Flexibility and crisis resistance: quantitative evidence for German establishments

Purpose – The research question which this paper aims to address is: To what extent does (labour) flexibility contribute to crisis resistance at establishment level? More specifically, the authors seek to analyse the determinants of variation in the extent to which establishments showed resistance to the global financial crisis (GFC), i.e. the extent to which they were affected by the crisis, focusing on an available secondary dataset related to organizational, industry-level, and (numerical) labour flexibility. Design/methodology/approach – Based on a unique cross-sectional dataset of 8,000 establishments in Germany, the authors use binary logistic regression to assess the link between organizational characteristics, industry-specific factors and workforce characteristics, and the fact that some establishments were affected by the GFC while others were not affected. Findings – Establishment size, being located in western Germany and business problems before the crisis were positively associated with being affected by the crisis. The sector of economic activity also played a significant role. Contrary to predictions relating to the strategies employed by flexible firms, the extent to which they made use of temporary agency workers or of fixed-term employees showed no significant association with crisis resistance. Practical implications – The dependent variable measures the management respondent's (subjective) perception of being affected by the crisis, although it does not specify the ways in which a company has been affected, for example by a drop in demand or by difficulty in extending credit. The set of independent variables permits several tentative conclusions regarding numerical and functional flexibility, but it does not take alternative forms of flexibility into account. Originality/value – Using a unique and representative dataset, the findings suggest a less important role for numerical flexibility in establishment performance and crisis resistance when compared to other variables, at least within the authors’ research framework and its exceptional external economic circumstances.