Publication: Masters of Disasters: The Heterogeneous Effects of a Crisis on Micro-Sized Firms
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Date
2023-08-30
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Published
2023-08-30
Author(s)
Brucal, Arlan
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Abstract
Most crises have a disproportionately larger negative effect on micro-sized firms. Yet, the heterogeneity of impact within micro-sized firms is lesser known. Using five waves of the World Bank's Business Pulse Survey data, this paper finds that firms with zero to four employees have a much larger drop in sales and slower recovery rate compared to micro-sized firms with five to nine employees. The overall differences in the resilience between the two groups of micro-sized firms could potentially be due to a uniformly lower productivity level of firms with zero to four employees. Within the two groups of micro-sized firms, resilience is correlated with their liquidity position, managerial attitudes as well as their abilities. Using discriminant analysis, this paper confirms that a significant proportion of micro-sized firms mimic the behavior of larger firms in terms of their resilience to shocks and could potentially be “misclassified” as micro-sized. These findings have important implications for targeting and tailoring support for enhancing businesses' resilience to shocks.
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“Brucal, Arlan; Grover, Arti. 2023. Masters of Disasters: The Heterogeneous Effects of a Crisis on Micro-Sized Firms. Policy Research Working Paper; 10556. © World Bank. http://hdl.handle.net/10986/40302 License: CC BY 3.0 IGO.”
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