To that end, the Department of Economic Development (MED) commissioned a module for this year's BusinessSMEasure survey, which aimed to capture the impact of the Canterbury earthquakes on small businesses in New Zealand. Furthermore, the results showed a high degree of variability in the impact of the Christchurch earthquakes on small and medium-sized enterprises both within and outside the Canterbury region. As Table 6 shows, 91 percent of respondents were of New Zealand European descent, indicating that several ethnic minority groups are underrepresented in the sample (although Māori are adequately represented; it is Asian groups that are underrepresented).
A BOUT THE FIRM
Slightly more than a quarter of the firms (27 percent) were manufacturing firms and a similar percentage of firms were service firms (29 percent). Eighteen percent of companies operated in the wholesale or retail sector, with the remainder coming from primary production (15 percent) and construction (11 percent).
A BOUT THE FIRMS ’ PERFORMANCE
Regarding indebtedness, 34 percent of respondents reduced their debt in the past 12 months, while 45 percent reported stable debt levels. Twenty percent of the respondents increased their companies' indebtedness in the last 12 months. Regarding the number of employees, only 17 percent of respondents increased the number of employees in the last 12 months, while 24 percent decreased them.
This study followed the OECD's broad definition of innovation (2005) which includes the following four categories: “the implementation of a new or significantly improved product (good or service), or process; a new marketing method; or a new organizational method in business practice; workplace organization or external relations”. Results showed that in the past twelve months, 22 percent of companies reported product innovation, 16 percent process innovation, 20 percent organizational innovation and 24 percent marketing innovation. Total innovators (at least one innovation activity) 546 48 Table 16: Percentage of respondents who reported innovation activity in the last twelve months.
Of these firms, 57 percent reported that exporting accounted for less than 10 percent of their annual turnover, 13 percent reported that it accounted for 11 to 25 percent of their annual turnover, and 13 percent that it accounted for 26 to 50 percent of their annual turnover. . Seventeen percent of companies reported that exports accounted for more than 50 percent of their annual turnover.
C RISIS EXPERIENCE
Only a minority of respondents (8 percent) thought the crisis had no potential for harm, while about a third of respondents each considered the event to be moderately harmful or even severely harmful. Just under a quarter of respondents perceived the crisis to have the potential for extreme harm. The respondents were asked another question in relation to how serious the crisis was for their company.
While the previous question identified the potential damage the event may have caused, this question assesses the actual disruption the crisis has caused to business operations. Regarding the seriousness of the crisis for business, only 13 percent of respondents were not challenged by the crisis and treated it as part of business as usual. While most respondents felt they were challenged by the crisis, the extent of business disruption varied.
40 percent of the respondents believe that the crisis is not excessively or only moderately disturbing, while 37 percent assess it as very disturbing or even threatening the company's survival. In addition, we excluded those respondents who answered that the crisis was moderately disruptive, as it can be argued that this category is ambiguous and cannot be clearly defined as resilient or vulnerable.
C RISIS PLANNING
Due to the small numbers of the Canterbury sub-sample for this question, regional differences are not interpreted. Results showed that businesses in Canterbury differed significantly from businesses in other regions in two of the three planning indicators: proactive posture and recovery priorities. Furthermore, they demonstrated a greater understanding of the relationships and resources that the organization may need to access from other organizations during a crisis, and planning and managing to ensure this access.
In the case of company location, we found a weaker but still significant (p<10 percent) connection with the experience of a crisis. Binary logistic regression was used to assess the effect of each of the previously described variables on the crisis experience. Overall, the results show that, in addition to the physical location of the business, the approach to planning and preparedness and the age of the owner-manager are the strongest predictors of small business crisis experiences.
The results showed that of the firm characteristics examined, only firm performance in the past 12 months was related to resilience. Similarly, both of the owner-manager characteristics examined (i.e., gender and age) did not affect small business resilience.
I MPACT ON SMALL BUSINESS OPERATIONS
We further asked respondents four questions to measure their awareness of potential threats to business continuity, such as the level of insurance, finance and neighboring businesses, whether they can operate or not. Overall, just over half of the small businesses in our sample believe that their business could continue even if surrounding businesses were unable to operate, or that they would have sufficient funds to cover temporary disruptions if surrounding businesses were unable to operate. The only area where responses were significantly different was in relation to respondents' perception of whether their current level of insurance would protect the business if it were unable to operate for three months.
Small firms in other regions were therefore clearly more optimistic that their current level of insurance would protect their business in the event of disruption to their operations. The larger the firm, the more likely it was that they believed they had sufficient funds to resume operations in the event of physical damage to their business or to cover temporary disruption and that their current level of insurance would protect their business. If the business could not operate for three months, I believe that our current level of insurance would protect the organizations.
If the business sustained significant physical damage, we would have sufficient funds to resume operations until our insurance claim was settled. If businesses in the surrounding area were unable to operate, my business would be affected, but we would have sufficient funds to cover a temporary disruption.
I MPACT ON INSURANCE AND BACK - UP PLANS
I had insurance before the Canterbury earthquakes but have now reviewed it and increased its cover. I had insurance before the Canterbury earthquakes but have now reviewed it and reduced the cover. I had insurance before the Canterbury earthquakes but canceled it as the excess made it worthless.
I had a back-up system/plan before the Canterbury earthquakes and have not made any changes to it 545. I had a back-up system/plan before the Canterbury earthquakes but have now reviewed it and 76 adapted it. This greater frequency of such events places greater emphasis on crisis management planning for small business sustainability.
It turned out to be just one, albeit the most devastating, of a series of earthquakes that likely had cumulative effects on the continuity of small businesses, both in the Canterbury region and beyond. This is the first study to examine nationwide small business preparedness, crisis management, and the effects of this sequence of earthquakes.
A HIGH PROPORTION OF BUSINESS OWNERS EXPERIENCING A MAJOR CRISIS
This report examined the preparedness, resilience and responsiveness of small businesses to major crises, whether natural or man-made. In today's world the frequency of major events; whether natural, such as the Christchurch earthquakes, or man-made, such as the Rena disaster, have been increasing. In New Zealand, 2011 saw arguably the biggest natural disaster to affect businesses in the country's history with the devastating earthquake in Christchurch on 22 February.
A number of themes have emerged from this study across all New Zealand SMEs: a high proportion of business owners who have experienced a major crisis; a high degree of vulnerability of small businesses; lack of formal crisis and business continuity planning; a high degree of variation in adaptive capacity, in predictors of crisis experience and in the effects of the Christchurch earthquakes. These themes form the basis of our conclusions, which are discussed in more detail in the remainder of this chapter.
A HIGH DEGREE OF SMALL BUSINESS VULNERABILITY
A LOW LEVEL OF BUSINESS CONTINUITY PLANNING
A HIGH DEGREE OF VARIABILITY IN BUSINESS PROFILE CHARACTERISTICS AS PREDICTORS OF THE LIKELIHOOD OF
A HIGHER BEHAVIOURAL READINESS TO RESPOND TO POTENTIAL CRISES CHARACTERISES R ESILIENT SMES WHO ARE FOUND ACROSS
A HIGH DEGREE OF VARIABILITY OF IMPACTS OF THE
C HRISTCHURCH EARTHQUAKES WITH SME S BOTH INSIDE AND OUTSIDE THE C ANTERBURY REGION
B ELIEF IN BUSINESS CONTINUITY LEVELS WERE RELATIVELY HIGH
From the main conclusions we identify some implications, these should be treated as indicative as further ongoing research will be required to monitor the long-term effects of the Christchurch earthquakes and the response of SMEs to the potential of major crises, whether natural or man-made. The experience of dealing with the after-effects of the Christchurch earthquakes can feed into a national awareness; program with SMEs with examples of business continuity planning and crisis management comparison. While the effects of the Christchurch earthquakes were found to be highly variable across all SMEs, both within and outside the Canterbury region; however, we found that SMEs located in the Canterbury region demonstrated higher measures of resilience behavior than those outside the region.
This may mean that the learning and experiences gained from the impact and aftermath of the Christchurch earthquakes were useful for surviving SMEs. There are lessons to be learned from this unique experience of SME responses in the Canterbury region, changing behavior and dealing with a major natural disaster. There is no doubt that a lot of support has already gone to help SMEs and business survivors in Canterbury as part of the Christchurch earthquake relief and response.
This report has added insights to the known variable impact of natural disasters and crises, further research is needed to examine how SMEs are best prepared and supported to prepare for the increased occurrence of such events. Although natural disasters can be very different, from floods in Queensland to hurricanes in the USA, the effects of such crises on business continuity are similar and there are benefits to be gained through appropriate channels for sharing experience in supporting resilient SMEs.
