Local government strategies in the face of shocks and crises: the role of anticipatory capacities and financial vulnerability

Abstract

This article, building on governmental financial resilience literature, and using data from a survey of over 600 local governments in Germany, Italy and the UK, looks at the role that external shocks, anticipatory capacities and associated perceived vulnerabilities play in determining different organizational response strategies (i.e. ‘bouncing back’ versus ‘bouncing forward’ strategies) at times of crisis. In the face of shocks, higher perceived vulnerabilities will especially be associated with bouncing back strategies, whereas the presence of anticipatory capacity will be associated with bouncing forward strategies. Points for practitioners The present study reveals the crucial role of perceived vulnerabilities and anticipatory capacities for local governments that face shocks and crises. While organizational responses in the sense of bouncing back (e.g. retrenchment, buffering, downsizing, cutbacks) are strongly linked to the associated vulnerabilities, the implementation of bouncing forward strategies (e.g. transformation, repositioning, reorientation) turns out to mainly be dependent on anticipatory capacities, which enable organizations to better recognize potential shocks before they arise. This emphasizes the importance of developing wider anticipatory capacities within local governments as a key element to cope effectively under difficult conditions, as well as to build and nurture a financial resilience culture.