Digitalization and the Covid-19-led public crisis management: an evaluation of financial sustainability in the Azerbaijan business sector

Abstract

One of the key challenges for businesses during the Covid-19 pandemic has been to maintain financial sustainability despite the public crisis and consumer demand shocks. While some companies have managed to digitize and cope with the new realities, others have not. This will determine the future of companies and the direction of anti-crisis tools in management strategies. The purpose of this study is to analyze the use of digitalization as an anti-crisis tool among Azerbaijani businesses during the Covid-19 outbreak. The data set is based on voluntary survey data gathered from key businesses of the Azerbaijan economy. Our analysis applied k-means clustering, the related-samples Wilcoxon Signed Rank test and the independent-samples Mann-Whitney U test to learn whether there was any connection between digitalization and financial sustainability. Our findings indicate that 42% of the businesses that participated in the study obtained benefits by using digitalization as a crisis management tool during the Covid-19 pandemic period, but 38% of the respondents did not report any significant changes in their businesses despite increased digitalization efforts. Moreover, 20% of the businesses examined experienced negative changes after digitalization. The results of the independent-samples Mann-Whitney U test indicated that those businesses that had high scores before and after the increased digitalization efforts during the Covid-19 pandemic, achieved higher median profits, while the businesses with lower scores experienced a financial loss. As can be seen from the results, the chances of benefiting from digitalization are rather uncertain for local businesses. The main policy conclusion from this study is that businesses in Azerbaijan need to address the digitization challenge comprehensively to increase benefits and reduce costs. The results of our study are useful for business owners, policy makers, and top managers when developing strategies for enterprise-level digitization, especially during and after viral outbreaks.