Economic crisis and organisational change in developing countries: evidence from Chile

Recent theoretical models have shown that when demand is slack, firms tend to introduce new management practices and/or reorganise their production methods; however, few microeconometric studies deal directly with the relationship between organisational change and economic crises. In this paper, we use data from Chilean manufacturing plants, and the international financial crisis of 1998 to shed light on this phenomenon. Using National Survey of Technological Innovation statistics for two years, both before and during the financial crisis, we study how different measures of organisational change responded to the economic crisis. In addition, we analyse the impact on product and process innovation. Our results are consistent with the idea that economic crises may have some effect on organisational change, but it is not limited to this specific type of innovation. We find that economic crisis may also spur the development of new products and process.