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The Impact of Natural Disasters on Micro, Small and Medium Enterprises (MSMEs): A Case Study on 2016 Flood Event in Western Sri Lanka
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7th 7th International International Conference Conference on on Building Building Resilience; Resilience; Using Using scientific scientific knowledge knowledge to to inform inform policy policy and practice in disaster risk reduction, ICBR2017, 27 – 29 November 2017, Bangkok, and practice in disaster risk reduction, ICBR2017, 27 – 29 November 2017, Bangkok, Thailand Thailand
The Impact of Natural Disasters on Micro, Small and Medium Enterprises (MSMEs): A Case Study on 2016 Flood Event in Western Sri Lanka Gunathilaka Gunathilaka Samantha* Samantha* Faculty of of Engineering, Engineering, University University of of Ruhuna, Ruhuna, Matara Matara 81000, 81000, Sri Sri Lanka Lanka Faculty
Abstract Abstract The indirect impacts impacts of of natural natural disasters disasters are are devastating devastating to to business business activities activities and and their their continuity. continuity. These These catastrophic catastrophic The direct direct and and indirect events have have created created aa significant significant impact impact on on Micro Micro and and Small Small and and Medium-sized Medium-sized Enterprises events Enterprises (SMEs) (SMEs) in in the the Sri Sri Lanka Lanka during during the the recent recent years. years. Micro Micro and and SME SME sectors sectors can can be be considered considered as as the the highly highly vulnerable vulnerable sections sections of of Sri Sri Lankan Lankan economy economy which which impacted impacted drastically drastically by by the the flooding flooding as as they they are are relatively relatively resource resource constrained constrained and and less less resilient. resilient. Having Having aa sound sound understanding understanding of of the the adverse impacts of flooding on Micro and SMEs might useful for entrepreneurial resilience. This study sought to investigate adverse impacts of flooding on Micro and SMEs might useful for entrepreneurial resilience. This study sought to investigate the the full full range range of of impacts impacts (short (short term term and and long long term) term) experienced experienced by by micro micro and and SMEs SMEs located located in in Western Western Sri Sri Lanka Lanka following following the the floods floods of of mid-2016. mid-2016. Hundred Hundred randomly randomly selected selected flood flood affected affected micro micro and and SMEs SMEs from from Colombo Colombo district district were were surveyed surveyed for for this this study. study. Semi Semi structured structured interviews interviews were were carried carried out out in in person person with with the the business business owners owners in in order order to to identify identify their their experiences experiences on on various types of damages, rehabilitation and re-establishment. One of the major finding was the micro and SMEs various types of damages, rehabilitation and re-establishment. One of the major finding was the micro and SMEs are are vulnerable vulnerable to to flooding flooding in in four four fronts: fronts: capital, capital, labour, labour, logistic logistic and and markets. markets. Revenues Revenues have have fallen fallen below below the the expenditures expenditures suddenly suddenly and and finding finding manpower manpower was was another another serious serious issue issue as as workers workers are are the the immediate immediate victims victims of of the the flood. flood. Entrepreneurs Entrepreneurs had had to to find find out out alternative alternative or or emergency emergency logistic logistic support support to to operate operate their their businesses businesses as as flood flood has has severely severely damaged damaged to to the the public public infrastructure infrastructure system. system. A A shift shift in in market market demand demand has has occurred occurred in in the the short-term short-term with with sharp sharp increase increase in in the the demand demand for for basic basic commodities commodities while while aa dip dip in in non-essentials. non-essentials. Furthermore, Furthermore, it it was was clear clear that that the the SME SME resilience resilience requires requires partnerships partnerships and and cooperation cooperation among among the the firms, firms, government government and and other other private private organizations. organizations. It It cannot cannot be be achieved achieved by by the the business business entity entity alone alone or or by by government government on on its its own. own. Therefore, Therefore, this this study study concludes concludes with with providing providing some some recommendations recommendations on on strategic strategic policies policies to to disaster disaster risk risk reduction reduction and and disaster disaster coping coping mechanism mechanism into into the the micro micro and and SME SME sector sector in in Sri Sri Lanka. Lanka.
2018 The © © 2017 2017 The Authors. Authors. Published Published by by Elsevier Elsevier Ltd. Ltd. Peer-review under under responsibility responsibility of of the the scientific committee of the 7th International Conference on Building Resilience. Peer-review Peer-review under responsibility of the scientific scientific committee committee of of the the 7th 7th International International Conference Conference on on Building Building Resilience. Resilience.
* * Corresponding Corresponding author. author. Tel.: Tel.: +94 +94 (0) (0) 773 773 418 418 411; 411; fax: fax: +94 +94 (0) (0) 91 91 2245762. 2245762. E-mail address: [email protected] E-mail address: [email protected] 1877-7058 1877-7058 © © 2017 2017 The The Authors. Authors. Published Published by by Elsevier Elsevier Ltd. Ltd. Peer-review under under responsibility responsibility of of the the scientific scientific committee committee of of the the 7th 7th International International Conference Conference on on Building Building Resilience. Resilience. Peer-review
1877-7058 © 2018 The Authors. Published by Elsevier Ltd. Peer-review under responsibility of the scientific committee of the 7th International Conference on Building Resilience 10.1016/j.proeng.2018.01.096
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Keywords: Micro, Small and Medium Enterprise; Natural Disaster; Flood; Entrepreneurial Resilience
1. Introduction Disasters have shown significant impacts on all types of business in both developed and developing countries. Both direct and indirect impacts of natural disasters are devastating to business activities and their continuity. These catastrophic events have created a significant negative impact on most of the business entities including Micro and Small and Medium Enterprises (MSMEs) during the recent years. Though there are many studies have examined the impact of natural disasters in individual households and the broader macroeconomic climate, the impact of natural disasters on MSMEs is one of the least explored areas in the discipline of disaster risk reduction (DRR). According to the extant literature, MSMEs are more vulnerable to natural hazards than large firms due to the fact that MSMEs: tend to operate in sub-optimal locations; are smaller and financially weaker; have a more limited, usually local market; tend to implement less DRR measures and be more excluded from recovery programs [1]. Sri Lanka has been affected by number of major flood events during the last few years. On 15th May 2016 Sri Lanka was hit by a severe tropical storm that caused widespread flooding and landslides in most parts of the 22 districts out of 25 districts in the country, destroying homes and submerging entire villages. According to the Government of Sri Lanka Disaster Management Centre (DMC), this was reported as the worst flood in 25 years. Colombo is the worst affected district in the country with 301602 people affected by the floods. This is mostly as a result of large numbers of people of this highly populated urbanized city are living on reclaimed, marshy lands which are highly susceptible to flooding and poor drainage system. From an economic perspective, the impacts of flooding can be devastating on the function and sustainability of MSMEs. Even though several recent studies have examined the devastation caused by flooding on MSME’s in other countries (for example Crichton, 2006; Woodman, 2008; Ingirige and Wedeawatta, 2011. Ingirige, Wedeawatta and Proverbs, 2014), there is no proper study have looked at the Sri Lankan context [2,3,4,5]. Therefore, the objective of this study was to investigate the full range of impacts of flooding on micro, small and medium scale enterprises in Colombo district of Sri Lanka. 2. Micro and Small Medium Enterprises (MSMEs) There is no unique definition of MSMEs. Most of the organizations and countries use the number of employees, value of fixed assets, annual turnover and size of balance sheet as the selection criteria in the process of categorizing firms. Different institutions and government agencies of Sri Lanka have their own definition regarding MSMEs. However, the World Bank defines MSMEs based on number of employees: firms with less than 5 employees are micro businesses; firms with 6-49 employees are small; firms with 50-99 employees are medium sized; and firms with more than 100 employees are considered as large firms. Using number of employees as the selection criteria seems reasonable because when using capital, it should be revised frequently due to inflation. Hence this study follows the World Bank definition. MSMEs contribute to the well-being of the community by providing job opportunities, commodities and services. Therefore, MSMEs are an important part of economies of developing countries and will be even more important in the future. It seems that while the density of MSMEs is higher in developed countries but this trend may change in the future as the number of MSMEs per 1,000 in low income countries grows three times faster than in high-income countries – 6 percent per year vs. 2 percent per year [6]. MSMEs tend to be more flexible in their operations, particularly informal enterprises. Labor relations are typically based on trust rather than accountability mechanisms [7], providing a very different framework for job creation – one that directly supports community networks. As a result, MSMEs can have a stronger interaction with communities than bigger firms, and are key players in local development. MSMEs have an important role in employment provision of local communities, not only in terms of number of jobs but in the type of employees they hire. MSMEs are likely to engage less ‘employable’ workers with lower levels of education, social protection, and often belonging to particularly vulnerable groups. Even in developed countries, MSMEs were identified as providing employment to those who are less likely to find a job in a
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bigger company, such as older and previously unemployed workers [8]. Similarly, the MSME sector plays a major role in the Sri Lankan economy, consisting of more than ninety percent of the total business entities of the country [9]. 3. Floods in Sri Lanka and 2016 Flood Sri Lanka being a small island in the Indian Ocean located in the path of two monsoons. Therefore, Sri Lanka is mostly affected by weather related hazards. Major floods in Sri Lanka are associated with these two monsoons. Typically, during the Southwest monsoon season (May-September) the Western, Southern and Sabaragamuwa provinces are vulnerable to floods. During the Northeast monsoon (December-February) the Eastern, Northern and North-central provinces are prone to flooding. Rivers along the western slopes of the hilly central areas cause floods in the lower flood plains of Kalu Ganga and Kelani Ganga in particular during these periods. Beginning on 14 May 2016, a low-pressure area over the Bay of Bengal caused torrential rain to fall across Sri Lanka, causing floods and landslides which affected devastatingly. An area of low pressure above Sri Lanka has caused heavy rainfall across the country since 14 May 2016. Some locations saw over 350 mm of rain fall in 24 hours. Floods and landslides have caused havoc in as many as 22 districts of the country, including Colombo district. According to the Department of Meteorology of Sri Lanka, in a 24-hour period of 15 to 16 May, Colombo recorded 256 mm of rain. According to World Metrological Organization’s figures, the mean total rainfall for Colombo in April is 245.6 mm. This flood killed 101 people with 116 people missing. Sri Lanka’s Disaster Management Centre (DMC) reported that over 301,602 people have been affected. Almost 5037 homes have been damaged and 68 houses were fully destroyed. According to National Disaster Relief Services Centre (NDRSC) records 31 MSMEs were fully damaged and 5176 MSMEs were partially damaged in the Colombo district. With Sri Lanka facing the worst-ever floods in 27 years, Sri Lankan economy has begun to feel the pinch of climate change. The government appealed for foreign assistance to recover from gigantic floods that caused an estimated US$ two billion worth of damage. This is close to a staggering 2.43% of Sri Lanka’s GDP (US$ 82.3 billion) recorded in 2015. This figure rise may rise even further if opportunity cost and job losses are taken into account. 4. Impacts of disasters on MSMEs The studies of disaster impact on businesses was first appeared in late 1980s. The first study of this nature was carried out in United States after the Loma Prieta earthquake in 1989. Similar studies were conducted in United States after the catastrophic events of Great Midwest flood in 1993, Northridge earth quake in 1994 and Red River flood in 1997. According to the extant literature, the majority of studies on impacts of disasters on business and their continuity were conducted in United States and other developed countries. There are very few studies in this field in the context of developing countries. Disasters have shown profound adverse impacts all types of business including MSMEs. MSMEs are more vulnerable to natural hazards and they are affected in numerous ways. MSMEs’ vulnerability can be twofold. Firstly, smaller businesses have less financial and technical resources to reduce and cope with risk and lack of risk management mechanisms. Most of the MSMEs specially in developing countries are not practising disaster risk management mechanisms such as insurance, diversify their supply and customer bases and social protection for their employees [10]. Secondly, disasters could have a larger impact on MSMEs’ performance than other types of issues due to the general negative impact of the disaster on communities in which MSMEs operate [11]. Many businesses do not reach post-disaster stage. According to the US Institute for Business and Home Safety [12], more than 43 percent of businesses do not re-open following a disaster and 29 percent close for good within two years. The impacts of flooding can be categorized in numerous perspectives such as short term - long term; direct indirect; etc. Direct impacts are the damages to fixed assets and capital, damages to raw materials, crops, injuries and deaths. Indirect impacts refer to the issues created in production/services or continuity of the business. The
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majority of impact of flooding can be clearly visible. Property damages, ruined stocks, temporary business closure are few examples for this category. But there are some adverse impacts of flooding which are not clearly visible. For an example, loss of paper work/ documents due to flooding. These will result in problems in recovery process, tracing order status/payments and insurance claims. According to Metcalf et al. (2010), these impacts can be divided into six broad categories [13]. These six categories are: markets, logistics, premises, people, procedures and finance. In 2015, Philippine Institute for Development Studies has re-divided all these disaster impact on business into four categories, namely: capital, labour, logistic and market [14]. This study also used the four categories of flood impacts as this division is more appropriate as it was already successfully used in developing asian economy. Capital Damages to the land, equipment and revenue drops have been identified as an important source of financial stress for businesses after disasters. Revenues are expected to fall down due to the less or no sales during and after the disaster occurs. Damaged or loss of stock can create issues in continuity of business. It can cause temporary business closure while structural repairs needed to restore operations usually require large amounts of financial and other resources. Damages to manufacturing equipment and machinery may affected severely and disrupted production. If businesses are not insured or lack of resources for these repairs, survival of business is questionable. Logistic Disruptions after disasters regarding the provision of public and utility services such as electricity, water supply and sewage, fuel, transportations and telecommunications, can be responsible for businesses closing down and can cause population dislocation [1]. Dysfunction in facilities and public infrastructure is an expected effect of disasters requiring business to look at alternative or emergency logistic support to enable business to function. These public infrastructure damage can lead to business closure for extended periods till repairs completed. Labour Human resources are the prime asset for any organization including MSMEs which have a limited staff in general. Employees of these firms might be the immediate victims of the disaster including deaths and casualties. In addition, labour force might face physical and psychological health effects including injuries and stress [15]. Employees can be vulnerable to the numerous health hazards that prevail in weeks, even months after the event of flood. Waterborne dieses such as diarrhea and cholera are the most common epidemics that can spark after the flood. Employees who may affected severely are under financial distress too. Therefore, availability of manpower is crucial and firms have to consider manpower reinforcement and to support those affected workers to resume their duties at earliest which enable firms to meet targets, respond to spike in demand and resume operations at the shortest time. Market A shift in market demand also expected in the short term with sharp increase in the demand only for basic commodities while a drop in many non-essentials. In general, difficulties in distribution, receiving and shipping of products are very common issues after flood situation. As demand side for many products weaken, sales turn over drops drastically resulting MSMEs find it difficult to do accounts payable and ultimately manage their financial balance. This drop-in demand for their products are affected more seriously for MSMEs as majority of them are totally depend on neighbouring markets where the villagers are direct victims of flooding. In addition to above mentioned direct impacts of flooding, there are indirect impacts on community and local economy. Temporary and permanent business closure may result in loss of jobs which will create economic and social issues in local communities. Such economic and social impacts are difficult to accounted for monetary terms. 5. Research Objectives Micro and SME sector can be considered as the highly vulnerable sector of Sri Lankan economy which impacted drastically by the flooding as they are relatively resource constrained and less prepared for disasters. Having a sound understanding of the adverse impacts of flooding on Micro and SMEs might useful for entrepreneurial resilience
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through increasing of flood protection procedures. The objective of this research was to investigate the short-term and long-term impacts of flooding experienced by MSMEs located in Western Sri Lanka following the floods of mid-2016. Accordingly, this study sought to answer following research questions. 1. What are the immediate impacts of flooding on MSMEs? 2. What are the long-term impacts of flooding on MSMEs? 3. What lessons can be learned from these impacts? 6. Research Design and Methodology This research used quantitative cross-sectional survey research as its research design. The survey method is chosen because it attempts to provide insights about how 2016 flood event in Western Sri Lanka affected on the micro and SME’s. The survey research has its inherited advantages such as a cheap and efficient means of data collection, possibility to survey a large sample in a short time period, and with relatively little labour. 6.1 Population This study was conducted in the flood affected micro and SME’s which were located in the Colombo district. According to National Disaster Relief Services Centre (NDRSC) records, 31 MSMEs were fully damaged and 5176 MSMEs were partially damaged in the Colombo district. 6.2 Sample The current study is based on a random sample selected from the population of flood affected MSMEs in the Colombo district. The sample was consisted of 100 firms which were randomly selected from the flood affected firm list available at NDRSC. Either owner or manager of the selected firms were chosen as the respondents. According to the Bryman and Bell (2003), the random sampling method is best employed to enable the generalization of findings to the population [16]. Due to the time and resource limitations, the sample size was limited to 100 firms. However, the sample size obtained for this study satisfied the rule of thumb as proposed by Roscoe (1975) that sample size larger than 30 and less than 500 is appropriate for most studies [17]. 6.3 Data Collection and Preparation The data collection was carried out by face to face interviews with business owners/managers in order to identify their experiences on various types of damages, rehabilitation and re-establishment. A questionnaire was used in these interviews to eliminate interviewer bias. The questionnaire was designed to collect all necessary information for this study by addressing following aspects. 1. Basic information of the business and the owner 2. The short-term impact of flooding on MSMEs 3. The long-term impact of flooding on MSMEs 7. Data Analysis and Results The impact of flooding on MSMEs and the extent of these impacts were gathered using a five-point Likert scale. A weighting was allocated to each extent as bellows. Very much affected / Completely destroyed -4 Much affected / Damaged -3 Somewhat affected / Somewhat damaged -2 Affected a little / Slightly damaged -1 Not affect at all / Not damaged -0 The analysis commenced with the presenting the harshness of each and every identified impact of flooding. This study further used the relative importance index (RII), a well-known mechanism to evaluate the comparative importance of a single items to others [18, 5].
Gunathilaka Samantha/ Procedia Engineering 00 (2017) 000–000 Gunathilaka Samantha / Procedia Engineering 212 (2018) 744–751
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RII is calculated as follows: 𝑅𝑅𝑅𝑅𝑅𝑅 =
749
∑𝑤𝑤 𝐴𝐴 ∗ 𝑁𝑁
Where, ‘w’ is the weighting given to each impact by the respondent (i.e. 0 - 4 in this study) ‘A’ is the highest weighting (i.e. 4 in this study) ‘N’ is the number of respondent (i.e. 100 in this study) RII values for both short-term and long-term impacts of flooding on MSMEs and their consequent ranking were calculated. The findings were presented under the following headings. 7.1
Organizations: Scale and Ownership Out of 100 firms surveyed, 22 firms were belonging to micro category, 49 firms were belonging to small category and 29 firms were belonging to medium scaled firms.
7.2
Short-term impacts The basic analysis of collected responses for the short-term impacts of flooding is depicted in Table I. Table 1: Extent of damages / losses Losses / Impact
Damage, spoil or loss of stock Damage to premises/building Damage or loss of equipment Inability to conduct business Inconvenience to staff Loss of trading income Loss of records Travel difficulties for customers Loss of electricity, other services Delay in providing orders Delay in receiving items from suppliers Had to move to temporary premises
Very much affected/ Completely destroyed 40% 28% 67% 61% 18% 65% 18% 18% 26% 28% 29%
Much affected / Damaged
Affected a little / Slightly damaged 4% 5% 5% 4% 3% 6% 10% 5% 2% 4% 4%
Not affect at all / Not damaged
42% 51% 23% 23% 58% 23% 50% 52% 60% 47% 40%
Somewhat affected / Somewhat damaged 14% 16% 5% 12% 21% 6% 22% 25% 12% 21% 27%
40%
52%
4%
4%
0%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
As shown in the Table 1, the most devastating impact was damage or loss of equipment which was account for 67 percent completely destroy level. This study further identified that 65 percent of firms’ trading income had been completely destroyed. Table 2 depicts the ranking of impacts according to RII values. According to the Table 2, damage or loss of equipment was rank top as the impact experienced by the MSMEs owners. Even though many MSMEs are not having very sophisticated equipment, the existing ones are very important for them to continuity of the business. Moreover, the equipment might be the biggest portion of their assets of many MSMEs, hence owners were worried about damaging them. Loss of trading income has identified as the second highest negative impact of flooding on MSMEs while inability to conduct business took third place.
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Table 2: Ranking of impacts Losses / Impact
Damage, spoil or loss of stock Damage to premises/building Damage or loss of equipment Inability to conduct business Inconvenience to staff Loss of trading income Loss of records Travel difficulties for customers Loss of electricity, other services Delay in providing orders Delay in receiving items from suppliers Had to move to temporary premises 7.3
No. of responses with the highest value 40 28 67 61 18 65 18 18 26 28 29
Total weight (∑ w)
Mean impact weight
RII
Rank
318 302 352 341 291 347 276 283 310 299 294
.318 .302 .352 .341 .291 .347 .276 .283 .310 .299 .294
.795 .755 .880 .852 .727 .867 .690 .707 .775 .747 .735
5 7 1 3 10 2 12 11 6 8 9
40
328
.328
.820
4
Affected a little / Slightly damaged 3%
Not affect at all / Not damaged
46%
Somewhat affected / Somewhat damaged 4%
36%
40%
20%
0%
1% 80% 50%
79% 0% 40%
19% 0% 9%
0% 0% 0%
Long term Impacts The basic analysis of long term impacts is depicted in Table 3. Table 3: Extent of damage / loss (long term) Losses / Impact Very much affected/ Completely destroyed Disrupted cash flow or loss 47% income Staff anxiety from flooding to 4% business Higher insurance premium 1% Structural damage to premises 20% Loss of business records 1%
Much affected / Damaged
0%
As shown in the Table 3, the most devastating impact was disrupted cash flow which was account for 47 percent Very much affected level. This study further identified that 20 percent of firms’ structural damages to premises had been completely destroyed. Table 4 depicts the ranking of impacts according to RII values. According to the Table 4, disrupted cash flow was rank top as the impact experienced by the MSMEs owners followed by structural damages to premises.
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Table 4: Ranking of impacts (long term) Losses / Impact Disrupted cash flow or loss income Staff anxiety from flooding to business Higher insurance premium Structural damage to premises Loss of business records
No. of responses with the highest value 47 4 1 20 1
Total weight (∑ w) 337 224 184 320 243
Mean impact weight .337 .224 .184 .320 .243
751
RII
Rank
.842 .560 .460 .800 .607
1 4 5 2 3
8. Conclusion and Recommendation MSMEs in Colombo district were affected severely from the devastating floods in mid-2016. This research found that in economic perspectives, loss or damage of equipment was the highest damaged caused by the flood in the short run. Around two third of MSMEs completely lost/damaged their equipment. Loss of records had the minimal impact. Disrupted cash flow and loss income affected MSMEs most in the long run followed by structural damages to buildings. MSMEs need external support to get back to their usual business. The government should act as a initiator in this prosses. Since the main damage to MSMEs was plant and equipment, the aid relief agencies should procure capital goods such as tools, equipment and machinery and distributed to the relevant firms. As natural disasters are unpredictable, full prevention is neither possible or attainable. Disaster risk can be minimized through introducing insurance schemes. But, it is not possible for MSME to pay high insurance premium. The government needs to step in as a premium sharing partner allowing all MSMEs to get the protection. The authorities should think about rebuilding infrastructure on modern lines, creation of well-planned industrial zones and establishing business development services. References [1] Zhang, Yang, Michael K. Lindell, and Carla S. Prater. "Modeling and managing the vulnerability of community businesses to environmental disasters." 45th Annual Conference of the Association of Collegiate Schools of Planning, Portland, OR, October. Vol. 23. 2004. [2] Crichton, David. Climate Change and its Effects on Small Businesses in the UK. Axa Insurance, 2006. [3] Woodman, Patrick. Business continuity management 2008. London: Chartered Management Institute, 2008. [4] Wedawatta, Gayan, and Bingunath Ingirige. "Resilience and adaptation of small and medium-sized enterprises to flood risk." Disaster Prevention and Management: An International Journal 21.4 (2012): 474-488. [5] Wedawatta, Gayan, Bingunath Ingirige, and David Proverbs. "Small businesses and flood impacts: the case of the 2009 flood event in Cockermouth." Journal of Flood Risk Management 7.1 (2014): 42-53. [6] Kushnir, Khrystyna, Melina Laura Mirmulstein, and Rita Ramalho. "Micro, small, and medium enterprises around the world: how many are there, and what affects the count." Washinton: World Bank/IFC MSME Country Indicators Analysis Note (2010). [7] Murta, J., et al. "Enhancing Adaptive Capacity of Small to Medium Enterprises–Background Report." Institute for Sustainable Futures, UTS, Sydney (2012). [8] De Kok, Jan, et al. "Do SMEs create more and better jobs." Report prepared by EIM for the European Commission DG Enterprise and industry, Brussels, European Commission (2011). [9] Department of Registrar of Companies, Sri Lanka, Registration of Companies, (2012). [10] Preparing MSMEs for effective disaster management, KPMG, India (2016) [11] Battisti, Martina, and David Deakins. "Perspectives from New Zealand Small Firms: Crisis Management and the Impct of the Canterbury Earthquakes." New Zealand Centre for Small & Medium Enterprise Research (Ed.), BusinesSMEasure. Palmerston North: Massey University (2012). [12] Open for Business: a Disaster Planning Toolkit for Small Business Owners. Institute for Business and Home Safety (1999). [13] Metcalf, G., Jenkinson, K. and Johnstone, K. A changing climate for business. 3rd ed. Oxford: UK Climate Impacts Programme (2010) [14] Ballesteros, Marife M., and Sonny N. Domingo. Building Philippine SMEs Resilience to Natural Disasters. No. 2015-20. PIDS Discussion Paper Series, 2015. [15] Penning-Rowsell, Edmund, Sue Tapsell, and Theresa Wilson. "Key policy implications of the health effects of floods." Extreme Weather Events and Public Health Responses. Springer Berlin Heidelberg, 2005. 207-223 [16] Bryman, Alan, and E. Bell. "Breaking down the quantitative/qualitative divide." Business Research Methods (2003): 465-478. [17] Roscoe, John T. Fundamental research statistics for the behavioral sciences [by] John T. Roscoe. 1975. [18] Yang, Jyh-Bin, and Pei-Rei Wei. "Causes of delay in the planning and design phases for construction projects." Journal of Architectural Engineering 16.2 (2010): 80-83.
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Procedia Engineering 212 (2018) 744–751
7th 7th International International Conference Conference on on Building Building Resilience; Resilience; Using Using scientific scientific knowledge knowledge to to inform inform policy policy and practice in disaster risk reduction, ICBR2017, 27 – 29 November 2017, Bangkok, and practice in disaster risk reduction, ICBR2017, 27 – 29 November 2017, Bangkok, Thailand Thailand
The Impact of Natural Disasters on Micro, Small and Medium Enterprises (MSMEs): A Case Study on 2016 Flood Event in Western Sri Lanka Gunathilaka Gunathilaka Samantha* Samantha* Faculty of of Engineering, Engineering, University University of of Ruhuna, Ruhuna, Matara Matara 81000, 81000, Sri Sri Lanka Lanka Faculty
Abstract Abstract The indirect impacts impacts of of natural natural disasters disasters are are devastating devastating to to business business activities activities and and their their continuity. continuity. These These catastrophic catastrophic The direct direct and and indirect events have have created created aa significant significant impact impact on on Micro Micro and and Small Small and and Medium-sized Medium-sized Enterprises events Enterprises (SMEs) (SMEs) in in the the Sri Sri Lanka Lanka during during the the recent recent years. years. Micro Micro and and SME SME sectors sectors can can be be considered considered as as the the highly highly vulnerable vulnerable sections sections of of Sri Sri Lankan Lankan economy economy which which impacted impacted drastically drastically by by the the flooding flooding as as they they are are relatively relatively resource resource constrained constrained and and less less resilient. resilient. Having Having aa sound sound understanding understanding of of the the adverse impacts of flooding on Micro and SMEs might useful for entrepreneurial resilience. This study sought to investigate adverse impacts of flooding on Micro and SMEs might useful for entrepreneurial resilience. This study sought to investigate the the full full range range of of impacts impacts (short (short term term and and long long term) term) experienced experienced by by micro micro and and SMEs SMEs located located in in Western Western Sri Sri Lanka Lanka following following the the floods floods of of mid-2016. mid-2016. Hundred Hundred randomly randomly selected selected flood flood affected affected micro micro and and SMEs SMEs from from Colombo Colombo district district were were surveyed surveyed for for this this study. study. Semi Semi structured structured interviews interviews were were carried carried out out in in person person with with the the business business owners owners in in order order to to identify identify their their experiences experiences on on various types of damages, rehabilitation and re-establishment. One of the major finding was the micro and SMEs various types of damages, rehabilitation and re-establishment. One of the major finding was the micro and SMEs are are vulnerable vulnerable to to flooding flooding in in four four fronts: fronts: capital, capital, labour, labour, logistic logistic and and markets. markets. Revenues Revenues have have fallen fallen below below the the expenditures expenditures suddenly suddenly and and finding finding manpower manpower was was another another serious serious issue issue as as workers workers are are the the immediate immediate victims victims of of the the flood. flood. Entrepreneurs Entrepreneurs had had to to find find out out alternative alternative or or emergency emergency logistic logistic support support to to operate operate their their businesses businesses as as flood flood has has severely severely damaged damaged to to the the public public infrastructure infrastructure system. system. A A shift shift in in market market demand demand has has occurred occurred in in the the short-term short-term with with sharp sharp increase increase in in the the demand demand for for basic basic commodities commodities while while aa dip dip in in non-essentials. non-essentials. Furthermore, Furthermore, it it was was clear clear that that the the SME SME resilience resilience requires requires partnerships partnerships and and cooperation cooperation among among the the firms, firms, government government and and other other private private organizations. organizations. It It cannot cannot be be achieved achieved by by the the business business entity entity alone alone or or by by government government on on its its own. own. Therefore, Therefore, this this study study concludes concludes with with providing providing some some recommendations recommendations on on strategic strategic policies policies to to disaster disaster risk risk reduction reduction and and disaster disaster coping coping mechanism mechanism into into the the micro micro and and SME SME sector sector in in Sri Sri Lanka. Lanka.
2018 The © © 2017 2017 The Authors. Authors. Published Published by by Elsevier Elsevier Ltd. Ltd. Peer-review under under responsibility responsibility of of the the scientific committee of the 7th International Conference on Building Resilience. Peer-review Peer-review under responsibility of the scientific scientific committee committee of of the the 7th 7th International International Conference Conference on on Building Building Resilience. Resilience.
* * Corresponding Corresponding author. author. Tel.: Tel.: +94 +94 (0) (0) 773 773 418 418 411; 411; fax: fax: +94 +94 (0) (0) 91 91 2245762. 2245762. E-mail address: [email protected] E-mail address: [email protected] 1877-7058 1877-7058 © © 2017 2017 The The Authors. Authors. Published Published by by Elsevier Elsevier Ltd. Ltd. Peer-review under under responsibility responsibility of of the the scientific scientific committee committee of of the the 7th 7th International International Conference Conference on on Building Building Resilience. Resilience. Peer-review
1877-7058 © 2018 The Authors. Published by Elsevier Ltd. Peer-review under responsibility of the scientific committee of the 7th International Conference on Building Resilience 10.1016/j.proeng.2018.01.096
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Keywords: Micro, Small and Medium Enterprise; Natural Disaster; Flood; Entrepreneurial Resilience
1. Introduction Disasters have shown significant impacts on all types of business in both developed and developing countries. Both direct and indirect impacts of natural disasters are devastating to business activities and their continuity. These catastrophic events have created a significant negative impact on most of the business entities including Micro and Small and Medium Enterprises (MSMEs) during the recent years. Though there are many studies have examined the impact of natural disasters in individual households and the broader macroeconomic climate, the impact of natural disasters on MSMEs is one of the least explored areas in the discipline of disaster risk reduction (DRR). According to the extant literature, MSMEs are more vulnerable to natural hazards than large firms due to the fact that MSMEs: tend to operate in sub-optimal locations; are smaller and financially weaker; have a more limited, usually local market; tend to implement less DRR measures and be more excluded from recovery programs [1]. Sri Lanka has been affected by number of major flood events during the last few years. On 15th May 2016 Sri Lanka was hit by a severe tropical storm that caused widespread flooding and landslides in most parts of the 22 districts out of 25 districts in the country, destroying homes and submerging entire villages. According to the Government of Sri Lanka Disaster Management Centre (DMC), this was reported as the worst flood in 25 years. Colombo is the worst affected district in the country with 301602 people affected by the floods. This is mostly as a result of large numbers of people of this highly populated urbanized city are living on reclaimed, marshy lands which are highly susceptible to flooding and poor drainage system. From an economic perspective, the impacts of flooding can be devastating on the function and sustainability of MSMEs. Even though several recent studies have examined the devastation caused by flooding on MSME’s in other countries (for example Crichton, 2006; Woodman, 2008; Ingirige and Wedeawatta, 2011. Ingirige, Wedeawatta and Proverbs, 2014), there is no proper study have looked at the Sri Lankan context [2,3,4,5]. Therefore, the objective of this study was to investigate the full range of impacts of flooding on micro, small and medium scale enterprises in Colombo district of Sri Lanka. 2. Micro and Small Medium Enterprises (MSMEs) There is no unique definition of MSMEs. Most of the organizations and countries use the number of employees, value of fixed assets, annual turnover and size of balance sheet as the selection criteria in the process of categorizing firms. Different institutions and government agencies of Sri Lanka have their own definition regarding MSMEs. However, the World Bank defines MSMEs based on number of employees: firms with less than 5 employees are micro businesses; firms with 6-49 employees are small; firms with 50-99 employees are medium sized; and firms with more than 100 employees are considered as large firms. Using number of employees as the selection criteria seems reasonable because when using capital, it should be revised frequently due to inflation. Hence this study follows the World Bank definition. MSMEs contribute to the well-being of the community by providing job opportunities, commodities and services. Therefore, MSMEs are an important part of economies of developing countries and will be even more important in the future. It seems that while the density of MSMEs is higher in developed countries but this trend may change in the future as the number of MSMEs per 1,000 in low income countries grows three times faster than in high-income countries – 6 percent per year vs. 2 percent per year [6]. MSMEs tend to be more flexible in their operations, particularly informal enterprises. Labor relations are typically based on trust rather than accountability mechanisms [7], providing a very different framework for job creation – one that directly supports community networks. As a result, MSMEs can have a stronger interaction with communities than bigger firms, and are key players in local development. MSMEs have an important role in employment provision of local communities, not only in terms of number of jobs but in the type of employees they hire. MSMEs are likely to engage less ‘employable’ workers with lower levels of education, social protection, and often belonging to particularly vulnerable groups. Even in developed countries, MSMEs were identified as providing employment to those who are less likely to find a job in a
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bigger company, such as older and previously unemployed workers [8]. Similarly, the MSME sector plays a major role in the Sri Lankan economy, consisting of more than ninety percent of the total business entities of the country [9]. 3. Floods in Sri Lanka and 2016 Flood Sri Lanka being a small island in the Indian Ocean located in the path of two monsoons. Therefore, Sri Lanka is mostly affected by weather related hazards. Major floods in Sri Lanka are associated with these two monsoons. Typically, during the Southwest monsoon season (May-September) the Western, Southern and Sabaragamuwa provinces are vulnerable to floods. During the Northeast monsoon (December-February) the Eastern, Northern and North-central provinces are prone to flooding. Rivers along the western slopes of the hilly central areas cause floods in the lower flood plains of Kalu Ganga and Kelani Ganga in particular during these periods. Beginning on 14 May 2016, a low-pressure area over the Bay of Bengal caused torrential rain to fall across Sri Lanka, causing floods and landslides which affected devastatingly. An area of low pressure above Sri Lanka has caused heavy rainfall across the country since 14 May 2016. Some locations saw over 350 mm of rain fall in 24 hours. Floods and landslides have caused havoc in as many as 22 districts of the country, including Colombo district. According to the Department of Meteorology of Sri Lanka, in a 24-hour period of 15 to 16 May, Colombo recorded 256 mm of rain. According to World Metrological Organization’s figures, the mean total rainfall for Colombo in April is 245.6 mm. This flood killed 101 people with 116 people missing. Sri Lanka’s Disaster Management Centre (DMC) reported that over 301,602 people have been affected. Almost 5037 homes have been damaged and 68 houses were fully destroyed. According to National Disaster Relief Services Centre (NDRSC) records 31 MSMEs were fully damaged and 5176 MSMEs were partially damaged in the Colombo district. With Sri Lanka facing the worst-ever floods in 27 years, Sri Lankan economy has begun to feel the pinch of climate change. The government appealed for foreign assistance to recover from gigantic floods that caused an estimated US$ two billion worth of damage. This is close to a staggering 2.43% of Sri Lanka’s GDP (US$ 82.3 billion) recorded in 2015. This figure rise may rise even further if opportunity cost and job losses are taken into account. 4. Impacts of disasters on MSMEs The studies of disaster impact on businesses was first appeared in late 1980s. The first study of this nature was carried out in United States after the Loma Prieta earthquake in 1989. Similar studies were conducted in United States after the catastrophic events of Great Midwest flood in 1993, Northridge earth quake in 1994 and Red River flood in 1997. According to the extant literature, the majority of studies on impacts of disasters on business and their continuity were conducted in United States and other developed countries. There are very few studies in this field in the context of developing countries. Disasters have shown profound adverse impacts all types of business including MSMEs. MSMEs are more vulnerable to natural hazards and they are affected in numerous ways. MSMEs’ vulnerability can be twofold. Firstly, smaller businesses have less financial and technical resources to reduce and cope with risk and lack of risk management mechanisms. Most of the MSMEs specially in developing countries are not practising disaster risk management mechanisms such as insurance, diversify their supply and customer bases and social protection for their employees [10]. Secondly, disasters could have a larger impact on MSMEs’ performance than other types of issues due to the general negative impact of the disaster on communities in which MSMEs operate [11]. Many businesses do not reach post-disaster stage. According to the US Institute for Business and Home Safety [12], more than 43 percent of businesses do not re-open following a disaster and 29 percent close for good within two years. The impacts of flooding can be categorized in numerous perspectives such as short term - long term; direct indirect; etc. Direct impacts are the damages to fixed assets and capital, damages to raw materials, crops, injuries and deaths. Indirect impacts refer to the issues created in production/services or continuity of the business. The
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majority of impact of flooding can be clearly visible. Property damages, ruined stocks, temporary business closure are few examples for this category. But there are some adverse impacts of flooding which are not clearly visible. For an example, loss of paper work/ documents due to flooding. These will result in problems in recovery process, tracing order status/payments and insurance claims. According to Metcalf et al. (2010), these impacts can be divided into six broad categories [13]. These six categories are: markets, logistics, premises, people, procedures and finance. In 2015, Philippine Institute for Development Studies has re-divided all these disaster impact on business into four categories, namely: capital, labour, logistic and market [14]. This study also used the four categories of flood impacts as this division is more appropriate as it was already successfully used in developing asian economy. Capital Damages to the land, equipment and revenue drops have been identified as an important source of financial stress for businesses after disasters. Revenues are expected to fall down due to the less or no sales during and after the disaster occurs. Damaged or loss of stock can create issues in continuity of business. It can cause temporary business closure while structural repairs needed to restore operations usually require large amounts of financial and other resources. Damages to manufacturing equipment and machinery may affected severely and disrupted production. If businesses are not insured or lack of resources for these repairs, survival of business is questionable. Logistic Disruptions after disasters regarding the provision of public and utility services such as electricity, water supply and sewage, fuel, transportations and telecommunications, can be responsible for businesses closing down and can cause population dislocation [1]. Dysfunction in facilities and public infrastructure is an expected effect of disasters requiring business to look at alternative or emergency logistic support to enable business to function. These public infrastructure damage can lead to business closure for extended periods till repairs completed. Labour Human resources are the prime asset for any organization including MSMEs which have a limited staff in general. Employees of these firms might be the immediate victims of the disaster including deaths and casualties. In addition, labour force might face physical and psychological health effects including injuries and stress [15]. Employees can be vulnerable to the numerous health hazards that prevail in weeks, even months after the event of flood. Waterborne dieses such as diarrhea and cholera are the most common epidemics that can spark after the flood. Employees who may affected severely are under financial distress too. Therefore, availability of manpower is crucial and firms have to consider manpower reinforcement and to support those affected workers to resume their duties at earliest which enable firms to meet targets, respond to spike in demand and resume operations at the shortest time. Market A shift in market demand also expected in the short term with sharp increase in the demand only for basic commodities while a drop in many non-essentials. In general, difficulties in distribution, receiving and shipping of products are very common issues after flood situation. As demand side for many products weaken, sales turn over drops drastically resulting MSMEs find it difficult to do accounts payable and ultimately manage their financial balance. This drop-in demand for their products are affected more seriously for MSMEs as majority of them are totally depend on neighbouring markets where the villagers are direct victims of flooding. In addition to above mentioned direct impacts of flooding, there are indirect impacts on community and local economy. Temporary and permanent business closure may result in loss of jobs which will create economic and social issues in local communities. Such economic and social impacts are difficult to accounted for monetary terms. 5. Research Objectives Micro and SME sector can be considered as the highly vulnerable sector of Sri Lankan economy which impacted drastically by the flooding as they are relatively resource constrained and less prepared for disasters. Having a sound understanding of the adverse impacts of flooding on Micro and SMEs might useful for entrepreneurial resilience
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through increasing of flood protection procedures. The objective of this research was to investigate the short-term and long-term impacts of flooding experienced by MSMEs located in Western Sri Lanka following the floods of mid-2016. Accordingly, this study sought to answer following research questions. 1. What are the immediate impacts of flooding on MSMEs? 2. What are the long-term impacts of flooding on MSMEs? 3. What lessons can be learned from these impacts? 6. Research Design and Methodology This research used quantitative cross-sectional survey research as its research design. The survey method is chosen because it attempts to provide insights about how 2016 flood event in Western Sri Lanka affected on the micro and SME’s. The survey research has its inherited advantages such as a cheap and efficient means of data collection, possibility to survey a large sample in a short time period, and with relatively little labour. 6.1 Population This study was conducted in the flood affected micro and SME’s which were located in the Colombo district. According to National Disaster Relief Services Centre (NDRSC) records, 31 MSMEs were fully damaged and 5176 MSMEs were partially damaged in the Colombo district. 6.2 Sample The current study is based on a random sample selected from the population of flood affected MSMEs in the Colombo district. The sample was consisted of 100 firms which were randomly selected from the flood affected firm list available at NDRSC. Either owner or manager of the selected firms were chosen as the respondents. According to the Bryman and Bell (2003), the random sampling method is best employed to enable the generalization of findings to the population [16]. Due to the time and resource limitations, the sample size was limited to 100 firms. However, the sample size obtained for this study satisfied the rule of thumb as proposed by Roscoe (1975) that sample size larger than 30 and less than 500 is appropriate for most studies [17]. 6.3 Data Collection and Preparation The data collection was carried out by face to face interviews with business owners/managers in order to identify their experiences on various types of damages, rehabilitation and re-establishment. A questionnaire was used in these interviews to eliminate interviewer bias. The questionnaire was designed to collect all necessary information for this study by addressing following aspects. 1. Basic information of the business and the owner 2. The short-term impact of flooding on MSMEs 3. The long-term impact of flooding on MSMEs 7. Data Analysis and Results The impact of flooding on MSMEs and the extent of these impacts were gathered using a five-point Likert scale. A weighting was allocated to each extent as bellows. Very much affected / Completely destroyed -4 Much affected / Damaged -3 Somewhat affected / Somewhat damaged -2 Affected a little / Slightly damaged -1 Not affect at all / Not damaged -0 The analysis commenced with the presenting the harshness of each and every identified impact of flooding. This study further used the relative importance index (RII), a well-known mechanism to evaluate the comparative importance of a single items to others [18, 5].
Gunathilaka Samantha/ Procedia Engineering 00 (2017) 000–000 Gunathilaka Samantha / Procedia Engineering 212 (2018) 744–751
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RII is calculated as follows: 𝑅𝑅𝑅𝑅𝑅𝑅 =
749
∑𝑤𝑤 𝐴𝐴 ∗ 𝑁𝑁
Where, ‘w’ is the weighting given to each impact by the respondent (i.e. 0 - 4 in this study) ‘A’ is the highest weighting (i.e. 4 in this study) ‘N’ is the number of respondent (i.e. 100 in this study) RII values for both short-term and long-term impacts of flooding on MSMEs and their consequent ranking were calculated. The findings were presented under the following headings. 7.1
Organizations: Scale and Ownership Out of 100 firms surveyed, 22 firms were belonging to micro category, 49 firms were belonging to small category and 29 firms were belonging to medium scaled firms.
7.2
Short-term impacts The basic analysis of collected responses for the short-term impacts of flooding is depicted in Table I. Table 1: Extent of damages / losses Losses / Impact
Damage, spoil or loss of stock Damage to premises/building Damage or loss of equipment Inability to conduct business Inconvenience to staff Loss of trading income Loss of records Travel difficulties for customers Loss of electricity, other services Delay in providing orders Delay in receiving items from suppliers Had to move to temporary premises
Very much affected/ Completely destroyed 40% 28% 67% 61% 18% 65% 18% 18% 26% 28% 29%
Much affected / Damaged
Affected a little / Slightly damaged 4% 5% 5% 4% 3% 6% 10% 5% 2% 4% 4%
Not affect at all / Not damaged
42% 51% 23% 23% 58% 23% 50% 52% 60% 47% 40%
Somewhat affected / Somewhat damaged 14% 16% 5% 12% 21% 6% 22% 25% 12% 21% 27%
40%
52%
4%
4%
0%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
As shown in the Table 1, the most devastating impact was damage or loss of equipment which was account for 67 percent completely destroy level. This study further identified that 65 percent of firms’ trading income had been completely destroyed. Table 2 depicts the ranking of impacts according to RII values. According to the Table 2, damage or loss of equipment was rank top as the impact experienced by the MSMEs owners. Even though many MSMEs are not having very sophisticated equipment, the existing ones are very important for them to continuity of the business. Moreover, the equipment might be the biggest portion of their assets of many MSMEs, hence owners were worried about damaging them. Loss of trading income has identified as the second highest negative impact of flooding on MSMEs while inability to conduct business took third place.
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Table 2: Ranking of impacts Losses / Impact
Damage, spoil or loss of stock Damage to premises/building Damage or loss of equipment Inability to conduct business Inconvenience to staff Loss of trading income Loss of records Travel difficulties for customers Loss of electricity, other services Delay in providing orders Delay in receiving items from suppliers Had to move to temporary premises 7.3
No. of responses with the highest value 40 28 67 61 18 65 18 18 26 28 29
Total weight (∑ w)
Mean impact weight
RII
Rank
318 302 352 341 291 347 276 283 310 299 294
.318 .302 .352 .341 .291 .347 .276 .283 .310 .299 .294
.795 .755 .880 .852 .727 .867 .690 .707 .775 .747 .735
5 7 1 3 10 2 12 11 6 8 9
40
328
.328
.820
4
Affected a little / Slightly damaged 3%
Not affect at all / Not damaged
46%
Somewhat affected / Somewhat damaged 4%
36%
40%
20%
0%
1% 80% 50%
79% 0% 40%
19% 0% 9%
0% 0% 0%
Long term Impacts The basic analysis of long term impacts is depicted in Table 3. Table 3: Extent of damage / loss (long term) Losses / Impact Very much affected/ Completely destroyed Disrupted cash flow or loss 47% income Staff anxiety from flooding to 4% business Higher insurance premium 1% Structural damage to premises 20% Loss of business records 1%
Much affected / Damaged
0%
As shown in the Table 3, the most devastating impact was disrupted cash flow which was account for 47 percent Very much affected level. This study further identified that 20 percent of firms’ structural damages to premises had been completely destroyed. Table 4 depicts the ranking of impacts according to RII values. According to the Table 4, disrupted cash flow was rank top as the impact experienced by the MSMEs owners followed by structural damages to premises.
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Table 4: Ranking of impacts (long term) Losses / Impact Disrupted cash flow or loss income Staff anxiety from flooding to business Higher insurance premium Structural damage to premises Loss of business records
No. of responses with the highest value 47 4 1 20 1
Total weight (∑ w) 337 224 184 320 243
Mean impact weight .337 .224 .184 .320 .243
751
RII
Rank
.842 .560 .460 .800 .607
1 4 5 2 3
8. Conclusion and Recommendation MSMEs in Colombo district were affected severely from the devastating floods in mid-2016. This research found that in economic perspectives, loss or damage of equipment was the highest damaged caused by the flood in the short run. Around two third of MSMEs completely lost/damaged their equipment. Loss of records had the minimal impact. Disrupted cash flow and loss income affected MSMEs most in the long run followed by structural damages to buildings. MSMEs need external support to get back to their usual business. The government should act as a initiator in this prosses. Since the main damage to MSMEs was plant and equipment, the aid relief agencies should procure capital goods such as tools, equipment and machinery and distributed to the relevant firms. As natural disasters are unpredictable, full prevention is neither possible or attainable. Disaster risk can be minimized through introducing insurance schemes. But, it is not possible for MSME to pay high insurance premium. The government needs to step in as a premium sharing partner allowing all MSMEs to get the protection. The authorities should think about rebuilding infrastructure on modern lines, creation of well-planned industrial zones and establishing business development services. References [1] Zhang, Yang, Michael K. Lindell, and Carla S. Prater. "Modeling and managing the vulnerability of community businesses to environmental disasters." 45th Annual Conference of the Association of Collegiate Schools of Planning, Portland, OR, October. Vol. 23. 2004. [2] Crichton, David. Climate Change and its Effects on Small Businesses in the UK. Axa Insurance, 2006. [3] Woodman, Patrick. Business continuity management 2008. London: Chartered Management Institute, 2008. [4] Wedawatta, Gayan, and Bingunath Ingirige. "Resilience and adaptation of small and medium-sized enterprises to flood risk." Disaster Prevention and Management: An International Journal 21.4 (2012): 474-488. [5] Wedawatta, Gayan, Bingunath Ingirige, and David Proverbs. "Small businesses and flood impacts: the case of the 2009 flood event in Cockermouth." Journal of Flood Risk Management 7.1 (2014): 42-53. [6] Kushnir, Khrystyna, Melina Laura Mirmulstein, and Rita Ramalho. "Micro, small, and medium enterprises around the world: how many are there, and what affects the count." Washinton: World Bank/IFC MSME Country Indicators Analysis Note (2010). [7] Murta, J., et al. "Enhancing Adaptive Capacity of Small to Medium Enterprises–Background Report." Institute for Sustainable Futures, UTS, Sydney (2012). [8] De Kok, Jan, et al. "Do SMEs create more and better jobs." Report prepared by EIM for the European Commission DG Enterprise and industry, Brussels, European Commission (2011). [9] Department of Registrar of Companies, Sri Lanka, Registration of Companies, (2012). [10] Preparing MSMEs for effective disaster management, KPMG, India (2016) [11] Battisti, Martina, and David Deakins. "Perspectives from New Zealand Small Firms: Crisis Management and the Impct of the Canterbury Earthquakes." New Zealand Centre for Small & Medium Enterprise Research (Ed.), BusinesSMEasure. Palmerston North: Massey University (2012). [12] Open for Business: a Disaster Planning Toolkit for Small Business Owners. Institute for Business and Home Safety (1999). [13] Metcalf, G., Jenkinson, K. and Johnstone, K. A changing climate for business. 3rd ed. Oxford: UK Climate Impacts Programme (2010) [14] Ballesteros, Marife M., and Sonny N. Domingo. Building Philippine SMEs Resilience to Natural Disasters. No. 2015-20. PIDS Discussion Paper Series, 2015. [15] Penning-Rowsell, Edmund, Sue Tapsell, and Theresa Wilson. "Key policy implications of the health effects of floods." Extreme Weather Events and Public Health Responses. Springer Berlin Heidelberg, 2005. 207-223 [16] Bryman, Alan, and E. Bell. "Breaking down the quantitative/qualitative divide." Business Research Methods (2003): 465-478. [17] Roscoe, John T. Fundamental research statistics for the behavioral sciences [by] John T. Roscoe. 1975. [18] Yang, Jyh-Bin, and Pei-Rei Wei. "Causes of delay in the planning and design phases for construction projects." Journal of Architectural Engineering 16.2 (2010): 80-83.