Michele Sabatino Assistant Professor – KORE University of Enna ECONOMIC CRISIS AND RESILIENCE Resilient capacity and competitiveness of the enterprises Michele Sabatino Assistant Professor – KORE University of Enna

ECONOMIC CRISIS AND RESILIENCE OBJECTIES Analyze and identify the elements of vulnerabilities and the capacity of economic resilience at territorial and business level.

THE CONCEPT OF RESILIENCE LITERATURE The concept of resilience The word “resilience” comes from the latin verb resilire, that is to rebound. However, today there is no single definition of resilience. The first definition is from engineering (Hotelling, 1973; Pimm, 1984; Walker et al, 2006): “how fast a system that has been displaced from equilibrium by a disturbance or shock returns to that equilibrium” . For this, the system has to be able to reach an equilibrium by itself:

THE CONCEPT OF RESILIENCE LITERATURE (2) The ecological resilience (Hotelling, 1996; Gunderson e Hotelling 2002; Gunderson e Pritchard 2002; Walker et al, 2006) is “the capacity of a system to absorb disturbance and reorganize while undergoing change so as to still retain essentially the same function, structure, identity and feedback” . According to Holling the resilient Social Ecological Systems are able to evolve, because of a disturbance, to multiple states different from the one before the disturbance, keeping the essential functions and restoring the structures which distinguish them.

THE CONCEPT OF RESILIENCE LITERATURE (3) The third and last definitions of resilience, adaptive resilience, is defined “the ability of the system to withstand either market or environmental shocks without loosing the capacity to allocate resources efficiently” . The concept of adaptive resiliency may be interpreted in terms of regional economy as the ability of the different regions to adapt the changes and the shocks. This process requires adaptability and adaptation to the changes that these territories have.

Resilience and systemic vulnerability (Martin R. - 2011) APPROACH TO THE STUDY OF RESILIENCE FOCUS Engineering Ability of a system to return after the disturbance to the original equilibrium. The focus is on the condition of stability around the equilibrium point (Odum, 1965) Ecological Quantity of a disturbance a system can absorb before falling in a condition of equilibrium of inferior level, governed by different set of processes. The focus is on the behaviour of the system “oriented to equilibrium”. The approach implies the existence of multiple equilibriums (Holling, 1973) Adaptive system (socio-ecological) Ability of the system to advance the change as a consequence of an unforeseen event to minimize the negative impact. The focus is on the adaptive abilities of the system and the learning mechanism (Carpenter, Walker, Holling 2001; Folke, 2006)

THEORETICAL APPROACHES TO THE ECONOMIC RESILIENCE DEFINITION The most complete definition of economic resilience is the one adopted by the EU according to wich it is the ability of an economic system (local, regional, national, cluster, etc.) «to withstand, absorb or overcome an external shock» and to keep and/or to return the previous state (typically «of equilibrium ») (ESPON, 2012).

THEORETICAL APPROACHES TO ECONOMIC RESILIENCE More generally, economic systems affected by shock may show, in the short or medium - term, the different reactions: a) some manage to absorb the shock and return to the path of growth existing - within a relatively short time frame - by virtue of behavior “economically resilient”; b) others may not see affected his state of balance or path of economic growth at all, showing therefore not vulnerable and “shock-resistant”; c) Finally, others may appear unable to absorb or react to negative shocks, within a defined time, thus proving to be “not-resilient” (vulnerable).

RESILIENT ECONOMIC SYSTEMS Naudé proposes a building methodology of a Local Vulnerability Index with the following factors of local vulnerability: Degree of openness of the economy. Structure of the local economy. Concentration of exports (specialization in exported goods and services). Territorial marginality. Social development (socio-economic inequality). Income variability (instability in the growth rates and risk). Financial system (accessibility). Demographic development. Health (good health). Governance. Geographical and environmental characteristics.

ECONOMIC RESILIENT SYSTEMS More local vulnerabilities are: Human capital (knowledge, organizational culture, adaptability). Degree of innovation of the local business system (creative responses).

THEORETIC FRAMEWORK Starting from the theoretical framework proposed by Graziano to describe the economic system in three dimensions (economic, social and environmental) and later in major categories "vulnerability" and "resilience“ is meant to analyze the link between resilient business and resilient territories and what are the business characteristics resilient.

THEORETIC FRAMEWORK Graziano proposes a precise definition of territorial system resilient and subsequently indicators able to describe vulnerabilities and resilience: A resilient system is, therefore, a system with a diversified and modular structure, with a good availability of resources and with a good strategic adaptability resulting from systemic elements with redundant functions. A vulnerable system is a system characterized by strong structural homogeneity and dependent components, characterized by lack of functional autonomy.

ECONOMIC DIMENSION VULNERABILITY’/RESILIENCE

ECONOMIC DIMENSION VULNERABILITY/RESILIENCE From the propose scheme is found a strong relationship between territorial system and the business system. The vulnerability of enterprises and the vulnerability of the territories are two related phenomena. The principles of vulnerability and resilience can be applied within individual companies to understand the link between territories resilient and entrepreneurial system.

RESILIENT COMPETITIVENESS OF THE ENTERPRISES The resilient enterprises are, in fact, able to carry out the most appropriate strategies as an answer to the external challenges and consequently to get positive and sound performances in a long time. But which are the decisive factors of resilience? It offers a conceptual framework to define behaviors, characteristics and abilities of resilient enterprises.

THE RESILIENT COMPETITIVENESS OF THE ENTERPRISES It proposes seven determinants able to qualify a company as resilient and therefore able to face the economic and social shocks: 1) Focusing of the product; 2) Geographical focus; 3) Speed of decisions; 4) Organizational structure based on the model of the clan; 5) Culture of strong imprinting national - corporate values; 6) Customer centricity; 7) Efficient system of incentives linked to strategic objectives.

THE RESILIENT COMPETITIVENESS OF THE ENTERPRISES 1) Focus Product: resilient companies are those which simplify the structure of their business and remain focused on their core competencies (core competencies). 2) Geographical focus: resilient companies are those who invest and maintain an element of strength its market of origin and invest in geographic areas coherent with each other. 3) Speed of decisions: businesses fast in making decisions have a high degree of resilience.

THE RESILIENT COMPETITIVENESS OF THE ENTERPRISES 4) Organizational structure based on the model of clan: resilient businesses move towards simplification of the organizational structure. Typically they have an average of 8/10 people between the top and the base of employees. 5) Culture of strong national imprinting - corporate values: companies are resilient when they have been able to clearly define their asset value depending on the nation of origin. 6) Customer centricity: resilient companies are those which, especially in times of crisis, were able to focus on the customer and his needs.

THE RESILIENT COMPETITIVENESS OF THE ENTERPRISES 7) Efficient system of incentives linked to strategic objectives: resilient businesses are those that do not focus just on the achievement of profit, but set out their strategies to achieve long-term goals. The following table, therefore, proposes a model in two macrovariables reference subdivided into determinants of resilience.

ELEMENTARY FACTORS OF RESILIENCY MACROVARIABLE ELEMENTARY FACTORS OF RESILIENCY ORGANIZATIONAL STRUCTURE OF THE ENTERPRISES Structure of the costs Timeliness, anticipation and rapidity of the business decisions Involvement and efficient system of the incentives with strategic objectives Simple organizational structure and control system on a clan model RELATIONASHIP WITH THE REFERNCE MARKET/MARKETS Ability of focusing on the customer Product focalization and quality management Business culture of National imprinting and value system Geographical focalization and internalization strategies

CONCLUSIONS Resilient territories and resilient enterprises are a relevant continuum. There aren’t any resilient territories without productive enterprises and systems with resilient abilities and competences. The proposed scheme gives us the ability to measure, therefore, the organizational resilience of businesses through some major determinants and then to propose a culture of resilience to improve business performance and respond adequately to the crisis and changes. This scheme will be applied to a sample of n. 100 companies so as to verify the validity of the proposal.

Thank you for the attention!