Business Downturn Research Articles

Working, yet not working: Assessing labour underutilization in India

Labour market responses to past business downturns across countries have been ambiguous and paradoxical, including both pro‐ and counter‐cyclical reactions. In the absence of adequate social safety nets, including unemployment insurance, counter‐cyclical employment rates could signal distress rather than productive employment opportunities. Juxtaposing household employment‐ unemployment data with the recommendations of the 19th International Conference of Labour Statisticians on labour underutilization, this article critiques existing data on underemployment in India and calls for the review of data collection methods to better inform labour market policies.

ADOPTION OF I-FINTECH IN PROMOTING SUSTAINABLE ENTREPRENEURSHIP: EVIDENCE FROM SMES IN SELANGOR, MALAYSIA

i-FinTech is devoted to companies or entrepreneurs that combine financial services with recent, advanced technologies that comply with Shariah. However, SME’s usually have limited resources in finance, skilled entrepreneurs, in-house knowledge or management. This study aims to identify whether financial literacy elements influence the adoption of i-FinTech and subsequently lead to sustainable entrepreneurship among Bumiputera SMEs in Selangor, Malaysia. A quantitative technique was employed through the use of 88 surveys distributed using convenience sampling method to Bumiputera SMEs’ entrepreneurs. The data is analysed using mediation analysis through SPSS Process Macro Model 4. The results shows that i-Fintech adoption is positively and significantly influence by financial literacy and digital financial literacy. Contrary, financial management behavior is negatively influence i-Fintech adoption. Further, this study reveals that i-Fintech adoption has a complementary mediation role in the association between financial literacy and digital financial literacy towards sustainable entrepreneurship. This result indicates that Bumiputera entrepreneurs who possess both financial literacy and digital financial literacy are more likely to adopt i-FinTech, and finally end up contributing significantly to sustainable entrepreneurship. The findings should help entrepreneurs, i-Fintech service providers, researchers and regulators to have better understanding of the dynamics between the potential of i-FinTech and sustainable entrepreneurship. It is suggested that SMEs to continue to take advantage of i-fintech in carrying out their business activities to avoid the impact of business downturn and the smooth running of their business.

African agri-entrepreneurship in the face of the COVID-19 pandemic

BackgroundThe African continent is known for high entrepreneurial activity, especially in the agricultural sector. Despite this, the continent's economic development is below expectations, due to numerous factors constraining the growth and sustainability of agricultural SMEs. These constraints have been exacerbated by the COVID-19 pandemic. The purpose of this study was to understand the pathways through which the pandemic affected agri-SMEs, with specific focus on assessing the differentiated effects arising from the size of the agri-SME and the gender of the owner-manager.MethodsData was collected from over 100 agri-SMEs, ranging in size from sole proprietorships with one employee to agri-SMEs employing up to 100 people, in six African countries. Mixed methods were used to analyse the data with changes in business operations arising from changing market access, regimented health and safety guidelines and constrained labour supply assessed using visualisations and descriptive statistics. Logistic regression modelling was employed to determine the set of variables contributing to agri-SME business downturn during the COVID-19 pandemic.ResultsAll surveyed agri-SMEs were negatively affected by COVID-19-associated restrictions with the size of the firm and gender of the owner-managers resulting in differentiated impacts. The smallest agri-SMEs, mainly owner-managed by women, were more likely to experience disruptions in marketing their goods and maintaining their labour supply. Larger agri-SMEs made changes to their business operations to comply with government guidelines during the pandemic and made investments to manage their labour supply, thus sustaining their business operations. In addition, logistic regression modelling results show that financing prior to the pandemic, engaging in primary agricultural production, and being further from urban centres significantly influenced the likelihood of a firm incurring business losses.ConclusionsThese findings necessitate engendered multi-faceted agri-SME support packages that are tailored for smaller-sized agri-SMEs. Any such support package should include support for agri-SMEs to develop sustainable marketing strategies and help them secure flexible financing that considers payment deferrals and debt moratorium during bona fide market shocks such as the COVID-19 pandemic.

The Impact of Covid-19 Pandemic on the Livestock Subsector

The Covid-19 pandemic had an impact on human activities and all sectors globally. This study aims to review the impact of the pandemic on livestock products. Furthermore, data were collected from several literature, websites, national, and international news, relevant to current policies and conditions. The impact on the livestock sub-sector is not measured and includes a decrease in purchasing power and demand for livestock products such as meat, milk, and eggs, decreased profitability, hampered distribution of production inputs such as feed and medicine affect the increasing production costs, veterinary services limitation, hinder the livestock animal and product distribution, disruption on marketing and business downturn. Meanwhile, the positive impact is that farmers created an online-based digital innovation, known as e-commerce, involving product marketing, business, and product diversification. The Government also plays a vital role in demand and price stabilization, which ensures the supply chain sustainability of the products. Therefore, the livestock business can keep running sustainably, especially during the pandemic.

COVID-19 Induced Supply Chain Disruptions and Automotive Industry: A Case Study of Maruti Suzuki India Limited and Mitigation Strategies

The paper analyzed the impact of the COVID-19 pandemic induced supply chain disruptions (SCDs) on the Indian automotive industry (IAI) using a case study of Maruti Suzuki India Limited (MSIL), which share about 50% of automotive market in India and offered mitigation strategies and the SCDs recovery model. The study revealed that the IAI is unlikely to achieve its target for 2021-2022 due to pandemic induced SCDs and MSIL is no exception. The study revealed that in 2019-2020, the MSIL reduced its production several times to adjust dealers’ inventories in view of unprecedented economic slowdown and the prolonged domestic slump in automobile industry. In 2020-2021, MSIL is still facing severe disruption risks caused by the COVID-19 along with other OEMs in India and globally. In the first wave of the pandemic in India, MSIL production was totally halted and domestic sales were virtually zero in April 2020. During the second wave of the pandemic crisis in India, MSIL again experienced a severe fall in production and sales performance due to regional lockdown restrictions and SCDs. The rapid decline in production of MSIL has been mainly due to the pandemic induced lockdown and the SCDs in auto-components and halt in manufacturing activities. Therefore, robust mitigation strategies are needed to recover from the COVID-19 induced SCDs. The suggested model focused on the SCDs and risk management and offered the proactive and reactive responses for speedier readjustment of automotive industry from the COVID-19 pandemic induced SCDs. Ending the COVID-19 era and its impact on SCDs will not only depend on government policies, but also on proactive and reactive risk mitigation measures initiated by the firms. Robust measures should be taken to tackle the current supply chain threats in automotive sector to build the resilience of supply chain systems to safeguard them against business downturns.

Sailing too close to the wind in 1880s Wellington

The 1880s and early 1890s have been widely recognised as a time of depression in New Zealand. While well-known architects with substantial clienteles were generally able to survive the downturn in business, others struggled to make ends meet, showed signs of extreme stress, or occasionally resorted to sharp practices. Few in-depth studies have been able to show the broad spectrum of architects working in Wellington at a particular time as, until recently, it has been extremely difficult to accumulate the necessary data. The introduction of Papers Past has considerably simplified this task. We can now find and assess almost all the architects who made the news in different ways. Although more than 30 men claimed to be Wellington architects in the 1880s, not all of them were working. Some, such as Frank Mitchell, produced relatively large numbers of plans throughout the decade; many others appear to have been less successful, and to have turned their hands to other activities, for better or worse. In this paper we select a few of the more colourful "architects" residing in Wellington in the 1880s. Our candidates range from the aforementioned Frank Mitchell, through to Christopher Walter Worger, who being bankrupted in Christchurch, moved to Wellington in 1889. Leaving no record of any building designs, he had gone to Dunedin by 1906. Another enigmatic character was James Henry Schwabe, who escaped Dunedin and a rather public humiliation for Wellington in the late 1870s. Similarly, we discuss the erratic behaviour of W.J.W. Robinson, also escaping scandal in Dunedin to practise in the capital. Charles Zahl we find making a fleeting visit in early 1887, before absconding with a large sum of investors' money en route to Rio de Janeiro or Britain. We finish with the case of Ernest Wagner, released into the community after a year's hard labour in 1880. He never practised as an architect again - preferring, or being forced, to live as a farmer in the country south of Auckland. The examples we discuss are the exception rather than the rule. Of the bankruptcies recorded at the time, few came from the upper echelons of society. Some architects who were later prominent in Wellington moved offshore to better conditions in Australia (such as Joshua Charlesworth), whereas others such as William Turnbull were protected to some extent in successful partnerships in which they had a junior role.

Volatility in the Raw Materials Market and Risk Mitigation Methods

Companies in the raw materials market operate in a volatile and unstable market. Business downturns exert a particular effecton the level of cash flows and generate insolvency risk among companies, all the more so when crises are driven by objective circumstancesbeyond human control. Being well-versed with these risks, a company should take steps to mitigate the risk of rawmaterials price volatility affecting the planned results in at least the medium term. The subject of this analysis is to point out theinterdependencies between the basic economic categories when it comes to how the steel market functions and the risks stemmingfrom the volatility of the raw materials market. Moreover, it portrays the main financial instruments that can be used to mitigatethe consequences of the risk of movement of raw materials prices.

The Effect of Return on Asset, Debt to Equity Ratio and Company Size on Company Value in Manufacturing Companies in the Food and Beverage Sub-Sector on the IDX for 2014-2018

The purpose of this study was to determine the extent to which the factors of return on asset (RoA), debt-to-equity ratio (DER) and company size have an influence on company value as proxied by PBV (price to book value). The population in this study was food and beverage sub-sector manufacturing companies listed on the Indonesian Stock Exchange (IDX) in 2014-2018. This study included eight companies with a total of 32 data points, and selection was carried out by applying the purposive sampling method. The return on asset, debt to equity ratio and company size simultaneously affected company value, while the return on asset variable individually had a positive and significant effect on company value and the debt-to-equity ratio variable did not. This means that investors usually preferred a low debt-to-equity ratio because their interests are better protected in the event of a business downturn. The company size variable also did not have a significant effect, which means that company size is not a factor that investors consider in investments.
 Keywords: signal theory, trade-off theory, return on assets, debt to equity ratio, company size, company value

Finance and Firm Volatility: Evidence from Small Business Lending in China

The online trading platform Alibaba provides financial technology (FinTech) credit for millions of micro, small, and medium-sized enterprises (MSMEs). Using a novel data set of daily sales and an internal credit score threshold that governs the allocation of credit, we apply a fuzzy regression discontinuity design (RDD) to explore the causal effect of credit access on firm volatility. We find that credit access significantly reduces firm sales volatility and that the effect is stronger for firms with fewer alternative sources of financing. We further look at firm exit probability and find that firms with access to FinTech credit are less likely to go bankrupt or exit the business in the future. Additional channel tests reveal that firms with FinTech credit invest more in advertising and product/sector diversification, particularly during business downturns, which serves as effective mechanisms through which credit access reduces firm volatility. Overall, our findings contribute to a better understanding of the role of FinTech credit in MSMEs. This paper was accepted by Haoxiang Zhu, finance.

The Impact of Plant-Based Non-Dairy Alternative Milk on the Dairy Industry.

Vegetarians have claimed and actively promoted the advantages of plant-based alternative milks as the best option for human nutrition and health, compared to the natural dairy milk. However, numerous scientific evidences and reports have demonstrated that the natural milk possesses more beneficial nutrients and bioactive components than artificially manufactured plant-derived milks. The biochemical and nutritional advantages and functionalities of natural dairy milk cannot be replaced by man-made or crafted plant-based beverage products. On the other hand, the tremendous increase in production and consumption of the plant-based alternative milks in recent years has led a serious business downturn in traditional roles and stability of the dairy industry, especially in the major dairy producing Western countries. Although plant-based milk alternatives may have some benefits on nutrition and health of certain consumers, the plant-derived alternative milks may not overshadow the true values of natural milk. Milk is not a high fat and high cholesterol food as animal meat products. Unlike plant-based alternative milks, natural milk contains many bioactive as well as antiappetizing peptides, which can reduce body weight. It has proven that taking low-fat, cultured and lactase treated milk and dairy products with other diversified nutritionally balanced diets have been shown to be healthier dietary option than plant-based milk/foods alone.

Analysis of Constraints and Opportunities for the Development of Smallholder Coconut Oil Processing Industry in Micro Enterprises Konawe Islands Regency

It is based on the fact that small-scale coconut oil processing in micro-scale businesses is facing serious threats and competition with palm oil produced by large and medium-sized entrepreneurs, resulting in a downturn in business as well as weakening the motivation of coconut farmers to process coconut production into coconut oil. As a result, coconut farmers in their daily lives actually buy palm oil processed by large and medium entrepreneurs, while their businesses are getting worse. In line with this, through this research, an analysis of the obstacles and opportunities for the development of the people's coconut oil processing industry was carried out. The purpose of this study was to analyze the barriers to developing the people's coconut oil processing industry on a micro-scale business and to analyze the opportunities for developing the people's coconut oil processing industry on a micro-scale business. The research method is through a Focus Group Discussion (FGD) to identify obstacles and opportunities for developing the coconut oil processing industry, followed by Analysis Hierarchy Process (AHP) to determine priority problems and priority opportunities that should be carried out by multi-stakeholders for the development of the coconut oil processing industry. The results showed that the priority obstacles to the development of the coconut oil processing industry in micro-scale businesses in Konawe Islands Regency were product marketing problems, financial capital, and business funding problems, production equipment problems, skilled labor issues, raw material problems, micro-business protection policy issues, business organization, and management problems, as well as problems in the use of information technology and innovation. The priority of opportunities for the development of the micro-scale coconut oil processing industry in Konawe Kepualauan Regency is the presence of economic value by-products of coconut oil processing, namely shell charcoal, nata de coco, and coconut coir, there is a tendency for people to consume more coconut oil than consume coconut oil. Palm oil, the existence of a government program to encourage the coconut processing industry, and the nutritional value that is unique to coconut oil. Organizational and business management problems, as well as problems in the use of information technology and innovation. The priority of opportunities for the development of the micro-scale coconut oil processing industry in Konawe Kepualauan Regency is the presence of economic value by-products of coconut oil processing, namely shell charcoal, nata de coco, and coconut coir, there is a tendency for people to consume more coconut oil than consume coconut oil. Palm oil, the existence of a government program to encourage the coconut processing industry and the nutritional value that is unique to coconut oil. Organizational and business management problems, as well as problems in the use of information technology and innovation. The priority of opportunities for the development of the micro-scale coconut oil processing industry in Konawe Kepualauan Regency is the presence of economic value by-products of coconut oil processing, namely shell charcoal, nata de coco, and coconut coir, there is a tendency for people to consume more coconut oil than consume coconut oil. Palm oil, the existence of a government program to encourage the coconut processing industry and the nutritional value that is unique to coconut oil.

Resilient Supplier Selection in Electronic Components Procurement: An Integration of Evidence Theory and Rule-Based Transformation into TOPSIS to Tackle Uncertain and Incomplete Information

The experience of disruptive events causing supply chain vulnerability and business downturns has motivated manufacturing purchasers to consider resilience capability when selecting suppliers. However, this problem is complex, mainly due to difficulties in obtaining precise data on supplier performance. Disruptions are viewed as low-possibility events, leading to incomplete or insufficient evidence to support assessment. A literature review presented in this paper identifies a list of prospective criteria for resilient supplier selection, within the electronics market, considering both quantitative and qualitative aspects in a symmetrical way. A new hybrid methodology, able to handle various forms of uncertain and incomplete data, is proposed to facilitate the supplier selection process. Evidence theory, which suggests the assignment of degrees of belief, instead of traditional probabilities, to expected results, is adopted to construct a decision matrix. The rule-based transformation technique is then employed to transform various forms of the assessment results into a unified format before further aggregation by the modified Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) method. The proposed methodology is tested with a case of resilient supplier selection in a company producing computer hardware components. The proposed decision-making methodology can be applied not only by electronics purchasers but also by practitioners in other industries to logically and straightforwardly model the uncertainty and incompleteness of the available information.

Конкурентный анализ развития интернет-сайта по бронированию жилья Booking.com в условиях спада туристического бизнеса

Конкурентный анализ развития интернет-сайта по бронированию жилья Booking.com в условиях спада туристического бизнеса

Innovation supports for small-scale development in rural regions: a create, build, test and learn approach

Small and medium sized firms' businesses in rural regions typically address a home market and the delivery of niched products. This makes them exposed to business downturns, innovation is thus one way to survive and prosper. Small-scale product development is typically very hands-on, a sort of trial and error process. This experimental way is in favour for the implementation of innovation processes, but one challenge is the limited resources that firms can, or are willing to, spend on innovative work. A challenge is that procedures for organisational learning are lacking in the straightforward approach. The article describes the background and rationale for supporting small-scale manufacturing by introducing a support toolbox for early product development work. The support toolbox's rationale is built upon learning cycles and communicative prototyping which may enhance innovation process capabilities.

When is cash king? International evidence on the value of cash across the business cycle

Precautionary-motive theory implies that corporate cash holdings should be valued at a premium during recessions when uncertainty is high. However, from an agency-conflict perspective, business downturns aggravate agency problems, and investors tend to discount the value of corporate cash holdings during recessions. We test two hypotheses derived from these competing perspectives by examining the value of cash across different phases of the business cycle, using a sample of firms from 41 economies over the 1991–2016 period. Our results show that $1 of cash is valued about $0.67–$0.70 higher during a boom than during a recession, supporting the agency-conflict hypothesis. Our analyses show that this effect is not sensitive to national uncertainty-avoidance tendencies but varies with different levels of investor protection. These results confirm that investors discount the value of cash during recessions due to concerns about severe agency conflicts, and that investor protection mitigates this discount.

Innovation supports for small-scale development in rural regions: a create, build, test and learn approach

Small and medium sized firms' businesses in rural regions typically address a home market and the delivery of niched products. This makes them exposed to business downturns, innovation is thus one way to survive and prosper. Small-scale product development is typically very hands-on, a sort of trial and error process. This experimental way is in favour for the implementation of innovation processes, but one challenge is the limited resources that firms can, or are willing to, spend on innovative work. A challenge is that procedures for organisational learning are lacking in the straightforward approach. The article describes the background and rationale for supporting small-scale manufacturing by introducing a support toolbox for early product development work. The support toolbox's rationale is built upon learning cycles and communicative prototyping which may enhance innovation process capabilities.

Pengaruh Perubahan Penjualan,Capital Intensity Ratio, Debt to Asset Ratio, dan Current Ratio terhadap Cost Stickiness dalam Perusahaan di Bursa Efek Indonesia

This paper attempted to understand the cost behavior known as cost stickiness in Indonesian companies, and the influence of capital intensity ratio, debt to asset ratio and current ratio to cost stickiness. This understanding is expected to shed light into cost behavior during business downturn. The research utilized regression model developed by Anderson, Banker and Janakiraman, to analyze behavior of Sales, General and Adminisitrative cost when there is a decrease of sales.This research used data of companies listed in the Indonesian Stock Exchange as sample for the population of the Indonesian companies. The research did not find evidence of cost stickiness, but discovered indication of relationship between capital intensity ratio, debt to asset ratio and current ratio with cost behavior during sales downturn.

Downward wage rigidity in American technology firms

This study reviews the role of various corporate governance mechanisms to pay for performance in American technology firms. Compared to traditional business leaders, CEOs in technology firms possess stronger power for negotiating with shareholders; such power theoretically lowers the chance of interest conflicts between management and control but may increase CEOs’ wage rigidity during business downturns, especially in firms with poor corporate governance. We evaluate ownership structure; board composition; and the existence of independent compensation committees throughout the dot-com bubble and bubble-burst periods. We aim to examine during the business downturn period whether these CEOs cut their compensation effectively or exercise their negotiation power to protect their own benefit. Our empirical results provide strong evidence that given poor firm performance, CEOs with weak corporate governance negotiate higher cash-based pay rather than reduce their compensations. However, we find that venture capitalists play an important role in monitoring CEOs and revising compensation.

Data Analysis Trumps Specialist Advice: How Direct Banks Function

Abstract Low interest rates and sluggish economic growth are not exactly ideal conditions for the financial services industry. Almost daily we are confronted with reports of inadequate capital bases, declining earnings, and layoffs at banks. But while many traditional retail banks are struggling with a business downturn, the direct bank market is enjoying steady and respectable growth despite a challenging environment. Dr. Schmidberger, Fully Authorized Representative at ING-DiBa Germany, offers us a glimpse behind the curtains of this direct bank. We will learn how data technology is used so that bank customers are (more) satisfied.

Expressway Traffic Demand Forecasts in the Volatile Economic Environment of Greece

The forecasting of expressway traffic demand for existing facilities is not particularly challenging for regions and countries with stable or moderately growing economies. In most cases the objective is to carefully establish a reliable estimate for the average annual growth for the next N years using demographic and macroeconomic inputs. Recent applications for freeways and rural highways in Hawaii indicate that the traditional methods using time series or tracking important trends, such as tourism in Hawaii, work well for horizons between 5 and 20 years. Models relying on growth do not adapt well to substantial decreases in traffic demand. A dramatic case is Greece, where a multitude of changes such as increased fuel taxes, reduced GDP, increased unemployment, increased car registration (or car ownership) taxes, and a collapsed new car market caused substantial reductions of traffic on all toll roads in the country, including the Attica Tollway in the capital city of Athens. Given several series of high quality monthly data from January 2005 to December 2012, a number of estimates and forecasts for Attica Tollway toll transactions were estimated. Toll transactions are a measure similar to average daily traffic. ADT represents a traffic load at a specific location whereas toll transactions are the total daily vehicle entries to the facility. Then the 2013 to mid-2015 actual data were used to evaluate the models. Autoregressive models were employed to arrive at toll transaction forecasts between 2013 and 2024. The models used International Monetary Fund (IMF) and Economist Intelligence Unit (EIU) forecasts of the GDP for Greece, as well as scenarios for future fuel prices. The impacts of the much increased fuel prices and of the economic and business downturns to traffic are obvious and the models capture them successfully. However, errors in the GDP forecasts cause errors in the predicted traffic. The stock market index appears to be a useful leading indicator with a two year lag.