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Enterprise Resilience in Bangladash 328 International Journal of Mass Khan & Sayem: Enterprise Resilience in Bangladash International Journal of Mass Emergencies and Disasters November 2012, Vol. 30, No. 3, pp. 328–356. Resilience of Small Scale Enterprises to Natural Disasters: A Study of a Flood Prone Area in Bangladesh Mohammad Aftab Uddin Khan International Federation of Red Cross and Red Crescent Societies Graduate Institute of International and Development Studies, Geneva, Switzerland Amir Mohammad Sayem Independent Researcher, Dhaka, Bangladesh Email: [email protected] Abstract The study investigated the level of resilience of, and identified factors affecting resilience in, small scale enterprises. A cross sectional survey was carried out with a sample of 254 micro entrepreneurs in a subdistrict of the Sirajganj district in Bangladesh. To investigate different sorts of business resilience, we developed several items for each scale. Results indicate that the items in each of the capital-based resiliences are reliable and valid, suggesting that the capital-based approach developed by Mayunga (2007) can be used to further test validity and reliability. Multivariate regression analysis revealed that several factors had significant impact on different sorts of capital-based resilience. Although there was variation in capital specific resilience, education, monthly income, number of years of engagement in the current profession, number of employees, type of market, monthly income through revenue or disposal before disaster, loan received prior to disaster, and perception of recovery dynamics all had significant impact. The study concluded with theoretical and applied implications of the findings. Keywords: Resilience, small enterprises, flood, Bangladesh. Introduction Recent catastrophic events—the tsunami earthquake in Japan in 2011, the devastating earthquake in Haiti and Chile in 2010, the catastrophic flood in Pakistan in July 2010, Cyclone Nargis in Myanmar in 2008, the tropical cyclone Sidr along the coastal areas of Bangladesh in 2007, Hurricane Katrina along the U.S. Gulf Coast in 2007, and the devastating Indian Ocean Tsunami in 2004—are stark reminders of the global significance of natural hazards and their impact on the socioeconomic vulnerability of 328 Khan & Sayem: Enterprise Resilience in Bangladash populations, a vulnerability aggravated in many cases by climate change. Data suggest that the number of victims rose from 198.7 million in 2000 to 217.3 million in 2009 (Guha-Sapir et al. 2010). Natural disasters cause billions of dollars’ worth of damage, a figure that varies grossly from region to region. Data from Guha-Sapir et al. (2010) indicate that, in terms of monetary value, total damage sustained by the Americas was the highest (US$56.84 billion), followed by Asia (US$34.76 billion), Europe (US$17.70 billion), Australia and Oceania (US$14.51 billion), and Africa (0.06 billion). The same report also reveals that Asia’s share of global damages in 2010 (28.1%) was below its 2000 to 2009 share of 39.8%. Damage in Europe accounted for 14.3% of global reported damage in 2010, while Oceania’s share amounted to 11.7%, with damage in Africa accounting for only 0.05% of global economic damage from natural disasters in 2010, marginally less than its 2000 to 2009 share of 1.2%. Disaster often results in the region or locality being severely affected. Tierney and Nigg 1995) found that one consequence of floods in the city of Des Moines was that of lifeline disaster. The survey indicated that flooding caused power outages that affected 35,000 households as well as the entire downtown business district, leaving a total of 300,000 residents without potable water or electric power. A total of 80% of the businesses in Des Moines reported being without water due to the flooding. Although only some parts of the community experienced direct flood damage, damage to the city’s water treatment and sewage facilities affected the entire community, and flood related electricity service interruptions were extensive. Loss of critical lifeline services, particularly water, was the main cause of business closure in the affected region. Each year, small businesses in nations around the world suffer major losses as a direct consequence of natural disasters such as earthquakes, severe storms, and flooding. Evidence indicates that in most communities it is small businesses that are the major employers, and that the losses caused by disasters often result in these businesses closing (Alesch, Holly, Mittler and Nagy 2001). It has been recognised that businesses play an important socioeconomic role in community functioning by providing products and/or services, and employment opportunities, and represent an important source of revenue via the taxes they pay (Cochrane 1992). Despite this, disaster research has thus far had a propensity to focus on families, households, and government agencies (Burby 1998; Tierney, Lindell, and Perry 2001) rather than businesses. Earlier research emphasised the need to understand the reason behind the failure of small businesses to devise ways to prepare for, and eventually recover from, natural disasters (Alesch et al. 2001). Of even greater importance, however, particularly in regard to the development of suitable protective measures, may be the resilience of such companies in the face of natural disaster. Response to disasters before, during, and after they occur is a matter of both hazard and disaster management practice and public policy at national and international level. Survivors face the arduous task of rebuilding at personal, structural, and economic levels. 329 Khan & Sayem: Enterprise Resilience in Bangladash In general, part of the rebuilding process is discharged via a combination of foreign and domestic humanitarian relief aid. Yet, despite tremendous effort on the part of governments, as well as international and national humanitarian and development agencies, the actual impact and proper focus of post disaster economic recovery strategies remain somewhat uncertain from an empirical point of view. Since the 2004 Indian Ocean tsunami, donors have become aware that such strategies should place greater emphasis on the rehabilitation of the local economy (Bennett et al. 2006), thereby re- empowering beneficiaries without delay, personally and economically. The very concept of disaster resilience and livelihood recovery gained wide interest among scholars and practitioners in the wake of the 2004 tsunami, becoming popular after the adoption of the Hyogo Framework for Action 2005–2015: Building the resilience of nations and communities to disasters (Manyena 2006). Given that in the field of post disaster livelihood and economic recovery management scientific knowledge and practical experience are both very limited, it is unlikely that the challenges that lie ahead will be fully met in the short term, especially in the developing world (Sahni and Ariyabandu 2003; Seck 2008). Studies show that the creation and sustainable development of new microeconomic and small business activities, even more so in vulnerable developing countries, is the result of a complex chemistry of enabling factors, which can be delivered neither by local government nor foreign donor agencies alone (Runyan 2006). Such chemistry, however, is far less attainable in the unstable, abnormal circumstances generated by natural disasters and/or violent crises, the urgent need to create employment and income generating activities as rapidly as possible notwithstanding (ILO 2005). Business sustainability after a natural disaster is complex and multidimensional, and several authors report that the same depends not only on assistance, but also on the company concerned, local community systems, market structures, and the pattern of interactions between family members. In developing countries small businesses, largely family run, are often conducted from the family residence (Rose and Liao 2003; Rose, Oladosu, and Liao 2005; Webb et al. 2000). The greater the support from family and social or community networks, the greater the resilience and long term sustainability after a disaster. Concept of Disaster Resilience Timmerman (1981) is credited with being the first to use the concept of resilience in relation to hazard and disaster (Klein et al. 2003). Timmerman (1981) defines the term as the measure of a system’s capacity, or part thereof, to absorb and recover from hazardous events (Klein et al. 2003). Subsequent to the work of Timmerman (1981), although numerous definitions of the concept of resilience in the field of hazard and disaster have emerged, no consensus among researchers and practitioners on one common definition has yet been reached. The majority of authors use capacity or ability to define disaster 330 Khan & Sayem: Enterprise Resilience in Bangladash resilience, in effect equating the notion of resilience with the capacity or ability of people, individually or collectively, to cope with disaster (Mayunga 2007). Other authors, however, define disaster resilience in terms of the speed with which such people recover from disaster, an aspect that gave rise to several studies being conducted (Rubin 1991; Rubin et al. 1985; Dahlhamer and Tierney 1998). As units of analysis in disaster research, businesses/enterprises have only recently begun to be studied (Rodriguez et al. 2007). Researchers studying the economic impacts of disasters have tended to focus on units of analysis larger than individual firms and enterprises, such as community and regional economies. Until very recently,
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