Factors impacting on whether and how businesses respond to early warning signs of financial and economic turmoil: Jamaican firms in the global crisis

Much of the debate surrounding the recent global crisis is focused on respective governments’ policy responses to the financial and economic downturn. Much less attention has been placed on the manner in which private sector businesses responded to the crisis. This study analyses the results of a survey of 284 Jamaican businesses conducted in the first quarter of 2009. It identifies the responses to the crisis that were viewed as most likely at that stage, and uses logistic regression techniques to analyse the factors most likely to precipitate different types of responses. International transmission mechanisms, basic business characteristics, and managers’ experiences with and expectations of changing conditions in the finance, output and input markets were investigated as explanatory variables. The results presented are important, as the early response of businesses to economic and financial crisis often determines the extent of the ultimate outcome on the livelihoods of individuals in a country.