Antecedents of organizational resilience in economic crises—an empirical study of Swedish textile and clothing SMEs

Abstract

Economic recessions have created challenges for small and medium-sized enterprises (SMEs) and contributed to disruptions requiring them to be resilient. At times of economic crises, SMEs face major threats to their financial performance and ultimately to their survival. The average number of Swedish textile and clothing (T&C) firms that went bankrupt during the recent crisis (2007–09) escalated twofold compared to the average over 2000–10. Following the 1990s economic crisis nearly 12 per cent of the T&C companies went bankrupt in 1994–95. The structural industrial statistics also plummeted in these crisis years, aggravating many internal problems in SMEs as a ripple effect.This study concentrates on the constraints faced by Swedish textile-related SMEs, primarily during the economic crises of the past two decades (1990–93 and end 2007–09), and identifying the antecedents and their different degrees of influence on economic resilience. It also deepens the understanding of the underlying patterns in the antecedents, observed in SMEs, favouring or inhibiting resilience due to their significance or deficit, respectively.The paper adopts an exploratory research conducted in two phases, first through a survey and followed by a series of interviews, responded by eight Swedish T&C SMEs. Annual reports provide a detailed account of the financial performances of these firms. A conceptual resilience framework was developed earlier, based on a review of extant literature.Findings provide insight on how the responding firms considered resourcefulness, viz. cash flow and investment finance, relational networks and material assets, along with ‘dynamic competitiveness’ through strategic and operational flexibility to be key enablers of resilience and financial performance, mostly through generation of profitability, cash flow/liquidity and sales turnover. Responses also highlighted the indirect influence of the ‘soft’ learning and cultural aspects like attentive leadership and collectiveness on economic resilience, considered tacit and ingrained in small or medium-sized family businesses. Additional process initiatives, in particular growth and continuity strategies, were also emergent patterns to properly utilize and direct the antecedents for resilience development. These are beneficial for firms to understand the key areas, in which to invest for developing resilient business models.