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Honduran Business Resilience Analysis COVID-19

Posted By Dun Grover, ACDI/VOCA, Thursday, April 23, 2020

New evidence on business resilience in Honduras tests 10 hypotheses on how businesses are mitigating, adapting to, and recovering from COVID-19 crisis.

The USAID/Honduras Transforming Market Systems Activity conducted a mobile survey of 1,178 establishments from 17 different economic activities to generate primary data, including objective and subjective measures of the resilience capacities of Honduran businesses to mitigate, adapt to, and recover from the COVID-19 crisis.

The study finds disproportionate impacts of the COVID-19 crisis on certain types of economic activities and some disadvantages to smaller businesses. The evidence suggests a set of resilience capacities that are essentially transformative that are predictive of expected business recovery. In other words, the capacity of businesses to learn from this crisis/shock in order to transform their business models, identify new business opportunities and to innovate is considered significant to their likelihood of recovery.

Hypothesis

Findings

Hypothesis 1: The COVID-19 crisis has impacted enterprises, requiring them to stop or suspend production which would result in laying off and suspending employees.

Findings: 90% of enterprises stopped production and 67% of enterprises did not sell products or services the week of March 30 to April 5 of 2020. Enterprises that stopped production or did not sell were significantly more likely to lay off or suspend employees. This decision is likely a coping strategy in order to avoid closing their operations.

Hypothesis 2: The COVID-19 crisis has a disproportionate impact on some industries more than others with implications on where support should be prioritized for recovery.

Findings: Tourism and manufacturing enterprises, including agro-processors, are more significantly impacted by the COVID-19 crisis and have a shorter expected duration that they can cope with the COVID-19 crisis before closing operations than other enterprise profiles.

Hypothesis 3: Smaller enterprises are less able to cope with the COVID-19 crisis than larger enterprises and will be more likely to lay off or suspend their employees.

Findings: No significant effects were identified by the size of enterprises and whether they laid off or suspended staff. However, microenterprises and small enterprises were significantly less likely than medium or large to have made sales.

 

Hypothesis 4: The COVID-19 crisis has affected enterprises located in some regions of Honduras more significantly than enterprises location in other regions of Honduras.

Findings: There are no significant differences in the effects of the COVID-19 crisis for enterprises located in the different regions of Honduras.

 

Hypothesis 5: Enterprises whose employees are able to telework will be better able to cope with the COVID-19 crisis than enterprises whose employees are not able to telework.

 

Findings: Enterprises that reported employees teleworking also reported being able to cope with COVID-19 crisis for longer duration than enterprises whose employees did report employees teleworking. However, the percentage of employees teleworking varied significantly by economic activity suggesting there are sectoral differences.

Hypothesis 6: Enterprises that sell online are better able to cope with the COVID-19 crisis than enterprises that do not sell online.

 

Findings: Enterprises which sold online were better able to continue selling through the COVID-19 crisis than those that did not sell online. Enterprises with online sales had a smaller decline in percentage change of sales than those enterprises that did not sell online. Microenterprises were less likely to report online sales than larger enterprises.

Hypothesis 7: Enterprises with external financing are better able to cope with the COVID-19 crisis than enterprises that do not have external financing.

 

Findings: No relationship was found between enterprises that had external financing and their ability to cope with the COVID-19 crisis. However, microenterprises are less likely to have financing than larger enterprises. At the same time, enterprises which don´t already have financing are less likely to require additional financing.

Hypothesis 8: Enterprises that are able to adapt their business models to the COVID-19 crisis context are more likely to cope with and recover from COVID-19 crisis

Findings: Half of all enterprises identified specific changes they were making to their business models. Enterprises that are making specific changes to business models express greater confidence in their ability to cope with and recover from the COVID-19 crisis than enterprises that did not identify specific changes that they are making to their business models.

Hypothesis 9: Enterprises that are able to find new buyers and/or adapt their products in response to the COVID-19 crisis are more likely to cope with and recover from the crisis.

Findings: A set of resilience capacities are predictive of whether enterprises are changing their business models and/or have confidence in recovery from the COVID-19 crisis. These resilience capacities are essentially “transformative” and reflect the capacity of enterprises to turn the crisis/shock into new business opportunities, sources of strength or innovation.

Hypothesis 10: Enterprises that were already experiencing shocks or stressors prior to the crisis are less likely to be able to cope with COVID-19 crisis.

Findings: Enterprises which had not recovered from other shocks or stressors were less confident in their ability to recover from the COVID-19 crisis.

 

 

Tags:  COVID-19  Metrics and Research  Resilience 

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Comments on this post...

Mónica Ducoing, Aspen Institute says...
Posted Thursday, April 23, 2020
Great post!
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