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Resilience, Performance and Strategies in Firms’ Reactions to the Direct and Indirect Effects of a Natural Disaster

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Abstract

This work investigates the impacts of the 2012 Emilia-Romagna earthquake and looks at the capacity of the regional economic system to adapt to the shock generated by the seismic event. We contribute to the literature by distinguishing two different effects: direct (i.e. damages to production factors of the focal firm) and indirect effects (e.g. disruptions that affected industrial and business partners). The original dataset used and the chronological sequence of the information allow us to provide insightful evidence. The analysis of the two related effects generated by the same shock provides insights on the overall capacity of a regional system to adapt. Namely, the indirect damages appear as relevant as the direct damages, especially when looking at indicators of firm performance. In addition, indirect impacts are also relevant in shaping firm strategies and thus firm resilience.

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Notes

  1. We do not confine our review to those studies concerning earthquakes, but we also focus our attention on other kinds of natural disasters. This because of two main reasons: 1. the analysis of earthquakes’ economic consequences are of a relative scarce number, also because of the usual low frequency of these events; 2. the damages caused by different natural disasters produce similar, if not the same, effects on the economic systems.

  2. Other studies reporting negative consequences for economic growth are Otero and Marti (1995), Crowards (2000), Charveriat (2000), Murlidharan and Shah (2001), Freeman et al. (2002), Mechler (2004), Hochrainer (2006), Raddatz (2007), Crespo-Cuaresma et al. (2008), Noy (2009) and Okuyama (2009).

  3. Cavallo and Noy (2009) come to similar conclusions also in the long term, as listed for large disasters, in terms of the distribution of direct damages caused by the natural disasters.

  4. Crespo-Cuaresma et al. (2008) come to the same conclusion, but it is limited to high (per capita) income countries.

  5. See Modica and Reggiani (2015) for a thorough literature review.

  6. The acronyms can be translated as follows, although for some categories there are no equivalents in English: SPA = Società Per Azioni = Joint Stock Company; SRL = Società a Responsabilità Limitata = Limited Liability Company; SAPA = Società in Accomandita Per Azioni = Limited Partnership Joint Stock Company; SNC = Società in Nome Collettivo = General Partnership Company.

  7. To further reduce the reverse-causality problem, when the questionnaire was administered, respondents were explicitly asked to refer to the post-seismic period of 2012, that is, after May 2012.

  8. See the seismic risk map produced by the Italian Department for Emergency Prevention and Management (Protezione Civile): www.protezionecivile.gov.it/resources/cms/documents/A3_class20150416_r.pdf (last accessed Nov 2020)

  9. In an ancillary unreported regression (whose results are available upon request), we tested the effect of direct and indirect damages on the adoption of risk management measures in the immediate aftermath of the earthquake (the period from 2012 to 2013). Results show that in addition to direct damages a main driver is the previous adoption in the period from 2010 to 2011 of similar measures. Risk management thus appears persistent behaviour of the companies.

  10. The number of used observations in our specifications is not 554 for two main reasons: (1) the calculation of the human capital variable as the ratio of white-collar workers to blue-collar workings and (2) the presence of missing values in the variables used in our specifications.

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Authors and Affiliations

  1. Department of Economics and Management, University of Ferrara (IT), Ferrara, Italy

    Davide Antonioli

  2. Gran Sasso Science Institute, Social Sciences, L’Aquila, Italy

    Alberto Marzucchi & Marco Modica

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  1. Davide Antonioli
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  2. Alberto Marzucchi
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  3. Marco Modica
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Correspondence to Marco Modica.

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Antonioli, D., Marzucchi, A. & Modica, M. Resilience, Performance and Strategies in Firms’ Reactions to the Direct and Indirect Effects of a Natural Disaster. Netw Spat Econ 22, 541–565 (2022). https://doi.org/10.1007/s11067-021-09521-0

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