030 https://www.mdpi.com/journal/joitmc

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 2 of 17
Since the outbreak of COVID-19, it has become difficult for the health practitioner
deal with it. The mortality rate is high in many countries; thus, this disease is one of its
with no cure found and confirmed at the time this paper was written [7]. A worldwide
recession, economic downturns, and decline in returns of the industries are just so
the consequences of this global emergency [8]. The increasing number of cases has created
panic, stress, and nervousness among the masses around the world [5]. People had to
encounter psychological issues, panic attacks, anxiety, and understanding that there
known cure for this disease [9]. The steps taken by the government to counter the fear
of COVID-19 include awareness about the disease, information about the precautio
measures, and lockdowns [1]. However, the psychological aspects directly related to th
people’s mental health were ignored by the authorities.Researchers such as Gallie [10]
illustrated that this disease adversely impacts the mental health of the people, leadin
anxiety and depression.
Prior studies considered fear of job loss and financial insecurity as the most substa
consequences of governmental policies such as lockdowns [11]. In the private sector, the
fear of job insecurity is an ongoing threat; however, it has gained more attention d
this pandemic.The fear of being laid off from their ongoing jobs is higher than the fe
of being infected. Studies showed that people panic at an individual level because o
threat of losing their income and employment [9]. According to research, it takes years
to recover from the fear of non-employability. Fear of COVID-19 has emerged as a glo
phenomenon.It has impacted individuals, institutions, societies, and nations all acro
the world. Many businesses failed to survive the economic pressures posed by COVID
Those that are surviving had to find and implement innovative business models. Desp
such innovations, many organizations reported significant losses leading to downsi
and other cost-cutting mechanisms.
Past research on pandemics suggests that such diseases significantly affect empl
performance and mental health. Occupation uncertainty and the threat of unemploym
at the workplace has been directly related to an unexpected low performance level12].
This uncertainty and threat increase anxiety,fear,depression,and job burnout among
the employees [13]. Studies revealed that employees’impaired mental health affects
their attitude and influences the quality of service the employees provide. Therefore
management needs to consider mental health of the workers as an important issue du
the pandemic [14].
The study conducted by Ramelli and Wagner [15] stated that the world had not faced
an economic crisis as bad as that during the COVID-19 pandemic. Almost all the corpor
sectors were adversely affected, whereas the first one hit by this was the hospitality s
Internationally,the hospitality industry is a flourishing sector.In Pakistan,it adds a
significant amount to the GDP each year and plays a vital role in the service sectorAs
in other countries,this sector was also affected adversely in Pakistan.Tourism was at
a halt, hotels were not allowed to entertain guests, restaurants were closed for din
employees were being laid off, and the remaining employees were under the threat
non-employability.This pandemic brought a challenge for the hospitality industry to
survive by adopting the innovative strategies and improving the customers’ perceptio
safety [16].
Shin and Kang [17] purposed that by implementing technological innovations and
risk reduction strategies, the hospitality industry can gain the trust back of their custo
once the restrictions are removed. In addition to the economic crisis, this pandemic cre
a wave of job insecurity that led toward mental issues in the employees.In their study,
Kang, Li [18] stated that mental health holds vital importance for employees to funct
properly at the workplace.They also further stated that families and friends are also
affected by employees who face mental issues.
Given the uncertainty of COVID-19, the current study investigated the potential eff
of fear of economic crisis and non-employability on the mental health of the employ
of the hospitality industry. The target population for this research was the employe

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 3 of 17
the hospitality industry of Pakistan. Since this sector is under-researched, thus, this s
tries to fill the gap and open new horizons for the managers. Specifically, in this rese
we investigate how perceived job insecurity meditates the relationship between fea
economic crisis, non-employability, and mental health.Finally, this study also compre-
hensively discusses how fear of COVID-19 moderates the relationship between fear
economic crisis and perceived job insecurity and even between non-employability a
perceived job insecurity.
By examining these relationships, we can better understand the factors causing m
health problems among the employees in this pandemic. Therefore, this research w
contribute toward the literature by testing the relationships and the effect of the micr
macro-level factors on the employee’s mental health.This study also takes the opportu-
nity to know more about the psychological factors impacting the employees during
pandemic.The main objective of the research was to contribute toward the literatur
the hospitality sector of Pakistan, since it is a sector that has received little attention
researchers.Secondly, it is one of the industries that is facing significant repercussio
by this pandemic. The present paper explores the relationships of fear of economic cr
non-employability, perceived job insecurity, and mental health issues that employees h
to face.
2. Review of Literature and Hypothesis Development
2.1. Fear of the Economic Crisis and Mental Health
Fear has many implications. Its purpose may include it as a strategy to attain a g
The fear of the unknown is a driving force to take advantage of the insecurities of the o
party. The factor fear has not only been considered as a strategy to motivate employe
corporate settings, but it is also used by political parties to set their agendas [18]. Fear arises
from an unplanned situation; in some cases, we can predict the outcome, and in other c
the results may stay unrevealed.Sudden changes in the socio-structural circumstances
lead to anxiety and fear among people.Research reveals that these fluctuations create
angst among the masses and compel people to take harsh decisions such as self-ha
and suicide [19]. Research indicates that the economic crisis includes unemploymen
financial sufferings of employees, and job insecurity [20]. Giorgi [21] also explained the
economic crisis as a macro stressor including multiple factors of an employee’s econo
life, including the fear of job loss and job insecurity.
The literature also considers the fear of economic crisis as an innovative construct
defines it as a perception of the employee about the organization that something su
downsizing will take place in the organization soon [22]. A study revealed that the primary
reason for suicide was the pressure that there are no jobs in the market and unemploy
Prolonged economic crisis leads to financial hardships among the people working o
trying to find work.These sufferings cause psychological distress and fear of job loss
among the employees. The economic crisis has a significant impact on working people23].
This perception of crisis may shape stress, anxiety, and turnover, and absenteeism
significantly affect the employees’ health [24]. Stress theory explains individuals and
families’ reactions and how they react when they face stress [25]. Although the economic
crisis affects everyone, people have a different response and handle stress in varied w
The economic crisis due to COVID-19 has raised challenges for the economies to re
back on the track of progress [16]. Every country has been affected by this disease, and not
only developmental programs have been at a halt, but people are also struggling men
and financially. Roca [26] and Voydanoff and Donnelly [27] in their research proved that
the economic crisis had a direct and negative impact on the mental health of emplo
Previous research also illustrated that employees’ mental health is adversely affected b
economic crisis prevailing in the country [28]. The study conducted by Voydanoff [29] also
highlighted that income loss, lack of finances, and unemployment also causes depres
and affect the employees’ mental health.

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 4 of 17
2.2. Non-Employability and Mental Health
Perceived non-employability is a susceptible issue for the employees. If employ
perceive that other organizations are laying off their employees due to the prevailin
situation, they become even more sensitive.This phenomenon is also explained by the
uncertainty management theory [30]. This theory describes that during uncertain times
employees become more sensitive and vulnerable.Organizations need to be more con-
siderate, since the employees become exposed to the treatment they receive from t
organization. Employees who fear unemployability consider their organizations to be m
non-cooperative, and hence, they have a higher level of fear of the economic crisis20].
Berntson and Marklund [31] define employability as the set of working skills that would
find employees another job. It is considered to be the perception made in the mind of
employees that would find them a new job when needed in the market.
A worker perceiving non-employability would believe that it would be difficult an
sometimes impossible to find a job with the skills set that he has [21]. This thought and
perception of not getting a new job consume the psychological resources of the emplo
hence impacting mental health,especially during austere times.The perceived fear of
non-employability adversely affect the employees; even their families suffer due to
perception [32]. Low-income families are more affected by fear of non-employability,
resulting in adverse mental and health issues [33]. Previous research has already established
that non-employability is associated with mental health problems such as depressio
anxiety, and even self-harm [34]. Giorgi [21] also stated that the psychiatric cases and even
mortality rate due to psycho-pathological conditions increased during the economic c
2.3. Mediating Role of Perceived Job Insecurity
Job insecurity is defined as the fear that one will lose their job and will not be a
to retain the job [35]. Greenhalgh and Rosenblatt [36] further added to the definition of
job insecurity as the vulnerability that one faces while working in an organization w
a threat of unemployment.Previous research has proved that job insecurity has many
implications.Some of the significant repercussions to job insecurity include complai
regarding mental health, lack of commitment, and low job satisfaction [37]. The economic
crisis may be considered one of the most triggering factors that creates fear of job inse
Due to the economic instability and fear of job loss,employees have also developed a
state of mind where they believe that long-term relationships with organizations ar
longer considered loyal [38]. According to Elman and O’Rand [39], employees have also
generated reasoning that no one is resistant to job insecurity.The sense of vulnerability
among employees augments the fear of job insecurity, and this phenomenon affects
mental health of the employees [36].
The literature is filled with evidence that proves a negative relationship betwee
employability and perceived job insecurity [40]. Silla [41] highlighted that job insecurity is
negatively associated with an employee’s well-being. Otterbach and Sousa-Poza [42] also
supported a negative relationship between job insecurity and mental health of emplo
However, the present research explores the missing link by taking job insecurity as a
ator among non-employability and mental health. Job insecurity is one of the signific
factors that cause restlessness among the employees, hence impacting the mental hea
the employees directly.
Research conducted by Llosa [43] also concluded the significant effects of job insecurity
on the mental health of employees. Their study highlighted that employees’ professio
networking,low satisfaction with life,and other mental and psychological issues are
standard among employees who feel that their job is not secure.A study by Gallie [10]
stated that a major reason why an employee fears job insecurity is the awareness i
reduction in staff by the employers. Hence, the present research combines the macro
factor, i.e., economic crisis and macro-level organizational concepts, and tries to ex
the impact of fear of economic crisis and non-employability on the employees’ men

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 5 of 17
health [35]. We cannot ignore the importance of mental health of employees, since it dir
affects organizational performance [44]. Thus, we hypothesize the following:
Hypothesis 1a (H1a).Fear of economic crisis has a significant negative impact on the em
mental health through the mediation of perceived job insecurity.
Hypothesis 1b (H1b).Non-employability has a significant negative association with th
ployee’s mental health through the mediation of perceived job insecurity.
2.4. Moderating Role of Fear of COVID-19
Wars have boundaries; however, diseases such as COVID-19 proved no bounda
when there is an outbreak.Contagious diseases such as COVID-19 leave a trauma on
people’s mental health, since they affect the well-being of people [45]. Fear is an expressive
response to this situation. Fear of COVID-19 created panic, excessive stress, and a
among the employees that lead toward job insecurity. People, especially the working c
felt vulnerable and dealt with psychological issues because of uncertainty [46]. Scholars
believe that the fear of COVID-19 increases the fear of economic crisis that adversely a
employees’ mental health [47]. The fear of COVID-19 increased drastically among the
employees because of uncertainty, job insecurity, financial insecurities, and governm
health care policies.
The unprecedented measures taken by the government to control the outbreak it
created panic and triggered mental issues (Galea et al.2020).Bao [48] also endorsed in
their research that disease such as COVID-19 is positively linked with mental stres
anger. Researchers also confirmed that the impact of such diseases does not remain
the affected persons only but also spreads out to families, communities, and nations49].
Throughout the world, due to COVID-19, schools and universities were closed, large g
erings were prohibited, workers were being laid off by organizations, non-employab
increased,and the economy faced the worst crisis.This all had a direct impact on the
employee’s mental health.
Several studies report the amount of research being conducted on making the vacc
for COVID-19. However, hardly any study shows how the employees mentally suffe
due to this pandemic. Employees were directly affected, since the functioning of busine
changed. Supply chains were broken due to the non-availability of raw materials owin
travel restrictions. When the manufacturing and selling were negatively affected, org
zations had to cut down on costs, and hence, firing employees was one of the strate
to reduce cost. Reducing the workforce involved the employees who were being lai
and created a sense of job insecurity among the remaining employees [50]. Job insecurity
shatters the employee’s confidence and hence leads to a mental health problem for
employee.Therefore, this study highlights that employers had to bear a loss in reven
during this period and facilitate the employees to recover from psychological stress.
the following hypotheses are proposed:
Hypothesis 2a (H2a).Fear of COVID-19 moderates the indirect relationship of fear of ec
crisis on mental health,such that the effect of fear of economic crisis on mental health t
perceived job insecurity might be more assertive when employees have higher fear o
Hypothesis 2b (H2b).Fear of COVID-19 moderates the indirect relationship of non-emplo
on mental health, such that the effect of non-employability on mental health through
insecurity might be more robust when employees have higher fear of COVID-19.
Figure 1 explains the hypothesized model of the research.

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 6 of 17
J. Open Innov. Technol. Mark. Complex. 2021, 7, x FOR PEER REVIEW 6 of 18
Figure 1. Research Model.
3. Materials and Method
3.1. Participants and Procedure
The service sector is hard hit by the COVID‐19 pandemic, particularly the hospit
industry, based on the accommodation and food and beverages segments. One way t
control the spread of COVID‐19 was the lockdown, which was the main reason for th
cancellation of economic activities. The hospitality industry was also affected by it as
tional and international flights were halted, and there was no tourism, busines
meetings, and no flight crew staying at the airport hotels. Furthermore, hotel operat
such as restaurants, conferences, seminars, and banquets were also restricted, seve
affecting economic and financial performance. However, earlier to this pandem
hospitality industry was growing and flourishing in Pakistan. Its contribution t
was 3%, and from 2012 to 2014, the industry′s growth rate was observed as
which was increasing year by year. Due to this worst‐case scenario, the hospitality in‐
dustry had lost approximately $253.7 million and just $0.64 million in February. It w
also reported that 90% of hotel bookings were cancelled in this period [51], which ad
versely affected their profitability and created chaos among the employees reg
their future employability.
That is why the current study targeted the hospitality industry employees to ana
the effect of fear of economic crisis and non‐employability on mental health t
perceived job insecurity. It also explores the moderating role of fear of COVID
tween fear of economic crisis, non‐employability, and mental health ofemployees. Data
collection was initiated during the period of the COVID‐19 pandemic (May to July 20
We have taken prior approval from the institutional ethical committee before initiati
the research. The management and employees were also informed about it. Furtherm
the study participants were ensured that the gathered information would not be shar
with any authority at any point in time. All the information would be used for researc
purposes only. We have contacted the administration of 50 hotels and requested the
provide the contact details of their employees (emails and phone numbers) during th
smart lockdown period, but only 27 agreed to share the information.
The data were collected from the employees through an online survey. Question
naires were distributed to the targeted sample through online platforms. We had
questionnaire links to 750 employees, but 443 participants had filled the questionnai
that presented the response rate of59%. Initially, the data were screened for missin
values, unengaged responses, and multivariate outliers. We further deleted 71 respo
and ended up with the final data of 372 participants. The respondent′s characteristic
reported in Table 1 that presented the mean (median) age of the participants 31.5 (3
SD (3.60).Off all the participants,27 were managers,148 were engaged in the
white‐collar jobs, and 197 were performing the blue‐collar jobs. A large number of e
Figure 1. Research Model.
3. Materials and Methods
3.1. Participants and Procedure
The service sector is hard hit by the COVID-19 pandemic, particularly the hospita
industry, based on the accommodation and food and beverages segments.One way to
control the spread of COVID-19 was the lockdown, which was the main reason for t
cancellation of economic activities.The hospitality industry was also affected by it as
national and international flights were halted, and there was no tourism, business t
meetings, and no flight crew staying at the airport hotels. Furthermore, hotel opera
such as restaurants, conferences, seminars, and banquets were also restricted, sev
affecting economic and financial performance.However,earlier to this pandemic,the
hospitality industry was growing and flourishing in Pakistan. Its contribution to GDP w
3%, and from 2012 to 2014, the industry’s growth rate was observed as 7% [51], which was
increasing year by year. Due to this worst-case scenario, the hospitality industry had
approximately $253.7 million and just $0.64 million in February. It was also reported
90% of hotel bookings were cancelled in this period [51], which adversely affected their
profitability and created chaos among the employees regarding their future employab
That is why the current study targeted the hospitality industry employees to anal
the effect of fear of economic crisis and non-employability on mental health throug
perceived job insecurity. It also explores the moderating role of fear of COVID-19 betw
fear of economic crisis, non-employability, and mental health of employees. Data collec
was initiated during the period of the COVID-19 pandemic (May to July 2020). We h
taken prior approval from the institutional ethical committee before initiating the rese
The management and employees were also informed about it.Furthermore, the study
participants were ensured that the gathered information would not be shared with
authority at any point in time. All the information would be used for research purpo
only. We have contacted the administration of 50 hotels and requested them to provide
contact details of their employees (emails and phone numbers) during the smart lockdo
period, but only 27 agreed to share the information.
The data were collected from the employees through an online survey.Question-
naires were distributed to the targeted sample through online platforms.We had sent
questionnaire links to 750 employees, but 443 participants had filled the questionnaire
presented the response rate of 59%. Initially, the data were screened for missing value
engaged responses, and multivariate outliers. We further deleted 71 responses and e
up with the final data of 372 participants. The respondent’s characteristics are report
Table 1 that presented the mean (median) age of the participants 31.5 (30) and SD
Off all the participants, 27 were managers, 148 were engaged in the white-collar jobs
197 were performing the blue-collar jobs. A large number of employees (197) were wor
on fixed-term job contract positions.The mean(median) values related to their length
of service or job experience in the contemporary hotel were between 8.5 (10.5) in t

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 7 of 17
current organization. Overall, 216 employees were male, 249 were married, and m
the employees have obtained their postgraduate degree (187). The detailed character
of the respondents are explained in Table 1.
Table 1. Socio-demographic data (n = 372).
Variables n = 372
Gender, n (%)
Female 135 (36%)
Male 216 (58%)
Prefer not to say 21 (6%)
Marital Status, n (%)
Married 249 (67%)
Unmarried 119 (32%)
Divorced/Widowed 4 (0.1%)
Age (years)
Mean (SD) 31.5 (3.60)
Median 30
Range 21–47
Education, n (%)
High School Education 36 (10%)
Bachelor Degree 120 (32%)
Postgraduate Degree 187 (50%)
Professional Level Diploma or Course 29 (0.8%)
Job Position, n (%)
Managers/Middle Managers 27 (7%)
White-Collars 148 (40%)
Blue Collars 197 (53%)
Job Seniority (years)
Mean (SD) 8.5 (4.20)
Median 10.5
Range 0.3 (months)–25 (years)
Job Status, n (%)
Permanent 175 (47%)
Fixed-Term Job Contract 197 (53%)
3.2. Measures
Fear of economic crisis measures employees’ perceived degree that their organiza
would be affected by the economic crisis [52]. It was calculated by five questions taken
from Giorgi [22]. Non-employability is the perceived degree of employees about their
working competencies that do not allow them to acquire another job. It was assess
5 items borrowed from Giorgi [53]. After recoding negatively worded items, the highest
score indicates each stressors’ greater extent: fear of economic crisis and non-employa
The reliability values of fear of economic crisis and non-employability are 0.906 and 0
respectively. Perceived job insecurity is the perception of uncertainty that is in the
of employees regarding the future of their jobs. It was measured by following the way
Kinnunen [54] by 7 items.The highest score of perceived job insecurity represented th
greater extent of job insecurity among the employees. Its factor loading lies between
and 0.901, and the reliability score is 0.922.
Fear of COVID-19 depicts a person’s anxiety or fear about the COVID-19 pandemic55].
It was measured using Reznik [56] and Satici [57] through 7 items. Its highest score indi-
cated the greater level of fear about the coronavirus among the masses, while the l
score reflected the presence of a lower degree of fear about the pandemic. The reliabil
the scale is 0.941. Mental health includes anxiety and depression, social dysfunction,
loss of confidence [52]. It was measured by 12 items from the General Health Questionnai
(GHQ-12), which was designed to diagnose the psychiatric disorder among the people58].
It was a self-reported questionnaire that described individuals’ behavior and symptom
any of them, they recently experienced related to their psychological health. It consiste

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 8 of 17
12 items: 6 for anxiety and depression, 4 for social dysfunction, and 2 for loss of confid
It includes both positive and negative questions.The factor loadings of the items range
from 0.810 to 0.902. The internal consistency and reliability of the scale are also acce
all the items; for further detail, see Table 2.
Table 2. Measurement items and standardized factor loadings.
Constructs SFL
Mental Health (MH)
α = 0.967; CR = 0.971; AVE = 0.734
MH 1 0.835
MH 2 0.834
MH 3 0.834
MH 4 0.849
MH 5 0.863
MH 6 0.842
MH 7 0.810
MH 8 0.858
MH 9 0.902
MH 10 0.875
MH 11 0.888
MH 12 0.887
Fear of Economic Crisis (FEC)
α = 0.906; CR = 0.930; AVE = 0.727
FEC 1 0.812
FEC 2 0.808
FEC 3 0.880
FEC 4 0.877
FEC 5 0.884
Non-Employability (NE)
α = 0.925; CR = 0.944; AVE = 0.770
NE 1 0.828
NE 2 0.907
NE 3 0.901
NE 4 0.899
NE 5 0.850
Perceived Job Insecurity (PJI)
α = 0.922; CR = 0.938; AVE = 0.686
PJI 1 0.826
PJI 2 0.767
PJI 3 0.844
PJI 4 0.719
PJI 5 0.856
PJI 6 0.866
PJI 7 0.901
Fear of COVID-19 (FCV-19)
α = 0.941; CR = 0.952; AVE = 0.740
FCV 1 0.886
FCV 2 0.850
FCV 3 0.831
FCV 4 0.841
FCV 5 0.867
FCV 6 0.894
FCV 7 0.851
α = Cronbach’s Alpha Coefficient;CR = Composite Reliability;AVE = Average Variance Extracted;SFLs =
Standardized Factor Loadings.
4. Results
Table 3 presented the results for discriminant validity with Fornel–Larker crite
which stated that Average Variance Extracted (AVE) square root values should be more
the correlations among the variables. The bold diagonal values loaded for each var

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 9 of 17
confirm that all the study variables discriminate from each other, and the AVE square r
are more than the standardized correlation. Discriminant validity is also confirmed by w
of Henseler [59] through Heterotrait-Monotrait (HTMT) alues, and all the HTMT valu
are lower than one, which validates the discriminant validity. The mean values for me
health (4.563), perceived job insecurity (4.404), fear of COVID-19 (4.328), fear of eco
crisis (4.156), and non-employability (4.154) are high. Whereas, all the standard devi
values are less than unity, which depicts that there is no issue of normality in the dat
any of the study variables.
Table 3. Inter-construct correlation and discriminant validity.
ConstructsMean SD 1 2 3 4 5
1. MH 4.563 0.544 0.857
2. FEC 4.156 0.764 0.450 0.853
3. NE 4.154 0.601 0.373 0.494 0.878
4. PJI 4.404 0.60 0.495 0.455 0.412 0.828
5. FCV 4.328 0.526 0.539 0.313 0.355 0.430 0.860
Note: MH = Mental health; FEC = Fear of economic crisis; NE = Non-employability; PJI = Perceived job insec
FCV = Fear of COVID-19.
We applied the structural equation model to test the hypothesized model with b
moderating and mediating effect, as recommended by Hayes and Preacher [60]. This tech-
nique is suitable for the simultaneous analysis of all the study variables and followe
bootstrapping approach to evaluate the mediating impact of perceived job insecurity.
interaction terms (fear of economic crisis*fear of COVID-19) and (non-employability*fe
COVID-19) are calculated using the orthogonal interaction method to test the modera
effect of fear of COVID-19 on the link of fear of economic crisis–perceived job insecurit
non-employability–perceived job insecurity. The structural model is drawn on Smart
and model fitness is also checked. Overall, the model is a good fit Standardized Root M
Square Residual (SRMR) = 0.05; Chi-Square = 3339.71; Normed Fit Index (NFI) = 0
R-square values for perceived job insecurity and mental health are 0.37 and 0.42, resp
showing that the significant portion of the variance in these variables is explained b
independent variables.
Hypothesis1a posited that the fear of economic crisis would affect the employe
mental health through the mediation of perceived job insecurity.As stated in Table 4,
fear of economic crisis was significantly and positively related with perceived job insec
(β = 0.247;p < 0.001) and later,perceived job insecurity is positively related with the
adverse mental health of the employees (β = 0.225; p < 0.001).Hypothesis1b stated that
non-employability influenced the mental health of the employee through the media
of perceived job insecurity, which is confirmed by Table 4, where non-employability
significantly and positively related with perceived job insecurity (β = 0.189; p < 0.001) and
further, perceived job insecurity is positively associated with the negative conseque
of the mental health (β = 0.225;p < 0.001).We also tested these mediation hypotheses
directly through an indirect mediation model with bootstrap at a 95% confidence inte
The findings further validate the hypotheses H1a and H1b (β = 0.055; p < 0.05;β = 0.042;
p < 0.001), respectively.
In Hypothesis 2a, we proposed that fear of COVID-19 moderates the indirect relati
of fear of economic crisis on mental health through perceived job insecurity. Table 4 co
that the interaction term (fear of economic crisis*fear of COVID-19) was significant
positively associated with perceived job insecurity (β = 0.178; p < 0.001), which is further
significantly affecting the mental health of the employees (β = 0.225; p < 0.001). Additionally,
we directly tested the mediation model by linking the interaction term (fear of econ
crisis*fear of COVID-19) with mental health through perceived job insecurity with bo
at a 95% confidence interval. The findings validate the results by indicating that the v
the indirect effect of mediation on the interaction term (fear of economic crisis*fear of

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 10 of 17
19) is significant on mental health (β = 0.267; p < 0.001) through perceived job insecuri
which provides support to Hypothesis 2a.
Table 4. Results for structural equation model.
Hypothesized Path Coefficients p Values
i. Direct Effect
Fear of Economic Crisis→ Perceived Job Insecurity 0.247 ***
Non-Employability→ Perceived Job Insecurity 0.189 ***
Fear of Economic Crisis*Fear of COVID-19→ Perceived
Job Insecurity 0.178 ***
Non-Employability*Fear of COVID-19→ Perceived Job Insecurity −0.213 ns
Perceived Job Insecurity→ Mental Health 0.225 ***
ii. Indirect Effect
Fear of Economic Crisis→ Perceived Job Insecurity→
Mental Health 0.055 **
Non-Employability→ Perceived Job Insecurity→ Mental Health 0.042 ***
iii. Moderating Effect
Fear of Economic Crisis*Fear of COVID-19→ Perceived Job
Insecurity→ Mental Health 0.040 ***
Non-Employability*Fear of COVID-19→ Perceived Job Insecurity
→ Mental Health −0.048 ns
Note: *** < 0.001; ** < 0.01; * < 0.05.
We plotted two different interaction graphs to explain the moderation results.Figure 2
explained the moderating role of fear of COVID-19 between fear of economic crisis
ceived job insecurity.The graph shows that the relationship between fear of economic
and perceived job insecurity is stronger under a high fear of COVID-19. The notable p
the moderation graph is perceived job insecurity at a high and low level of fear of C
19.The relationship between fear of economic crisis and perceived job insecurity is
when COVID-19 fear is high (see Figure 2), meaning when fear of economic crisis an
COVID-19 are consistent. This eventually supports Hypothesis 2a.
J. Open Innov. Technol. Mark. Complex. 2021, 7, x FOR PEER REVIEW 11 of 18
of economic crisis and fear of COVID‐19 are consistent. This eventually suppo
pothesis 2a.
Furthermore, we plotted the conditional indirect effects for mental health on thr
different moderator levels with 95% upper and lower bootstrap confidence intervals
following the recommendations of Hayes [61], as presented in Figure 3. Figure 3 sho
the indirect effect of the interaction term (fear of economic crisis*fear of COVID‐19)
mental health through perceived job insecurity at higher (+1SD) and lower (‐1 SD) le
from the mean values of fear of COVID‐19. The value of the indirect effect is significaif
zero is excluded from the upper and lower confidence interval limit. The total indirec
effect is conditional on the moderating variable (fear of COVID‐19) at the mean (4.33
SD above the mean (4.78), and 1 SD below the mean (3.88). These findings are also c
sistent withthe proposed hypothesis 2a.
Figure 2. Moderation of FCV‐19 between fear of economic crisis and perceived job insecurit
3
3.2
3.4
3.6
3.8
4
4.2
4.4
4.6
4.8
5
Low FEC High FEC
Perceived Job Insecurity
Low FCV
High FCV
Figure 2. Moderation of FCV-19 between fear of economic crisis and perceived job insecurity

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 11 of 17
Furthermore, we plotted the conditional indirect effects for mental health on th
different moderator levels with 95% upper and lower bootstrap confidence interval
following the recommendations of Hayes [61], as presented in Figure 3. Figure 3 shows the
indirect effect of the interaction term (fear of economic crisis*fear of COVID-19) on m
health through perceived job insecurity at higher (+1SD) and lower (-1 SD) levels f
the mean values of fear of COVID-19. The value of the indirect effect is significant if z
is excluded from the upper and lower confidence interval limit.The total indirect effect
is conditional on the moderating variable (fear of COVID-19) at the mean (4.33), at
above the mean (4.78), and 1 SD below the mean (3.88). These findings are also cons
with the proposed Hypothesis 2a.
J. Open Innov. Technol. Mark. Complex. 2021, 7, x FOR PEER REVIEW 12 of 18
Figure 3. Effect of fear of economic crisis on perceived job insecurity through mental health a
els of FCV‐19.
5. Discussion
The present study investigated the effect of fear of economic crisis and
non‐employability on employees′ mental health through perceived job insecurity. It al
analyzes the moderating role of fear of COVID‐19 between direct and indirect relation
ships. This study empirically examines the underlying framework by conducting
online survey from 372 employees of the hospitality industry. Data collection were ini
ated during the period of the COVID‐19 pandemic (May to July 2020). Questionnaires
were distributed to the targeted sample through online platforms. The hypothes
model was tested through a structural equation model. This study has three significan
findings. First, it confirms the direct relationships between fear of economic cr
non‐employability, fear of COVID‐19, perceived job insecurity, and employee me
health. The prior literature supports all these findings.
Previous studies reported that economic instability and financial crisis are
leading cause of depression, stress, and anxiety among the employees [10]. Research
consider economic and political unrest as a major cause of psychological diseases tha
adversely affect the health of the person. Non‐employability threats also lead t
adverse health consequences [32]. Employees’ perception regarding their working co
petencies that do not allow them to acquire anotherjob created a constant stress, which
negativelyinfluencestheir mental health [23]. Bao [48] claimed that high fear of
COVID‐19 is now becoming the root cause of mental stress among the employees. The
present research also supports the idea presented by De Witte [12] and Caroli and Go
dard [62]claiming that the perceived job insecurity has a positive impact on the menta
issues of the employees. An employee cannot function properly if they are psychologi‐
Figure 3.Effect of fear of economic crisis on perceived job insecurity through mental health at l
of FCV-19.
5. Discussion
The present study investigated the effect of fear of economic crisis and non-employ
on employees’ mental health through perceived job insecurity. It also analyzes the
erating role of fear of COVID-19 between direct and indirect relationships.This study
empirically examines the underlying framework by conducting an online survey from 3
employees of the hospitality industry.Data collection were initiated during the period
of the COVID-19 pandemic (May to July 2020).Questionnaires were distributed to the
targeted sample through online platforms. The hypothesized model was tested throug
structural equation model. This study has three significant findings. First, it confirms
direct relationships between fear of economic crisis, non-employability, fear of COVID
perceived job insecurity, and employee mental health.The prior literature supports all
these findings.
Previous studies reported that economic instability and financial crisis are the lead
cause of depression, stress, and anxiety among the employees [10]. Researchers consider
economic and political unrest as a major cause of psychological diseases that adver
affect the health of the person. Non-employability threats also lead toward adverse h
consequences [32]. Employees’ perception regarding their working competencies that d
not allow them to acquire another job created a constant stress, which negatively influ
their mental health [23]. Bao [48] claimed that high fear of COVID-19 is now becoming the
root cause of mental stress among the employees. The present research also support

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 12 of 17
idea presented by De Witte [12] and Caroli and Godard [62] claiming that the perceived
job insecurity has a positive impact on the mental issues of the employees. An empl
cannot function properly if they are psychologically stressed and feel that their job i
secure [9].
Second, economic stability is an essential factor in the growth of any sector, an
economic crisis is a state when employees are adversely affected and creates a perce
that their job will not be secured.In line with this notion,the present study has also
observed a positive relationship between fear of economic crisis on perceived job insec
which confirms the findings of Kalleberg [37]. Previous studies consider employability
a significant predictor of job insecurity, and low employable employees are more lik
to perceive job insecurity [31]. Our findings are also in line with the previous studies.
These results validate the mediating role of perceived job insecurity between fear o
nomic crisis and employee mental health. Similarly, employability helps the employees
more secure about their jobs even during the crisis period [54]; however, non-employability
increases the perceived job insecurity that adversely affects the employee mental hea
Thirdly, the idea that makes this research unique is to test the moderating role of
COVID-19 between direct and indirect relationships. The present study also concludes
the fear of COVID-19 moderates the direct connection of fear of economic crisis on m
health, supporting the results of French [47]. The effect of fear of economic crisis on mental
health through perceived job insecurity is also stronger when employees have a higher
of COVID-19. Due to the pandemic, the fear of perceived job insecurity has increased42],
thus adversely affecting the employees’mentalhealth [43]. This situation motivates
the scholars,policy-makers,and socialscientists to explore the in-depth relationship
of fear of economic crisis,perceived job insecurity and employees mentalhealth. In
line with explaining the moderating role of fear of COVID-19, we have plotted the t
different interaction graphs that comprehend the effect of moderating variable in a b
way. Figure 2 explained that the relationship of fear of economic crisis and perceive
insecurity strengthened when fear of COVID-19 is high among the employees.Figure 3
also validates the effect of the interaction term (fear of economic crisis*fear of COVID
on mental health through perceived job insecurity.
In the end, we conclude that the fear of economic crisis and non-employability
hances the perceived job insecurity among the employees and is becoming the root c
for the various psychological problems such as stress, depression, anxiety, and uncert
during COVID-19 outbreak.It also increases the attention of the management toward
the adoption of technological skills and innovative ideas that lead toward a new era
digital development [63]. This new advancement suggests the utilization of robotic tech
nology and suggests the application of artificial intelligence that transforms the exi
structure of the hospitality industry, which is in fact the need of the current situati
COVID-19.Finally, this study discusses the implications for the scholars, manageme
and employees, addresses the limitations, and provides future directions to the researc
in the next section.
Open Innovation in Hospitality Industry
Innovation is considered as a source for gaining the competitive advantage for
organizations [64]. It is also a necessity to improve the performance of the companies
especially for the service sector.The present research highlighted the importance of
innovation for the survival of hospitality industry in the current age.It is believed that
the hospitality industry may have to switch toward innovative business strategies rat
than a traditional business model to gain the trust of its customers and provide the
with a safe experience. Although the world was already shifting toward e-business
e-commerce, this pandemic has further forced the development of open innovation in
hospitality industry.Open innovation in the hospitality industry has been an imminen
field of advancement [65]. Research explicitly states the importance of open innovation i

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 13 of 17
the manufacturing and services sector, but there is clear evidence of a lack of rese
the hospitality sector [66].
The current study focused on the impact of fear of economic crisis and non-employ
on the perceived job insecurity and eventually on the mental health of the employees
COVID-19 in the hospitality sector of Pakistan. One of the major implications drawn
the results was that this pandemic has done much harm to this industry.Customers will
take time to gradually build up trust and start their routine with outdoor activities.
the hospitality sector should be ready, and if this sector wants to survive and again
competitive edge, then it needs to adapt to the open innovation and provide customer
an environment that is safe and has less human interaction.
6. Conclusions
The current study sheds light on how the fear of COVID-19 can impact the men
health of the employees of the hospitality industry by collecting data from 372 emplo
It further empirically investigated the effect of fear of economic crisis and non-employa
on mental health through perceived job insecurity. Results show that perceived job
curity mediates the relationship of fear of economic crisis, non-employability, and me
health. However, the moderating role of fear of COVID-19 is confirmed only in the dir
relationship of fear of economic crisis and mental health and also on its indirect pa
through perceived job insecurity.Our findings provide a guideline to the management
of hospitality industry on how to deal with the employee mental health issues by copi
with the fear of crisis that is important for designing the strategies of effective emp
management.It also encourages the industry to adopt technological infrastructure f
maximizing their profitability in the present era of advancement.
6.1. Implications
The present study enriches the existing knowledge in the field of behavioral stu
ies. It also suggests many practical implications for the management of the hospita
industry to cope with the employee mental health issues and emphasizes the adopt
of technological infrastructure to enhance their revenues.The significant implications
of the study are as follows.Firstly, it contributes to the existing literature of employee
well-being by examining the influence of macro-level factors such as fear of econom
crisis and non-employability on the micro-level psychological factors such as perce
job insecurity and mental health of the employees in the hospitality industry of Pakist
Secondly, it will guide the organizations to manage their employees during the crisis p
It highlighted the need to understand the psychological factors and emphasized tha
management wanted to increase the employee’s performance, they must give importa
to the psychological aspects,stimulate optimism,and create a positive atmosphere to
promote employee well-being.
Thirdly, from a practical perspective, the focus of the employers is usually on p
generation; however, specifically in the hospitality industry, where the employees ha
interact with customers and provide them with services, then the mental health of emp
ees should be given priority. Fourthly, this research might help the organizations deal
the employees’ non-employability threat by providing them with training and keepi
them up to date with advanced knowledge practices. Finally, this study highlighted
need for digital infrastructure investment in the hospitality industry. Consumer beha
will be expected to change after the COVID period. Consumers will prefer less in-per
interaction in hotels with greater hygiene standards. These customers’ expectation
eventually lead toward a structural shift, where investment in technology will beco
necessity not for engaging the customers but also for the well-being of the employees
6.2. Limitations and Future Recommendations
This study has faced certain limitations that are important to incorporate to enha
the research scope. First, we have collected the data from the employees of the hosp

J. Open Innov. Technol. Mark. Complex. 2021, 7, 30 14 of 17
industry only, making it difficult to generalize the findings on other industries. Secon
limitation of the study is that it takes into account only cross-sectional design, becaus
study explores relationships around which scholars are still discussing to establish
direction. For instance, some studies confirmed that employability predicts job insecu
but some others found job insecurity to predict employability (see: Cuyper, Broeck67]).
Similarly, the initial level of mental health could impact the fears of economic crisis
COVID-19 is still debatable.These guidelines may open new horizons for the future
researcher so that they might be considered in the future.
Third, in this research, perceived job insecurity is considered as a mediator; how
it is suggested to the future researchers to use a different mediator such as scarce soc
port, job stress, and future career anxiety in the same model to get a better understand
the relationship between fear of economic crisis, non-employability, and mental health.
fourth limitation can be the transition in the conditions, at the time of preparing this ar
Since data were collected when fear of COVID-19 was at a peak, other related condit
such as lockdown and quarantine prevailed at many places. Thus, prior literature sho
that a high fear level may lead to a different outcome [68]. Previous studies also highlight
that such fear increases the social and professional trauma, leaving employees with
other choice than to face financial and mental stress [69].
Fifth, fear of COVID-19 is a new construct in the literature. Therefore, it is sugge
that future researchers should test our model in the context of other countries to vali
or contradict the current results.Furthermore, it is proposed to conduct a comparative
study and investigate the effect of fear of COVID-19 across diversified age groups, ge
and employment status. Sixth, this study only discusses the economic and psychologi
factors associated with employees’ mental health.It does not cover the organizational
perspective during the crisis period, which strategies organizations are adopting to
with the situation by satisfying employee needs and enhancing profitability; that ar
open for the future researchers for further investigation. Finally, this research is bas
the self-reported questionnaire collected at one point in time; therefore, the generaliza
of the findings might be questionable.That is why it is recommended that the future
scholar use a longitudinal research design to confirm the current results’ consistency
Author Contributions: Conceptualization, K.I.K. and A.N. (Adeel Nasir); methodology, M.I.K
A.N. (Amna Niazi);software,K.I.K. and M.I.K.;validation,M.H.,A.N. (Amna Niazi),and A.N.
(Adeel Nasir); formal analysis, K.I.K.; investigation, M.I.K.; resources, M.H. and A.N. (Adeel N
data curation,M.I.K.and A.N.(Amna Niazi);writing—original draft preparation,K.I.K.,A.N.
(Amna Niazi), and A.N. (Adeel Nasir); writing—review and ed-iting, M.H., and M.I.K.; visualizatio
A.N. (Adeel Nasir); project administration and supervi-sion, K.I.K. All authors have read and agre
to the published version of the manuscript.
Funding: This research received no external funding.
Informed Consent Statement:This study was carried out through the approval of the Departmental
Committee of Professional Ethics FAST School of Management, National University Lahore Cam
Pakistan, in accordance with the Declaration of Helsinki. Informed consent was obtained fr
individual participants included in this study.
Data Availability Statement: Data is available, and can be provided on request.
Conflicts of Interest: The authors declare no conflict of interest.
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