What Determines the Adaptation of Enterprises to COVID-19 in CAREC Member Countries: Empirical Evidence from Azerbaijan, Georgia, Kazakhstan, and Mongolia

We investigate the factors affecting firms’ ability to adjust production in response to the COVID-19 outbreak. We used firm-level survey data from the enterprise survey implemented by the World Bank Group, including a standard enterprise survey (baseline) and two waves of follow-up surveys conducted in 2020 and 2021, which included questions related to COVID-19 and firm behavior during the pandemic. We used data from four CAREC member countries: Azerbaijan, Georgia, Kazakhstan, and Mongolia. Using a probit model, we studied how different factors, including firm characteristics and government policy, affected the probability that a firm would be able to adjust its activities to the changed conditions. The results showed that firms which successfully adapted to the COVID-19 crisis were younger, foreign firms that had been innovative in the recent past, with female managers, a formal firm strategy with key performance indicators, and their own website. 

WORKING PAPER NO: 1299