Climate change is making natural disasters more frequent and severe, yet little is known about the capacity of firms to withstand such disasters and adapt to them. We examine these issues using the World Management Survey (WMS), which includes new questions on firms' climate change perceptions and climate adaptation behavior as well as management practices. Combining the WMS with geocoded data on natural disasters, we create a panel spanning 8,000 firms across 33 countries over three decades. We show that exposure to disasters reduces firm survival and subsequent growth. Firms with structured management practices are more resilient, suffering much smaller drops in jobs growth and lower exit risk. Exploring mechanisms, we show that firms with more structured management practices have more accurate perceptions of climate-related risks to their businesses and are also more likely to have implemented measures to adapt to climate change. Our results suggest that structured management practices shape firms' resilience to climate shocks, highlighting management as a policy-relevant margin for mitigating the harmful consequences of climate change.
JEL classification: Q54, M11, L25, H12
Agnes Norris Keiller and John Van Reenen
7 June 2024 Paper Number POIDWP095
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