The Global Crisis And Crime: A Look Into Manufacturing Firms

In this study, we examine how the 2007-2009 Global Crisis affected manufacturing firms' security spending and losses due to property crime (i.e. theft, robbery, vandalism, and arson) in Eastern Europe and Central Asia. Although we are currently experiencing a new global crisis due to the coronavirus, we cannot examine this current period yet since the current crisis is still ongoing. This article pulls together different literatures on the aftermath of the 2007-2009 Global Crisis in middle income economies, the influence of crisis on global supply chains, and the connections between unemployment and crime, to provide an empirical investigation of the trends in security spending within manufacturing firms across time. We find that fewer firms paid for security after the crisis has passed. On the other hand, the firms that spent money on security after the crisis ended actually spent a larger proportion of their sales on security. Our results indicate that, after the crisis, although fewer firms experienced losses due to crime, certain types of firms changed their spending on security. More of the smallest and largest firms, fewer of the firms with no female owner and fewer of the firms with a male top manager spent money on security after the crisis. Also, the firms with one or more female owner or a male top manager spent more money on security after the crisis. Overall, we find that there is a “gender effect” on security spending. Male and female owners' spending patterns are different. Also, male and female top managers' spending patterns are different. Also, our results show that manufacturing firms viewed crime as a much lower obstacle in the business environment after the financial crisis, and most firm-types reported lower losses due to crime after the financial crisis had passed. We are hoping that these findings will guide manufacturing firms with respect to their operational spending. Although an economic crisis may cause crime rates to go up initially, over time, this trend reverses. Therefore, firms may want to recognize this cycle in responding to the next crisis.