How Does Financial Resilience Enable Firms To Survive Periods Of Hardship?

DOI

10.2991/978-94-6463-694-9_34How to use a DOI?

Keywords

firm survival; financial resilience; innovation

Abstract

This study seeks to conduct a thorough investigation into the direct influence of financial resilience on firm survival, while also analysing the mediating role of innovation in this relationship. Firms have been confronted with a myriad of challenges during COVID-19, particularly in terms of financial viability. Scholars and stakeholders have increasingly recognized the paramount importance of financial resilience in ensuring firms’ survival. In the contemporary era marked by incessant transformations, innovation has emerged as an equally critical determinant of firms’ operational efficiency. Using a sample comprising 58,484 companies spanning 43 nations during the timeframe from 2020 to 2022, our results first show that financial resilience has a positive influence on firm survival. These results imply financial resilience should be prioritized by managers in constructing adaptable and resilient financial systems of a firm with effective risk management while regulators should adopt flexible credit policies and investors can consider integrating financial factors into their investment analysis strategies to anticipate business potential. Secondly, our research presents the findings related to the mediating role of innovation in the association between financial resilience and firm survival. Specifically, we observe that financial resilience contributes to increasing innovation activities, which, in turn, innovation impacts positively on firm survival. Therefore, it is also important to consider innovation factors in the process of building an enterprise’s operational framework. Regulators should also prioritize the implementation of supportive policies that facilitate innovation for businesses. Moreover, investors can apply innovation metrics to evaluate the investment value of a company.

Research purpose:

This study seeks to conduct a thorough investigation into the direct influence of financial resilience on firm survival, while also analysing the mediating role of innovation in this relationship.

Research motivation:

Firms have been confronted with a myriad of challenges during COVID-19, particularly in terms of financial viability. Scholars and stakeholders have increasingly recognized the paramount importance of financial resilience in ensuring firms’ survival. In the contemporary era marked by incessant transformations, innovation has emerged as an equally critical determinant of firms’ operational efficiency.

Research design, approach, and method:

To investigate the impact of financial resilience on firm survival and the mediating role of innovation in this relationship, this research integrates data from two sources: the World Bank Enterprise Survey (WBES) and the World Bank COVID-19 Enterprise Follow-up Surveys (CEFS). The World Bank Enterprise Survey (WBES) provides comprehensive information on the business environment in the 2005–2023 period, while the COVID-19 Enterprise Follow-up Surveys (CEFS) focuses on the impact of the COVID-19 pandemic through 2020 to 2022. The research model was built according to Özşuca (2023), Khan et al. (2022).

Main findings:

Using a sample comprising 58,484 companies spanning 43 nations during the timeframe from 2020 to 2022, our results first show that financial resilience has a positive influence on firm survival. Secondly, our research presents the findings related to the mediating role of innovation in the association between financial resilience and firm survival. Specifically, we observe that financial resilience contributes to increasing innovation activities, which, in turn, innovation impacts positively on firm survival.

Practical/managerial implications:

These results imply financial resilience should be prioritized by managers in constructing adaptable and resilient financial systems of a firm with effective risk management while regulators should adopt flexible credit policies and investors can consider integrating financial factors into their investment analysis strategies to anticipate business potential. It is also important to consider innovation factors in the process of building an enterprise’s operational framework. Regulators should also prioritize the implementation of supportive policies that facilitate innovation for businesses. Moreover, investors can apply innovation metrics to evaluate the investment value of a company.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Nguyen Ngoc Thuy Vy
AU  - Dang Truc Giang
AU  - Le Nguyen Anh Thu
PY  - 2025
DA  - 2025/04/30
TI  - How Does Financial Resilience Enable Firms To Survive Periods Of Hardship?
BT  - Proceedings of the International Conference on Emerging Challenges: Sustainable Strategies in the Data-driven Economy (ICECH 2024)
PB  - Atlantis Press
SP  - 513
EP  - 530
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-694-9_34
DO  - 10.2991/978-94-6463-694-9_34
ID  - Vy2025
ER  -