drought

Spurring resilience: what drove successful adaptation to COVID-19?

Overview

Organizational resilience is the ability of a company to adapt positively or even emerge stronger from a significant setback. The increasing number of major crises over time and our limited understanding of companies’ reaction to these crises that significantly disrupt their operations have made this area increasingly interesting for both management scholars and policymakers worldwide.

In this study, researchers analysed how well companies were able to adapt to the COVID-19 pandemic. The core ideas of the study were that organizational resilience will depend on firm characteristics and their ability to change their business models through innovation. To these hypotheses, the team of researchers used data on more than 11,000 firms from 34 countries which exhibited great diversity in terms of how and when they have been affected by COVID-19 pandemic. They found that companies with female leaders were less resilient than those with males, while companies with multiple units and those that innovated their business models were more resilient to the COVID-19 shock.

Based on these findings, the researchers have also suggested some management and policy recommendations for building a firm’s resilience towards future disruptions. Specifically, companies that adopt innovative business models are more likely to survive crises and will also outperform those that are unwilling or unable to change their business models. Thus, this research highlights the importance of engaging in delivery or carry-out services for products sold, as well as the adoption of telework as important innovations to existing business models. In addition, have a diversified (multi-unit) structure allows firms for greater flexibility and arbitrage of internal resources, all of which contribute to their resilience in the face of a shock or crisis. Finally, females tend to bear the brunt of the increased domestic workload due to lockdowns, particularly in the case of the COVID-19 crisis. Thus, consistent with researchers’ expectations, this unbalance at home combined with weaker network positions and lower access to external financing will likely weaken a firm’s resilience to the shock. A result which is confirmed by the empirical analysis of this study, and one that mandates also better policy provisions (in terms of assistance to female workers and managers as well as to external finances) in times of crises.

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Team

Principal investigator

Sorin Krammer profile image

Professor Sorin Krammer

Professor of Strategy and International Business | Research Lead, Dept. of Strategy and International Business | Sustainability Fellow - the Institute for Sustainability