Contradiction or Consistency: The “Double-Edged Sword” Effect of Asset Specificity on Organizational Resilience

Abstract

In a turbulent environment, organizational resilience is critical to a firm's survival and long-term development. Specific assets, as a strategic resource for firms seeking a competitive advantage, have a “double-edged sword” effect on organizational resilience. There is less literature on the relationship between asset specificity and organizational resilience, and their perspectives differ. On the one hand, as the firm's “nuclear resource,” specific assets have “unique competitiveness” and assist the firm in resisting competitors and disruption. Specific assets, on the other hand, are “high locking,” making them unsuitable for the volatile environment. Its impact on resilience is contradictory, and it merits further investigation. This article investigates the impact of diverse types of asset specificity on organizational resilience and analyzes data from 302 Chinese firms. The findings show that “hard” asset specificity has a negative impact on organizational resilience, whereas “soft” asset specificity has a positive impact. As a dynamic capability, strategic flexibility mediates between specific assets and organizational resilience. Furthermore, organizational memory has a negative moderating effect on the relationship between strategic flexibility and organizational resilience. While organizational memory is useful for daily decision-making, it is ineffective for developing organizational resilience in turbulent environments. The article provides strategies for firms to invest in specific assets for the sake of developing organizational resilience.