Small Businesses Business Continuity Scholarly Articles
Review article
Business continuity management of small and medium sized enterprises: Evidence from Thailand☆Abstract
The concept of business continuity management (BCM) has recently emerged with regard to small and medium-sized enterprises (SMEs) in Thailand, and only few relevant studies were conducted. Thus, the present study aims to generate a better understanding of current practices of BCM by SMEs as well as to illuminate their assistance needs. Data were collected from 136 SMEs in Thailand by means of a questionnaire targeting top management. While the study reveals a substantial degree of Thai SME disaster experience, it shows a low-level of preparedness for business continuity, including a failure to develop a written business continuity plan (BCP). Although knowledge of BCM and relevant training needs vary among SMEs, results suggest that perceived disaster readiness, business continuity knowledge and training needs positively correlated with a scale of business size, operation period and disaster experience. Thus, the study highlights the importance of extending support to small businesses, particularly ones in disaster prone areas. Equally important, both public and private sectors can play an important role in promoting BCM practices among SMEs.
Introduction
There is a need for "business[es]… to integrate disaster risk management, including business continuity, into [their] business models and practices through disaster-risk-informed investments, especially in micro, small, medium-sized enterprises" (Third World Conference on Disaster Risk Reduction [40].
Owing to efforts under the Hyogo Framework for Action (HFA) 2005–2015: "Building the Resilience of Nations and Communities to Disasters" developed at the First World Conference on Disaster Risk Reduction [25], mortality from disasters has decreased in some countries ([40]; United Nations Office for Disaster Risk Reduction (UNISDR) [42]). However, hazards to people and to economic assets have been rising due to a failure to address underlying risks associated with rapid population and economic growth, and globalised supply chains [42], [44]. The United Nations Office for Disaster Risk Reduction (UNISDR) defines disaster as "a serious disruption of the functioning of a community or a society … which exceeds the ability of the affected community or society to cope using its own resources" [41]. In this research, a "disaster" refers to the crisis situation that results from destruction brought about by natural hazards such as hydro-meteorological and geophysical factors.
The Asia-Pacific region is the most disaster-prone region in the world, experiencing around 43% of disasters that occurred globally between 2004 and 2013 (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), [22]). The impacts of these disasters on businesses were enormous. More than 55–95% of the damages from major disasters in the region between 2009 and 2011 were borne by the private sector (Asian Disaster Preparedness Centre (ADPC), ESCAP, & R3ADY Asia-Pacific, 2015). In the ten years from 2005 to 2014, Thailand in particular was affected on average by four disasters per year, causing 180 lost lives and more than US$4.2 billion in damage each year [23]. During the periods, Thailand experienced major disasters such as the Indian Ocean earthquake in 2004, severe flooding in 2010 and 2011, and droughts in 2015 [23]. The 2011 Chao Phraya floods were one of the high ranked disasters globally in terms of economic damages like other disasters such as the Great East Japan earthquake in 2011, the Kobe earthquake in 1995 and the Hurricane Katrina in the United States in 2005. The floods were also the worst in 50 years in Thai history, resulted in about 90% of the total economic losses suffered by the private sector [49]. Small and medium- sized enterprises (SMEs1) were severely disrupted by the floods, bearing 71.1 billion Baht in direct and indirect damages within a month [4].
Focusing on Thai SMEs, they account for 97.2% of all businesses in the country (approximately 2.7 million SMEs), 37.4% of the county's GDP, and over 80% of the workforce (Office of Small and Medium Enterprises Promotion [35]). In general, SMEs are particularly vulnerable to disasters due to their limited capacities and resources to prepare for and cope with a disaster.
In light of this, there is a growing interest in enhancing disaster preparedness among SMEs in Thailand. The Sendai Framework 2015–2030 adopted as a successor to the HFA in early 2015 also reiterated the importance of commitment and engagement of the private sector, particularly SMEs in reducing disaster risk. It also suggested putting in place measures for business continuity. Business continuity management (BCM) can be a significant form of contribution by the private sector to reduce disaster risk [14], [15]. BCM is particularly instrumental for SMEs in safeguarding their business from a disaster, and ultimately helping retain jobs for people and reducing negative socioeconomic impacts.
There are a few academic studies on disaster risk management by SMEs [29], [45], and not many studies focusing on BCM by SMEs have been conducted. In addition, Herbane [28] states that the use of BCM has been accelerated to developing countries including Thailand since the terrorist attacks of 9/11 (September 11, 2001). Thus, the concept of BCM2 is relatively new for SMEs in Thailand. The Asian Disaster Reduction Centre [11], [12] and the Asia Foundation [6] surveyed disaster preparedness by SMEs including adoption of a plan for business continuity in the Asia-Pacific region and Thailand, respectively, but the scope of the studies was limited in terms of its focus and understanding of the challenges and needs of SMEs in practicing BCM. Furthermore, although BCM is increasingly considered as a responsibility of top management [17], the research did not necessarily reach out to managerial personnel. Thus, the current study aims to investigate the status of business continuity preparedness by Thai SMEs by targeting top management as the main survey respondents.
This study poses the following four questions:
- (1)
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To what extent have Thai SMEs experienced disasters and considered their business readiness to deal with disasters.
- (2)
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What level of business continuity preparedness measures has been put in place by Thai SMEs.
- (3)
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What are the challenges encountered by Thai SMEs in practicing BCM.
- (4)
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What kinds of assistance do Thai SMEs require in implementing BCM.
This study is expected to provide evidence on BCM-relevant practices, including the bottlenecks and support needs experienced by Thai SMEs. Findings will feed into current efforts by the government and disaster specialists to explore more effective intervention and assistance to promote BCM among SMEs in Thailand.
Following is a review of the literature on disaster risk reduction (DRR) and its relation to SMEs, followed by a review of BCM, and, finally, a review of emerging efforts to promote BCM in Thailand. Next, the survey on business continuity preparedness of Thai SMEs is presented, the findings discussed, a set of recommendations offered, and finally the limitations of this study noted.
Section snippets
Disaster Risk Reduction (DRR)
Disaster risk reduction (DRR) is defined as the concept and practice of reducing disaster risks through systematic efforts to analyse and manage the causal factors of disasters, including through reduced exposure to hazards, lessened vulnerability of people and property, wise management of land and the environment, and improved preparedness for adverse events [41].
Under the HFA a significant paradigm shift took place in DRR [42], [43]. There is a change in focus from disaster response to
Data
From July to August 2015 primary data on Thai SMEs were collected by administering a prepared questionnaire consisting of four sections: 1) General information about the business and the respondent; 2) Disaster experience of the business; 3) Disaster preparedness (with three subsets of category i.e. disaster risk management, planning and employee communication and training); and 4) Knowledge, training, and assistance needs. The survey questions were designed by adopting the survey questions of
Discussion
The Sendai Framework promotes disaster-risk-sensitive businesses and putting in place measures for business continuity, particularly for SMEs. Under the leadership of the OSMEP and with the presence of DRR integrated national and sectoral plans, Thailand has tremendous opportunities to diffuse the practices of BCM among its SMEs.
Although this survey did not target Thai SMEs in disaster-prone areas, results reveal that 44.1% of SMEs surveyed were affected by disasters in the 10 years from 2004
Limitations of the study
The study was able to shed light on current BCM practices of SMEs as well as their support and training needs by targeting top management of SMEs. However, there are several limitations, which suggest several future research recommendations. First, the sampling techniques employed, namely, questionnaire dissemination through personal contacts and snowball sampling, may have caused bias in sample selection. Secondly, there was a likelihood that some SMEs hesitated or refused to respond to the
Conclusion
This study attempted to increase our understanding of current BCM practices by Thai SMEs and their challenges and assistance needs. In spite of research limitations, the study provided a couple of valuable evidence. First, although Thai SMEs experienced disasters substantially in the 10 years from 2004 and 2014, their preparedness for business continuity remains limited or low. Second, the more SMEs had disaster experience, the more they have readiness, including a written BCP, had business
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Source: https://www.sciencedirect.com/science/article/abs/pii/S2212420917302923
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