Resource Sharing: An Empirical Analysis of Firms’ Resilience Through Resource Dependence Theory

Abstract

According to the Federal Emergency Management Agency (FEMA), around 40% of small businesses never reopen following a disaster and around 90% of firms that do reopen, fail within a year unless they can resume operations within 5 days. Nonetheless, firms can hasten their recovery and increase their survival chances by implementing resilience actions or tactics after a disaster begins. Given that business interruption losses are usually not eligible for public assistance programs, the type of action to be implemented is a strategic decision and will likely depend on some particularities of each business and the market in which it operates. This paper examines one of these resilience tactics – resource sharing – from the perspective of Resource Dependence Theory. By using a unique dataset collected from responses of businesses affected by Superstorm Sandy and Hurricane Harvey and by specifying a sample selection model, this study provides novel conclusions indicating that there is unobserved heterogeneity that explains the strategic decision-making of firms in the post-disaster and that those firms that are more likely to resource share are also the ones that exhibit higher economic resilience. Implications of these findings, complications and future research are discussed.