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Organizational Resources, Country Institutions, and National Culture Behind Firm Survival

36 Pages Posted: 14 Apr 2021

See all articles by Yu Liu

University of Texas Rio Grande Valley

University of Texas at Dallas

University of Texas at El Paso

University of Texas Rio Grande Valley (UTRGV) (Formerly University of Texas-Pan American) – College of Business Administration

World Bank – Development Research Group (DECRG); World Bank – Development Research Group (DECRG)

Date Written: April 10, 2021

Abstract

We provide one of the first comprehensive and most updated studies on the effects of firms’ organizational resources, country institutions, and national culture on the survival and growth of private firms around the world during the COVID-19 pandemic. Analyzing World Bank Enterprise Follow-up Surveys on COVID-19 that covers 18,770 firms from 36 countries, we document four sets of findings. (1) During the pandemic, firms with favorable organizational resources (i.e., state ownership and affiliation with parent companies) are more likely to survive and grow, whereas firms with foreign ownership or with more financial obstacles are less likely to survive or grow. Firms in countries with a higher per capita income, a lower COVID spread, and a less stringent COVID control policy are more likely to survive and grow. (2) Favorable ownership and parent-company affiliations help cushion the pandemic shock during the pandemic. (3) The relationship between firm characteristics and firm survival/growth is significantly affected by the stringency of a country’s COVID policy. (4) Firm survival and growth are positively related to a country’s cultural tendency in terms of long-term orientation, and are not significantly related to uncertainty avoidance and individualism. The overall country governance quality is negatively linked to the odds for firm survival as well as revenue and employment growth.

Keywords: COVID-19, private firms, firm survival and growth, organizational resources, country institutions, national culture

JEL Classification: G01, G32, G38

Suggested Citation: Suggested Citation

Liu, Yu and Peng, Mike and Wei, Zuobao and Xu, Jian and Xu, Lixin Colin and Xu, Lixin Colin, Organizational Resources, Country Institutions, and National Culture Behind Firm Survival and Growth during COVID-19 (April 10, 2021). Available at SSRN: https://ssrn.com/abstract=3823869 or http://dx.doi.org/10.2139/ssrn.3823869

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