Winners and Losers: Predicting Business Disaster Recovery Outcomes Following the Northridge Earthquake

Dahlhamer, James M.
Tierney, Kathleen J.
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Disaster Research Center
While the long-term effects of disaster and the factors that affect the ability to recover have received increasing attention by social science researchers, the majority of research to date has taken families and households as the units of analysis, with a smaller number of studies focusing on the recovery of entire communities. The processes and outcomes associated with the recovery of private firms, however, have almost never been addressed in the literature. Studies of the long-term economic consequences of disasters have generally focused on aggregate community effects. Findings of this research suggest that disasters produce negligible impacts at the community level. While important, this type of research neglects the impacts of disasters on individual firms and overlooks important micro-level recovery processes. For example, empirical support exists for the notion that disasters create both winners and losers, a process that aggregate analyses cannot capture. With this in mind, this paper explores the distributive effects of disaster on 1110 Los Angeles area firms impacted by the 1994 Northridge earthquake. The model used to predict winners and losers is based on an earlier analysis of business recovery following the earthquake, studies of both household and business disaster recovery, and the literature on organizational survival in non-disaster contexts. Findings show that business size, fmancial condition, disruption of business operations, earthquake shaking intensity, and the utilization of post-disaster aid are significant predictors of being worse off 18 months after the earthquake. Only financial condition was a significant predictor of being better off. Policy, theory, and future research implications are discussed.
business disaster , disaster recovery , Northridge earthquake