Disasters, Social Commitment, and Firm Resilience

46 Pages Posted: 28 Jun 2024

See all articles by Wenzhi Ding

Wenzhi Ding

Hong Kong Polytechnic University - School of Accounting and Finance

Xu Li

The University of Hong Kong

Qingyuan Lyu

affiliation not provided to SSRN

Date Written: June 21, 2023

Abstract

This study examines whether customers' social commitment helps sustain transactional relationships after disasters, promoting economic recovery. Utilizing the 2011 Japanese earthquake as an exogenous shock and container-level import data, we find that customers with low social commitment cut 24% of suppliers and reduced 30% of containers from Japan after the disaster compared to high-commitment customers. The effects are robust to other two major disasters in 2010s. Low-commitment customers also decreased imports from other high earthquake-risk countries by 10%, while imports from low-risk countries increased by 13%. High social commitment customers stayed with Japanese suppliers despite a 1.8 percentage point lower return on assets and 5.5 percentage point lower asset turnover, suggesting a lack of operational flexibility. The effects are concentrated in severely impacted regions and product categories. The findings provide insights into how corporate social responsibility shapes production networks and firm resilience to disasters.

Keywords: Disaster, Corporate social responsibility, Firm resilience, Supply chain, Switching cost

JEL Classification: G32, L14, M14

Suggested Citation

Ding, Wenzhi and Li, Xu and Lyu, Qingyuan, Disasters, Social Commitment, and Firm Resilience (June 21, 2023). Available at SSRN: https://ssrn.com/abstract=4876904 or http://dx.doi.org/10.2139/ssrn.4876904

Wenzhi Ding (Contact Author)

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

Hung Hom
Kowloon
Hong Kong

Xu Li

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Qingyuan Lyu

affiliation not provided to SSRN

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