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Natural Disasters, Technology Diversity, and Operating Performance

Author

Listed:
  • Po-Hsuan Hsu

    (University of Hong Kong and National Tsing Hua University)

  • Hsiao-Hui Lee

    (University of Hong Kong and National Tsing Hua University)

  • Shu-Cing Peng

    (National Taiwan University)

  • Long Yi

    (Hong Kong Baptist University)

Abstract

In this paper, we empirically measure the impact of natural disasters on firm-level operating performance and examine if such impact can be mitigated by technology diversification. Using major natural disasters specified by Barrot and Sauvagnat (2015) and factory location data from the toxic release inventory (TRI) database, we first find that firms with factories located in states affected by natural disasters are much less profitable. Second, we find that firms with diversified technologies are significantly less subject to the impact of natural disasters, suggesting that technology diversity enhances firms’ sustainability.

Suggested Citation

  • Po-Hsuan Hsu & Hsiao-Hui Lee & Shu-Cing Peng & Long Yi, 2018. "Natural Disasters, Technology Diversity, and Operating Performance," The Review of Economics and Statistics, MIT Press, vol. 100(4), pages 619-630, October.
    • Handle: RePEc:tpr:restat:v:100:y:2018:i:4:p:619-630
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    Cited by:

    1. Leonardo Biazoli & Ednilson Sebastião Ávila & Izabela Regina Cardoso Oliveira, 2024. "Combining cluster analysis with synthetic control for evaluating economic impacts of the dam breach in Mariana, Brazil," Empirical Economics, Springer, vol. 67(6), pages 2971-2991, December.
    2. Gómez, Jaime & Krammer, Sorin M.S. & Pérez-Aradros, Beatriz & Salazar, Idana, 2024. "Resilience to the pandemic: The role of female management, multi-unit structure, and business model innovation," Journal of Business Research, Elsevier, vol. 172(C).
    3. Lé Mathias, 2022. "The adaptation of economies to climate change: lessons from the economic research [L’adaptation des économies au changement climatique : les enseignements tirés de la recherche économique]," Bulletin de la Banque de France, Banque de France, issue 239.
    4. Hasan, Iftekhar & Manfredonia, Stefano & Noth, Felix, 2021. "Cultural resilience, religion, and economic recovery: Evidence from the 2005 hurricane season," IWH Discussion Papers 9/2021, Halle Institute for Economic Research (IWH).
    5. Zhao, Rui & Zhang, Dayong & Guo, Mengmeng, 2024. "Do natural disasters affect stock price crash risk? Evidence from emerging markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 93(C).
    6. Feng, Cong & Fay, Scott, 2020. "Store Closings and Retailer Profitability: A Contingency Perspective," Journal of Retailing, Elsevier, vol. 96(3), pages 411-433.
    7. Hasan, Iftekhar & Manfredonia, Stefano & Noth, Felix, 2020. "Cultural resilience and economic recovery: Evidence from Hurricane Katrina," IWH Discussion Papers 16/2020, Halle Institute for Economic Research (IWH).
    8. Ho, Anson T.Y. & Huynh, Kim P. & Jacho-Chávez, David T. & Vallée, Geneviève, 2023. "We didn’t start the fire: Effects of a natural disaster on consumers’ financial distress," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    9. Ai, Li & Gao, Lucia S., 2023. "Firm-level risk of climate change: Evidence from climate disasters," Global Finance Journal, Elsevier, vol. 55(C).
    10. Cirera, Xavi & Comin, Diego & Cruz, Marcio & Lee, Kyung Min & Torres, Jesica, 2022. "Technology and Resilience," CEPR Discussion Papers 16885, C.E.P.R. Discussion Papers.
    11. Zhang, Tianyu, 2022. "Independent directors and patenting strategies: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 81(C).
    12. Qiuyue Zhang & Yili Lin & Yu Cao, 2024. "From Financialization to Sustainability: The Impact of Climate Risks on Shadow Banking Activities in Non-Financial Firms in China," Sustainability, MDPI, vol. 16(19), pages 1-20, October.
    13. Bosco, Maria Giovanna & Valeriani, Elisa, 2023. "Energy retrofitting of firms after a natural disaster: A ‘build back better’ strategy," Energy Policy, Elsevier, vol. 179(C).
    14. Guoqing Qian & Chuansong Duanmu & Nisar Ali & Adnan Khan & Sumeet Malik & Yong Yang & Muhammad Bilal, 2022. "Hazardous wastes, adverse impacts, and management strategies: a way forward to environmental sustainability," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(8), pages 9731-9756, August.
    15. Machokoto, Michael & Gyimah, Daniel & Ntim, Collins G., 2021. "Do peer firms influence innovation?," The British Accounting Review, Elsevier, vol. 53(5).
    16. Yuzuka Kashiwagi, 2020. "The Heterogeneous Impact of Post-Disaster Subsidies on Small and Medium Firms," Economics of Disasters and Climate Change, Springer, vol. 4(3), pages 601-623, October.
    17. Wang, Qilin & Huang, Yehua & Zhao, Mengyao & Liu, Jinzhao, 2024. "Do natural disasters hinder analysts’ information production of non-affected firms?," Economics Letters, Elsevier, vol. 234(C).
    18. Yujue Wang, 2022. "Short-term shock, long-lasting payment: Evidence from the Lushan Earthquake," Papers 2212.01553, arXiv.org, revised Dec 2022.
    19. Liang, Chen & Zhu, Minghao & Lee, Peter K.C. & Cheng, T.C.E. & Yeung, Andy C.L., 2024. "Combating extreme weather through operations management: Evidence from a natural experiment in China," International Journal of Production Economics, Elsevier, vol. 267(C).
    20. Hoskins, Jake D. & Carson, Stephen J., 2022. "Industry conditions, market share, and the firm’s ability to derive business-line profitability from diverse technological portfolios," Journal of Business Research, Elsevier, vol. 149(C), pages 178-192.
    21. Liu, Tie-Ying & Lin, Ye, 2023. "Does global warming affect unemployment? International evidence," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 991-1005.
    22. Michele Battisti & Filippo Belloc & Massimo Del Gatto, 2023. "COVID-19, Innovative Firms and Resilience," WIPO Economic Research Working Papers 73, World Intellectual Property Organization - Economics and Statistics Division.

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