Do business strategies affect firms' survival during the COVID-19 pandemic? A global perspective

Abstract

PurposeThis study examines the survival probability of the firms during the COVID-19 pandemic and identifies the effects of pandemic-era business strategies on firm survival across sectors and sizes.Design/methodology/approachThis study combines World Bank Enterprise Survey data with three consecutive follow-up COVID-19 survey data. The COVID-19 surveys are the follow-up surveys of WBES, and they are done at different points of time during the pandemic. Both WBES and COVID-19 surveys follow the same sampling methods, and the data are merged based on the unique id number of the firms. The data covers 12,551 firms from 21 countries in different regions such as Africa, Latin America, Central Asia and the Middle East. The study applies Kaplan–Meier estimate to analyze the survival probability of the firms across sectors and sizes. The study then uses Cox non-parametric regression model to identify the effect of business strategies on the survival of the firms during the pandemic. The robustness of the Cox model is checked using the multilevel parametric regression model.FindingsThe study's findings suggest that a firm's survival probability decreases during the pandemic era. Manufacturing firms have a higher survival probability than service firms, whereas SMEs have a higher survival probability than large firms. During the pandemic period, business strategies significantly boost the probability of firm survival, and their impacts differ among firm sectors and sizes. Several firm-specific factors affect firm survival in different magnitudes and signs. Except in a few cases, the findings also indicate that one strategy positively moderates the influence of another strategy on firm survival during a pandemic.Originality/valueCOVID-19 pandemic has drastically affected the business across the globe. Firms adopted new business processes and strategies to face the challenges created by the pandemic. The critical research question is whether these pandemic-era business strategies ensure firms' survival. This study attempts to identify the effects of these business strategies on firms' survival, focusing on a comprehensive firm-level data set that includes firms from different sectors and sizes of countries from various regions.

Tax planning and financial default: role of corporate life cycle

“…Many studies on RBV have focused on firms' resource management across their life cycle and how managers obtain and use resources to improve performance and avoid financial defaults (Trahms et al. , 2013; Zahra, 2021; Islam and Fatema, 2023). Warnier et al.…”

“…This study extends our current understanding of this aspect by exploring the moderating role of firms' life cycle stages in the relationship between default likelihood and tax planning. In this sense, it has the potential to complement the recent literature on firm's failure and survival under specific conditions (Islam and Fatema, 2023; Paeleman et al. , 2023) and in specific life cycle stages (Mota et al.…”

“…Many studies on RBV have focused on firms' resource management across their life cycle and how managers obtain and use resources to improve performance and avoid financial defaults (Trahms et al, 2013;Zahra, 2021;Islam and Fatema, 2023). Warnier et al (2013) suggested that resource management research should not be limited to investigating strategic resources; it should be extended to a broader set of resources, such as cash resources, which are usually underexplored.…”

“…Finally, our study suggests to managers that tax planning may complement other strategies aimed at ensuring firm's survival. It also provides a quantitative estimate of the magnitude of the tax-planning effect on the firm's survival, holding great significance for managers and stakeholders (Mota et al, 2022;Islam and Fatema, 2023).…”

“…Tax planning is a resource-generating activity for most businesses (Edwards et al, 2016;Hanlon and Heitzman, 2010). However, RBV scholars have only recently acknowledged it as a resource-generating strategy (Hasan et al, 2017), overlooked when investigating the firm's survival likelihood in distress conditions (Islam and Fatema, 2023).…”