Assessing small & medium-sized enterprises’ resilience capacity to flooding: Evidence from a structural equation model

In this study a model that comprises of factors linked to the resilience capacity of small and medium-sized enterprises (SMEs) to flooding is tested. A sample of 343 enterprises from flood-prone areas was administered a structured questionnaire on cognitive, managerial and contextual factors that influence the ability to shape effective responses to flood challenges. Structural Equation Modeling is employed to identify associations between the various observed items forming the individual latent sub-constructs, as well as the associations between these latent sub-constructs with the flood resilience capacity construct (FRCI). Findings reveal that the major contributor to the FRCI is the sub-construct of ‘behavioral/managerial’ factors (beta = 0.893; p-value<0.001). Moderate associations are observed with the ‘cognitive’ factors (beta = 0.157; p-value<0.1), whereas no associations are found with the ‘contextual’ parameters linked to FRCI. Through the proposed approach, an analytical framework is set forth that will help standardize such assessments with an overarching aim of reducing the vulnerability of SMEs to flooding. This is achieved by identifying major internal and external attributes explaining the resilience capacity which is particularly important given the limited resources these enterprises have at their disposal and that they tend to be primary sources of vulnerabilities in supply chain networks.