Speaker
Description
We investigate effective management strategies for public utilities to mitigate the impact of various external shocks, including disasters, pandemics and financial crises. For public utilities such as transport, energy, water supply and telecommunications, ensuring the stability of their services during emergencies is a critical issue, as their services are essential infrastructure for society. While previous studies have examined resilience in general private enterprises (e.g. Dimitriadis, 2021; Iftikhar et al., 2021: Mao et al., 2023), there is a lack of research in public utilities. The management of public utilities differs from that of general private firms because, as providers of essential services, public utilities are subject to strong social pressure and government intervention to ensure stable service provision. In fact, in emergencies, the recovery of social infrastructure is necessary for the recovery of citizens and general businesses affected by the external shock. Therefore, the resilience of public utilities is critical to the stability of an entire community, and cooperation with government, communities and citizens is particularly important as possible strategies to respond to emergencies in public utilities.
As emergencies with different characteristics require different preparedness and response strategies, we compare three types of emergencies according to the degree of predictability of the recovery process: natural disasters, pandemics, and financial crises. For example, the recovery process for natural disasters is relatively predictable based on past experience, while pandemics are relatively difficult to predict. This means that preparedness plays a critical role in disasters, while ex-post response can be an important strategy in pandemics. While previous studies have focused on a single specific type of emergency, such as financial crises (e.g. Erkens et al., 2012) and COVID-19 (e.g. Mao et al., 2023), generalisation by comparing different types of external shocks has not been sufficiently explored.
Therefore, we construct an empirical model that considers different types of emergencies in the same framework. The empirical analysis is conducted using a dataset of 28 railway operators in Japan from 2005 to 2022, which includes the occurrence of significant events for each type of emergency: the Great East Japan Earthquake, the COVID-19 pandemic, and the 2008 financial crisis. According to Essuman et al. (2020), resilience can be defined as the ability to absorb shocks and recover from disruptions. Based on this, we assume that the preparedness for absorbing shocks can be addressed by proactive measures and the recovery by post-response measures. Therefore, our variables related to possible management strategies include managerial preparedness (e.g. slack resources, risk diversification, and diversified funding), managerial response (e.g. raising funds for recovery), stakeholder preparedness (e.g. governance through government intervention and mutual support mechanisms between operators) and stakeholder response (e.g. government support and social support). Our analysis examines the impact of these strategies on the resilience of operators, measured by the inverse of the deviation of output performance from that of the previous three years.
The preliminary analysis shows that organisational slack and diversification contribute to recovery from external shocks, while the use of short-term debt has a negative effect on recovery. Shareholdings by managers, the state, banks and foreign companies generally have no significant impact on resilience. However, the concentrated structure of shareholdings has a negative impact on the recovery.
Our study identifies strategies that significantly contribute to the resilience of public utilities for three types of emergencies. We therefore provide practical implications for mitigating risks and recovering from shocks affecting social infrastructure. While we focus on the railway industry, our implications can be applied to other public utilities with similar characteristics that provide essential services. The details of the study will be discussed at the conference.
References
Dimitriadis, S. (2021). Social capital and entrepreneur resilience: Entrepreneur performance during violent protests in Togo. Strategic Management Journal, 42(11), 1993–2019. https://doi.org/10.1002/smj.3292
Erkens, D. H., Hung, M., & Matos, P. (2012). Corporate governance in the 2007-2008 financial crisis: Evidence from financial institutions worldwide. Journal of Corporate Finance, 18(2), 389–411. https://doi.org/10.1016/j.jcorpfin.2012.01.005
Essuman, D., Boso, N., & Annan, J. (2020). Operational resilience, disruption, and efficiency: Conceptual and empirical analyses. International Journal of Production Economics, 229. https://doi.org/10.1016/j.ijpe.2020.107762
Iftikhar, A., Purvis, L., & Giannoccaro, I. (2021). A meta-analytical review of antecedents and outcomes of firm resilience. Journal of Business Research, 135, 408–425. https://doi.org/10.1016/j.jbusres.2021.06.048
Mao, Y., Li, P., & Li, Y. (2023). The relationship between slack resources and organizational resilience: The moderating role of dual learning. Heliyon, 9(3). https://doi.org/10.1016/j.heliyon.2023.e14044
| Keywords | Resilience; Public Utilities; External Shock; Disaster Preparedness; Pandemics |
|---|---|
| Best Congress Paper Award | Yes |
