ABSTRACT
Much of the debate surrounding the recent global crisis is narrowly focused on respective governments’ policy responses to the financial and economic downturn. Much less attention has been placed on the manner in which private sector businesses, the engine of growth in most economies, responded to the crisis. Pervasive credit crunches, recessions in numerous countries and drastic reductions in global consumption clearly indicated that most businesses would be affected by the crisis. As with most crisis situations, there were elements of high importance and immediacy that demanded a quick response by businesses, but also high uncertainty, which could translate to inertia or inappropriate responses if not handled properly (Calloway and Keen 1996: 18–19). It is therefore not surprising that studies conducted immediately after the crisis indicated that in numerous countries many businesses did not react to the crisis in a manner that made sense given their situations (see, for example, Heckmann et al. 2009, Banerji et al. 2009a). Surveys conducted with business managers in developed and emerging economies indicate that large proportions of businesses had not, at December 2008, initiated any response to the crisis, many hard-hit companies had not yet undertaken rationalization procedures designed to preserve cash, and numerous financially healthy companies were not taking advantage of the opportunities afforded by the crisis. 1 By contrast, other studies conducted during the same time period indicated that businesses were responding as expected, by cutting travel, communication and discretionary expenses, reducing inventories and receivables, instituting pay cuts, laying off staff if necessary and, where possible, aggressively pursuing new customers and opportunities (Raghavan 2005).
