Analyzing the Determinants of Crisis Management in Vietnamese State-Owned Enterprises During Economic Shocks: Evidence from Civil Servants in the COVID-19 Pandemic

2.1 Definition and characteristic of exogenous shocks

Röglinger et al. [3] define a crisis as extreme, unexpected, and unanticipated circumstances that pose difficulties for enterprises and necessitate swift actions. By their causes, severity, scope, and effects, various crises can be distinguished. Besides, crisis categories (such as conflict, illness, and terrorism) and themes (such as risk, preparedness, and decision-making) are based on their comprehensive literature review on crises. Natural catastrophes are the primary focus of crisis literature, with preparation as the overarching theme and managerial efforts to evaluate the adverse impacts of crises.

According to Fridgen et al. [4], extant crisis typologies relate to a variety of criteria including predictability, controllability, and effect. Consistent with the previously discussed concepts, the term exogenous shock appears in the literature across a variety of disciplines, most frequently in economics, politics, and finance. According to the IMF, crises are conceptualized as the consequence of an external shock event. Exogenous disturbances cannot be predicted with precision in advance. Their existence necessitates a significant reorientation of the organization, including simultaneous and discontinuous modifications in structure, process, and control mechanisms. An external jolt may necessitate a long-term reorientation of an organization's processes, structures, and strategies in order to adapt to a new environment. According to the research, exogenous disruptions can be caused by a wide range of factors, such as natural calamities, political crises, and armed conflicts. Exogenous disruptions can result in both long-term and short-term adverse internal conditions, such as a shortage of high-quality human resources that results in a lack of productive capability or technical understanding. Some external impacts may last effects, while others will not. External shocks can severely limit a company's ability to access critical resources or pursue development opportunities, which can have a significant impact on the company's primary business or target markets. Exogenous disruptions have an impact on organizations when they are compelled to modify their plans, business models, and methods of producing goods in order to survive [5].

2.2 Definition and role of crisis management

Crisis management is a broad term that encompasses the decision-making, particular activities, and technologies engaged in all stages of a catastrophe. In the pre-crisis phase, the emphasis is on mitigation and preparedness, in the catastrophe phase, disaster response, and in the post-crisis phase, recovery and organizational learning [6]. In terms of preparation, agencies strive for resilience, which is defined as the capacity to recover quickly from adversity and use the experience to become stronger and more resourceful than before. Researchers have examined organizational resilience from a variety of perspectives, including capability, process, function, and outcomes. Thus, collective mindfulness has emerged as a heightened awareness of change that prioritizes safety over efficiency. Business continuity management is a recommended method for disaster response that entails recognizing, controlling, and minimizing risks that could prevent businesses from mission-critical activities and services. In addition, a disaster contingency plan that outlines actions to be taken in the event of a disaster is an important element of a business continuity plan [7]. In the aftermath of crises, Broekema et al. [8] analyzed the capacity of agencies to draw lessons from the resolution of crises. Fostering organizational learning not only after a crisis has occurred, but also prior to and during the crisis, has been discovered to have positive impacts on crisis management in general. In addition, the multifaceted nature of crisis management research and associated methodologies provided an overview of essential studies related to the prevention, minimization, and efforts in crisis management of organizations.

Besides, crisis management is referred to as management of emergency and change. A crisis can occur with little to no warning for time and place and an organization can face crises at every stage of development [9]. Crisis management often relates to a planning and mitigation function when the element of surprise appears in order to respond to untoward events [10]. For the public sector, crisis management is understood as an arrangement for minimizing, preparing, responding, and rehabilitating from catastrophes [11]. For enterprises, this process includes problems with finances, public relations, technology, and legislative threats ... [6].

Furthermore, crisis management is considered a significant feature of contemporary administration. During the crisis, one of the most important expectations of communities and members is the ability of leaders to solve inconvenient situations to minimize the negative effects of this crisis [10]. However, the complexity arising from the seriousness of the situations is the factor affecting the managers. This complexity is caused by limited information, and time pressure, and makes leaders stressed when they have to solve the severity of the crisis situation, and the risks being taken to decide on critical issues [12]. Besides, Domdouzis et al. [13] also shows tools and techniques for improving decision-making in crisis emergencies including training, and decision support systems. In general, painstaking preparation is one of the essential methods of crisis management.

2.3 Determinants of the crisis management

Naim and Ustun [14] show that leadership competencies with decisiveness, flexibility, and skill communication impact crisis management in the public sector by using structural equation modeling (SEM). Successful crisis management does not consider only the different factors affecting decision-makers but also the audience of decision-makers. Leaders in state-owned enterprises need to know how to manage crises. This is considered an essential task and skill for them. Hence, leaders need to be fully informed about these duties and responsibilities before they are assigned to manage an enterprise [15]. Furthermore, leaders need to be able to over the pressure from the increase of uncertain expectations, rapid change, and scarcity reaching their peak during times of crisis. Leaders often have to be able to adapt and come up with effective solutions during a crisis. Besides, one of the necessary skills for leaders in state-owned enterprises is the ability to work with new partners with whom they have never cooperated before [10]. In addition to accumulating experience to help leaders resolve crises, participating in training programs will also be the main method to help leaders improve their skills and enhance the necessary management capacity in crisis [12].

Besides, hi-tech applications in solving the economic crisis play an important and useful role. In general, exogenous shocks often occur unexpectedly and disrupt the production and business processes of enterprises. These changes create instability and disorder within the production operations process during the shock economics. These unexpected changes significantly impact management [12]. After an exogenous shock, enterprises and their existing decision-making processes face highly unstable environmental conditions that require rapid and appropriate action [16]. In such situations, increased transparency through increased digitalization is an effective method. Hi-tech and information support today are used in almost all modern businesses in order to eliminate the shortcomings caused by economic crises. The development and application of software simulators have been started in the field of the economy. In particular, due to the COVID-19 pandemic requiring social distancing, businesses have switched to working and interacting with customers remotely, so the application of digitalization and technology application in transactions is increasing rapidly.

At the same time, information systems supporting manager processes production are important. With the ever-growing complexity of crisis management, utilizing technology to optimize operations and remaining competitive are becoming increasingly important in a global market [17]. Moreover, Ahmed [18] shows that the demand for information increases more and more. Providing an effective information system may enhance the power of state-owned enterprises and help to create smooth operational action during economic shocks.

In addition, Broekema et al. [8] confirm that the organizational structure also influences crisis management. Applying innovations in administrative reform and crisis management needs to take into account organizational structural factors. This organizational structure is required to be designed in an inversely structured manner for high flexibility in an uncertain environment associated with centralization, formalization, and the ability to integrate horizontal and vertical differentiation capabilities which represent the most important and relevant aspects of the organizational structure. Creating a fit and logic in organizational structure is seen as a factor that can influence significantly the management process in times of crisis [9]. Davenport and Short [19] also show that crisis management relates to reorganizing the structure and the policy. Organizing the operating structure and making policies of state-owned enterprises often aims at goals such as improving labor productivity, streamlining production processes, minimizing costs, and using the most efficiently available resources in times of economic shocks. The reorganization involves reviewing and redesigning the production and business processes, and the methods of organizing operations of state-owned enterprises in order to achieve improvements in quality, productivity, efficiency, and customer satisfaction [20].

Furthermore, a friendly work environment is important to help employees maximize their working abilities, and create more motivation to help employees improve their work performance. Therefore, improving the working environment needs to be enhanced in the process of crisis management. Improving the work environment for workers will help state-owned enterprises develop more sustainably, and create sustainability for the economy. At the same time, the work environment also improves workers' qualifications, happiness, and experience. Crisis management efforts are often placed in relation to the work environment relating to structural organization, culture, and teamwork to maintain the continuous process development of enterprise during economic shocks [6].

Overall, factors impacting crisis management are studied in the literature including leaders, policy, organizational structure, information, and work environment. Some prior studies have used structural equation modeling (SEM), and regression models to evaluate the factors influencing crisis management. Although they did some tests of the influence, not a single one mentioned the influence of factors influencing crisis management in state-owned enterprises in times of economic shocks like COVID-19 by using the Exploratory Factor Analysis (EFA) and the Analytic Hierarchy Process (AHP). Therefore, this paper will be written to study this bank gap.

4.1 EFA results on the relationships between factors affecting crisis management in state-owned enterprises

Calculation results from Cronbach Alpha for 5 individual components making impacts on crisis management in the state-owned enterprises during COVID-19 time in Table 3. These elements and their scales have Cronbach Alpha>0.7; Total correlation>3, and all of the Crobach alpha of research concepts>Crobach alpha of observation variables. The results show that they meet the quality test and they are used to test by EFA. The PO4 observation variable has Alpha=0.423 (<0.6), so it is not used for the EFA test.

Table 3. Testing the reliability coefficient of the scale

Source: Author’s survey (2022)

EFA analysis for 17 observation variables of 5 elements that make a real impact on crisis management in the state-owned enterprises related to economic activities. KMO=0.789 (>0.5) shows that the exploratory factor analysis is suitable for the research data set. Testing the correlation between observed variables shows that the coefficient sig=0.00 (<0.05) shows that the observed variables have a strong correlation in each factor.

The results of clustering the factors show that the factor loading coefficients of the retained observed variables all have values greater than 0.55 in Table 4. These values ensure a correlation between observed variables and created factors. Among the observed variables, the variable IN2 about securing information has the highest correlation coefficient (0.798).

Table 4. Rotated component matrix

Source: Author’s survey (2022)

4.2 AHP results on the contribution of the dimensions on the overall crisis management

Based on survey results of 259 civil servants in three areas in Vietnam (Hanoi, Ho Chi Minh City, and Son La), using a reversible relationship function, factors determining the level of exposure contamination will be normalized. Next, the expert opinion matrices, vector weight matrix, and average weight matrix are respectively established from which to calculate and synthesize the weights according to AHP of the indicators and components to determine the contribution of the dimensions on the overall crisis management.

Table 5 shows the priority level for each level 1 option affecting crisis management in state-owned enterprises. The results for each group of factors have different levels of impact on the effectiveness of educational policies in rural areas. Specifically, the weight value of the policy factor is 0.40; next is the leadership factor with a weight of 0.23 and the weights of the organizational structure, information, and work environment factors with weights of 0.21, 0.10, and 0.7 respectively. Besides, the consistency ratio for the average of surveyed state-owned enterprises of level 1 factor is 9.8% (satisfying the condition CR<10%). The results are accepted because this proves that the forecasts about the elements are acceptable to give in the synthesis and evaluate the weights for each group of elements.

In general, the AHP results show that for crisis management of Vietnamese state-owned enterprises during the COVID-19 time, Policy is the most important factor, followed by Leadership (see Table 5). It is not surprising that policy and leadership account for 63% of crisis management because managing a crisis demands inter-organizational collaboration and collaborative leadership skills, suitable policies. Crises create unstable environments so leaders need to make timely decisions. In order to cope with the influence of these high-risk events, every competent leader must take efficient actions during crises [14]. It is noted that while Policy and Leadership reflect the crisis management aspect of Vietnamese State-Owned Enterprises but do not affect maximization at all, the fact that those civil servants see information as the least important factor/dimension with only a 10% contribution. It reflects the lack of information in the management process of state-owned enterprises. Therefore, the role of information is not appreciated.

Table 5. AHP weights and ranks of crisis management dimensions

Source: Author’s survey (2022)

4.3 AHP results on the contribution of the indicators on each component

Table 6. AHP weights and ranks of crisis management

Source: Author’s survey (2022)

Regarding the priority level for each level 2 option affecting crisis management of state-owned enterprises during the COVID-19 period. We report the weights and consequently, the ranks of the elements in each component in Table 6 show that the ranks indicate which indicator contributes more, or is more essential, toward the elements. First, it is observed that among the three indicators of policy (PO), recruitment policy (PO1) with 0.49, training policy (PO2) with 0.29, and digital policy (PO3) with 0.23. So, recruitment policy (PO1) is the most important indicator, followed by training policy (PO2), whilst digital policy (PO3) is the least important one. The CR consistency ratio of the economic factor group is 3.1%, satisfying the condition of CR<10%, ensuring the compatibility of judgments among survey subjects.

Regarding the organizational structure factor group (OS), the results of AHP at level 2 show that OS1 (0.45) has a weight nearly 4 times higher than 0S4 (0.10) and OS2 (0.16). For this group, the CR ratio is 1% (<10%) ensuring the appropriateness of the assessment. For the leadership traits and skills (LTS), the results of factors at level 2 estimate that LTS1 (0.55) is about 4 times higher than LTS3 (0.14), while LTS2 is 0.31. A CR rate is 3% (<10%) indicates that the perceived relevance is acceptable. Information factor group (IN), the factor considered to have the most impact on crisis management is IN1 with a weight of 0.42, followed by IN3 with 0.29, IN2 with 0.19, and IN4 with 0.10. The CR rate is 7.9% (<10%). In the group of work environment (WE), the factor of most interest is WE1 with a weight of 0.48, followed by WE2 (0.27), and WE3 (0.17). The CR ratio is 7.9% (<10%) ensures the validity of the judgment.

Hence, for each crisis management component, one can also observe from Table 6 that the most important indicators include recruitment policy (PO1), centralization (OS1), decisiveness (LTS1), easier access to information (IN1), and hi-tech application (WC1). These findings are consistent with previous studies on crisis management in enterprises including issues related to recruitment, communication and relations, hi-tech, policy, and information. This is now sometimes included in expanded business continuity strategies and centralization of organizational structure [22].

4.3 The role of the indicators on agriculture sustainability and its implications

The results show that policy factors play a decisive role in the crisis management of Vietnamese State-Owned Enterprises during the COVID-19 time, followed by leadership traits and skills, organizational structure, information, and work environment factors. The weighted results of the factors are as follows:

W_Policy (0.40) > W_{Leadership traits and skills} (0.23) > W_{Organization structure} (0.21) > W_Information (0.10)>W_{Work enviroment} (0.05)

Besides, the overall weights are calculated as the products of the weights from each level of the hierarchy system. The ranks of all indicators toward the overall measure will be calculated based on those overall weights. The results are reported in Table 7. In particular, we can observe the crucial role of recruitment policy (PO1) with 0.20, decisiveness (LTS1) with 0.13, and training policy (PO2) with 0.29 in the crisis management of state-owned enterprises during the COVID-19 time and these factors related to managers. A leader's essential competencies are developing the ability to give direction to employees, the ability to communicate tactfully, and other management skills that bring employees together and motivate employees to carry out their duties in the leader's desired form. An excellent leader is someone who knows how to assign tasks in accordance with the abilities of employees to achieve the highest work efficiency. However, employees often only perform their tasks well when they believe in their leaders. The process is a deliberate and continuous interaction between leaders and subordinates to perform tasks appropriate to their abilities. Good leaders use their management skills effectively to positively control management practices during times of crisis [18]. Besides, the least important indicators include resource optimization (IN3) with 0.04, vertical differentiation (OS3) with 0.16, teamwork (WE2), and culture (WE3) with 0.01. Once again, we argue that from the civil servant's perspective, recruitment policy is a reasonable and important factor. In contrast, the aspects of culture, teamwork, resource optimization of information, and communication are less focused on crisis management of Vietnamese State-Owned Enterprises during the COVID-19 time.

Table 7. The contributions of all indicators toward crisis management

Source: Author’s survey (2022)