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Rationally bounded in a storm of complex events: Small businesses facing natural hazard resilience during a pandemic

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Listed:
  • Jennifer F. Helgeson

    (Applied Economics Office (AEO), National Institute of Standards and Technology (NIST), USA)

  • Juan F. Fung

    (Applied Economics Office (AEO), National Institute of Standards and Technology (NIST), USA)

  • Alfredo R. Roa-Henriquez

    (Applied Economics Office (AEO), National Institute of Standards and Technology (NIST), USA
    Johns Hopkins University)

Abstract

High-level economic estimates of disaster events typically report upon direct losses and do not capture indirect and longer-term impacts. In turn, these indirect and longer-term losses map to vulnerabilities that limit the decision sets available to agents seeking to manage current and future disruptive events, especially when these events are complex in nature. Herein we introduce the importance of considering agents' learning, agency, and flexibility (LAF) when providing support (financial and in-kind) aimed to enable agents to increase resilience capacity. Examples are drawn from a national survey conducted by agencies in the U.S. Department of Commerce (DOC) to better understand decision-making of owners and managers of micro-, small-, and medium-sized enterprises (MSMEs) faced with natural disasters and other concerns in the context of COVID-19. Little has been written from a behavioral economics perspective about MSMEs even though impacts on MSMEs have important implications given their critical role in the economy. Initial findings from this survey support the claim that LAF are key attributes of resilience capacity, especially relevant when considering complex events.

Suggested Citation

  • Jennifer F. Helgeson & Juan F. Fung & Alfredo R. Roa-Henriquez, 2020. "Rationally bounded in a storm of complex events: Small businesses facing natural hazard resilience during a pandemic," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 4(S3), pages 55-65, December.
    • Handle: RePEc:beh:jbepv1:v:4:y:2020:i:s3:p:55-65
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    References listed on IDEAS

    as
    1. Fairlie, Robert W., 2020. "The Impact of COVID-19 on Small Business Owners: Evidence of Early-Stage Losses from the April 2020 Current Population Survey," IZA Discussion Papers 13311, Institute of Labor Economics (IZA).
    2. Robert W. Fairlie & Alicia M. Robb, 2007. "Why Are Black-Owned Businesses Less Successful than White-Owned Businesses? The Role of Families, Inheritances, and Business Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 25(2), pages 289-323.
    3. Ajzen, Icek, 1991. "The theory of planned behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 50(2), pages 179-211, December.
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    5. Martina K. Linnenluecke & Andrew Griffiths & Monika Winn, 2012. "Extreme Weather Events and the Critical Importance of Anticipatory Adaptation and Organizational Resilience in Responding to Impacts," Business Strategy and the Environment, Wiley Blackwell, vol. 21(1), pages 17-32, January.
    6. Raquel Sanchis & Luca Canetta & Raúl Poler, 2020. "A Conceptual Reference Framework for Enterprise Resilience Enhancement," Sustainability, MDPI, vol. 12(4), pages 1-27, February.
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    Cited by:

    1. Michelle Baddeley, 2020. "COVID-19 2020: A year of living dangerously," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 4(S3), pages 5-9, December.

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    More about this item

    Keywords

    agency; business resilidence; flexibility; learning; Micro-; Small-; and Medium-sized Enterprises (MSMEs);
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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