Firm Resilience Research Articles

Working capital management efficiency in large firms during crisis: implications for community-based enterprises

Purpose This study aims to examine the impact of the COVID-19 pandemic on the working capital management (WCM) efficiency of resilient and nonresilient firms listed on India’s BSE 500 index. It focuses on key WCM components such as cash conversion cycles (CCC), accounts receivable periods, inventory conversion periods and accounts payable periods. Design/methodology/approach Panel data from 2012 to 2023 is analyzed using the System Generalized Method of Moments model. This study differentiates between resilient and nonresilient firms based on liquidity stress tests and cash flow performance before and during the pandemic. Findings Resilient firms demonstrated superior WCM efficiency, maintaining shorter CCCs, effective receivables and inventory management and stable payables. Nonresilient firms faced significant inefficiencies, including extended CCCs and slower receivables and inventory turnover, exposing gaps in their WCM practices. Research limitations/implications This study is limited to the pandemic period. Future research could explore broader timeframes to understand the long-term effects on WCM. Practical implications Managers should enhance WCM strategies, focusing on cash flow optimization to strengthen firm resilience during crises. Social implications Efficient WCM supports job retention, preserves supplier relationships and stabilizes local economies, contributing to broader community resilience during crises. Originality/value This study extends the resource-based view by emphasizing WCM as a critical internal resource that supports firm resilience during economic crises. It contributes new insights into how Indian firms adapted their WCM strategies in response to COVID-19.

Do Institutional Investors Stabilize Equity Markets in Crisis Periods? Evidence from COVID-19

During the COVID-19 stock market crash, U.S. stocks with higher institutional ownership (IO) performed worse than those with lower IO. By studying firm-level changes, we identify two mechanisms behind this effect: a sudden downscaling of institutional capital in the equity market and a collective attempt by institutions to reposition their equity portfolios toward more COVID-resilient stocks. The stock price effects of their “portfolio downscaling” trades quickly reversed in the market’s recovery phase, whereas those of their “portfolio repositioning” trades lingered. The institutional rush for firm resilience also caused price pressures, with retail investors providing liquidity to stocks sold by institutional investors, both during the crisis and afterward. Overall, our results indicate that when a tail risk is realized, institutional investors amplify price crashes. This paper was accepted by Lukas Schmid, finance. Funding: S. Glossner and P. Matos acknowledge financial support from the Richard A. Mayo Center for Asset Management at the Darden School of Business. S. Ramelli and A. F. Wagner acknowledge financial support from the University of Zurich Research Priority Program “Financial Market Regulation.” Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.03411 .

Too hard to die: an empirical overview of the post-pandemic resilience and financial performance of the Italian fashion industry

PurposeResearchers have paid limited attention to how the fashion sector has evolved in the years following the pandemic. This study aims to address this gap by providing an overview of the Italian fashion sector and its financial performance related to the concept of resilience.Design/methodology/approachThe model is based on a segmentation analysis of 5,129 firms in the Italian fashion sector, utilizing financial variables such as return on equity and return on sales. Moreover, it employs significance tests with the aid of Levene’s test and ANOVA.FindingsIt was discovered that the debt ratio, operating cash flow and aggregate growth ratio (AGR) over a five-year period exhibit significant differences across clusters. Additionally, it was determined that the debt ratio and operating cash flow are key financial indicators of firm resilience. These data have confirmed the resilience of the Italian fashion sector.Originality/valueThis study is among the first to focus on the financial performance of the Italian fashion sector, its resilience and post-pandemic recovery, as well as employing a reverse engineering system to identify the most suitable financial indicators for defining a sector’s resilience.

The Determinants of Audit Opinion in Resilient Firms before and after Covid Pandemic: The Case Study of Tunisian Banks Publishing CSR Information

Purpose - The purpose of this study is to identify the determinants of audit opinion. Design/methodology/approach - We have examined financial statements, and auditor's opinion to particularly note which companies received a qualified/modified opinion contrary to those who had received an unqualified/unmodified opinion. The data was taken from a sample of the 11 listed banks in Tunisia during the critical era of covid from 2018 to 2021. Findings - The results in this report indicate that audit quality has an effect on qualified opinion, meaning if a company is audited by a BIG4 company; it's more likely to receive a qualified audit opinion. CSR also influences audit opinion

Value of Enterprise Risk Management Integration and Supply Chain Performance: Mediating Role of Firm’s Resilience Capability

Every firm aims to generate profit by applying cost-cutting and customer satisfaction approaches in a volatile market. Based on the resource-based theory, this study explored the concept of risk management integration for Nigerian firms regarding supply chain performance. The study proposed a significant relationship between enterprise risk management integration with firm resilience and the supply chain performance of different sector firms. Furthermore, the study also examines the mediating role of firm resilience between enterprise risk management integration and supply chain performance. Data from 572 responses from Nigerian firms were analyzed using AMOS V-26 and Applied Structural Equation Modeling (SEM) to evaluate the validity and reliability. The study findings revealed that factors considering enterprise risk management significantly influence firm resilience and supply chain performance. Firm resilience partially mediates between enterprise risk management integration and supply chain performance. The study concludes that firm resilience helps to enhance supply chain performance through risk management strategies and contingent capabilities.

Building Resilience in a Crisis Through Boards – Exploring the Mediating Effect of Board Behavior

ABSTRACTThe present study examines two board behaviors, their antecedents and their consequences in the COVID‐19 crisis. The two behaviors are (1) board involvement in crisis management planning and (2) board creative effort in finding solutions. The antecedents are board expertise and cognitive diversity. The consequence is firm resilience. The study builds its theoretical argument using the classical and refined upper echelons theory, stating that the two board behaviors mediate the effect of board expertise and cognitive diversity on firm resilience. Survey data from the United States during early 2020 was used. We found strong support for our overall argument that board involvement in crisis management planning and board creative effort in finding solutions are critical mediators. Our study also shows that the context of a crisis matters. During COVID‐19, board cognitive diversity can negatively affect board behavior. We conclude the paper with discussions and future research proposals.

Impact of digital technologies on manufacturing firm resilience during COVID-19 pandemic: a PLS-SEM and artificial neural network analysis

PurposeThe emergence of the COVID-19 epidemic has considerably increased the intricacy of information, exacerbating the difficulties firms encounter in efficiently processing and understanding accurate data and knowledge. Consequently, the COVID-19 epidemic has profoundly exacerbated production ambiguity for firms, thereby disrupting their regular business operations and supply chain activities. Digital technologies (DTs) are essential tools for firms to process and interpret information and knowledge, thereby improving their resilience against supply chain interruptions.Design/methodology/approachThis research investigates the effect of digital technologies on firm resilience throughout COVID-19, utilizing PLS-SEM and artificial neural networks (ANN) derived from a comprehensive survey of Pakistani manufacturing firms.FindingsOur research assesses the mediating role of supply chain integration, memory, and absorptive capacity, as well as the moderating influence of information complexity. The outcomes demonstrate that supply chain integration (SCI), memory (SCM), and absorptive capacity (SCAC) mediate digital technologies’ influence on firm resilience. Moreover, in situations where information is highly complex, DTs have a greater effect on a firm’s resilience.Originality/valueThe results enhance our comprehension and awareness of the resilience-related effects of DTs and offer significant management insights for strengthening firm resilience in the setting of the COVID-19 pandemic.

Global Digital Transformation and New Venture Resilience

In the new situation of building an entrepreneurial ecosystem, faced with the global multi-agent competition of the system, how new ventures should integrate with the system, isomorphism, and use their own advantages to cultivate new venture resilience has become an important global issue. The purpose of this study is to explore the combined impact of digital transformation, entrepreneurial ecological orientation, and organizational structure on the resilience of new ventures. Based on qualitative comparative analysis (QCA), this study systematically explores the significant key conditions and configuration effects that affect the cultivation of new venture resilience. There are four types of configurations that help new ventures to cultivate resilience, namely: strategic change, flexible response, leadership niche and institutional logic. This study explores how these three dimensions interact to achieve high firm resilience, ultimately contributing to the research of resilience from the perspective of the entrepreneurial ecosystem.

Exploring the scope and depth of digitalisation in times of crisis: Implications for SME resilience

This article investigates the role of digitalisation in bolstering small- and medium-sized enterprises (SMEs) during crises. Drawing on data from 245 North American SMEs, we examine the impact of digital technology adoption on firm resilience. The findings reveal nuanced relationships: both the depth (Digital Depth) and scope (Digital Scope) of digitalisation exhibit curvilinear associations with resilience (Profit Outlook), suggesting optimal levels for maximum benefits. Moreover, digital depth moderates the relationship between digital scope and resilience, highlighting their interactive role in enhancing adaptive capacities. This research employs a quantitative approach to explore how SMEs can leverage digital tools for resilience. Notably, it highlights the importance of strategic digital investments tailored to industry dynamics for resilience enhancement illustrating the study underscores the practical significance of digital integration for SMEs, indicating its potential to not only restore pre-crisis performance but also foster sustainable growth in the aftermath of disruption.

Digital Infrastructure and Firm Resilience: Evidence from China

ABSTRACT We examine the impact of digital infrastructure on firm resilience. Analyzing panel data from listed companies across 306 Chinese cities from 2017 to 2021, we find that firms located in cities with better digital infrastructure experience less severe declines in employment and profits during the COVID-19 pandemic. Our results further show that digital infrastructure bolsters firm resilience by alleviating financing constraints and fostering business innovation. The digital infrastructure effect is particularly strong in non-state-owned, small-scale, low-cash-reserve, and labor-intensive firms.

The role of ESG in enhancing firm resilience to geopolitical risks: An eastern European perspective

The role of <scp>ESG</scp> in enhancing firm resilience to geopolitical risks: An eastern <scp>European</scp> perspective

Has digital transformation enhanced the resilience of manufacturing enterprises?

As environmental uncertainty and market competition intensify, the impact of digital transformation on the survival and development of enterprises has garnered increasing attention. This paper empirically examines the influence of digital transformation on the resilience of manufacturing firms, based on data from Chinese-listed manufacturing companies from 2013 to 2022. Additionally, the study also analyzes the role of dynamic capabilities in this process. It is found that digital transformation significantly enhances the resilience of manufacturing enterprises, primarily through improving their stability and growth. Extended regression results indicate that the breadth of digitalization significantly boosts firm resilience, while the impact of the depth of digitalization on resilience varies with the type of technology implemented. Mechanism tests from the perspective of dynamic capabilities reveal that digital transformation enhances organizational resilience by improving adaptive and absorptive capacities. Further analysis shows that in the face of significant unexpected shocks, enterprises that have implemented digital transformation exhibit significantly greater resilience compared to those that have not. These findings provide theoretical insights and practical references for leveraging digital potential, enhancing organizational resilience, and achieving high-quality economic and social development.

Better safe than sorry? The effect of asymmetric cost management on firm resilience in manufacturing firms

PurposeGlobal business practices show that during periods of demand volatility, manufacturing firms often engage in asymmetric cost management (ACM), a behavior in which costs increase faster than they decrease when demand decreases by the same amount. However, whether managing asymmetric costs will enhance or impede firm resilience remains an open question. We aim to investigate the impact of ACM on firm resilience and its boundary conditions.Design/methodology/approachUsing unbalanced panel data of 2,273 Chinese manufacturing listed companies from 2002 to 2021, we conduct an empirical analysis using a double fixed effects model.FindingsOur findings reveal that ACM has a negative effect on firm resilience. This suggests that in coping with external environmental fluctuations, ACM fails to fulfill its expected role effectively. Instead, it manifests as a severe agency problem affecting firm resilience. Further, we find that managerial myopia and digitalization diminish the negative effect, while customer instability exacerbates it.Originality/valueThis study contributes to the literature on the organizational resilience of manufacturing firms by providing an in-depth understanding of cost management and emphasizing the need to consider agency issues carefully when managing asymmetric costs.

Empowering resilience through digital transformation intentions: synergizing knowledge sharing and transformational leadership amid COVID-19

PurposeThis study examines the role of digital transformation intentions in enhancing the perceived resilience of firms, with a focus on China’s manufacturing sector. It investigates the mediating role of knowledge sharing and the moderating impact of transformational leadership.Design/methodology/approachA quantitative approach was employed, collecting data from 347 manufacturing firms. Participants included managers and MBA students involved in digital transformation projects. The study utilized statistical analysis to explore the relationships between digital transformation intentions, knowledge sharing, transformational leadership and perceived firm resilience.FindingsThe analysis reveals that knowledge sharing is a critical mediating factor between digital transformation intentions and perceived firm resilience. Additionally, transformational leadership significantly strengthens this relationship, highlighting its importance in the successful implementation of digital initiatives.Research limitations/implicationsThe study is geographically and sectorally limited to China’s manufacturing sector, which may affect the generalizability of the findings. Future research could explore other sectors and regions to validate and extend the results.Practical implicationsThe findings underscore the necessity of integrating digital transformation initiatives with effective leadership and knowledge management practices. Firms that foster transformational leadership and facilitate knowledge sharing are better equipped to enhance their resilience in the face of global disruptions.Originality/valueThis research offers a deep understanding of how digital transformation intentions, mediated by knowledge sharing and supported by transformational leadership, contribute to perceived firm resilience. It provides valuable insights for both academic research and practical applications in the field of management.

Exploring the effect of digital transformation on firm resilience: Evidence from China

Digital transformation has become a new driving force for the high-quality development of China's economy, and is also an important pivot point to safeguard the development of enterprises and promote the recovery of industries in an uncertain environment. In this paper, we apply textual analysis to measure the digital transformation index using the data of listed companies in China and explore the impact of digital transformation on corporate resilience. The results, which are based on a robustness test and endogeneity test, lead to the conclusion that digital transformation can have a significantly positive impact on enterprise resilience. Mechanism analysis finds that enterprise green innovation and total factor productivity (TFP) are important channels through which digital transformation significantly affects a firm’s resilience. Heterogeneity analysis further shows that the effect is more pronounced among state-owned enterprises (SOE), non-high-tech enterprises, labor-intensive enterprises and technology-intensive enterprises. These findings will help guide policies that promote digital transformation in order to resist the negative effects of external shocks.

Strategizing green marketing in times of uncertainty: does it pay off?

PurposeThis study aims to investigate the impact of green marketing strategy (GMS) and firms’ decision to invest in or divest from green marketing activities during a crisis on business performance.Design/methodology/approachThe study collected survey data from 245 Greek firms during the 2015 Eurozone crisis to investigate the impact of GMS and green marketing investments on firm resilience during crisis. Time-lagged, objective performance data for a subset of these firms helped examine the impact of GMS on postcrisis financial performance.FindingsPursuing a GMS builds resilience, especially for companies that decided not to reduce resources allocated to green marketing activities during a recession. Beyond resilience, firms investing in GMS during the crisis experienced improved financial performance in the long run. Finally, this research proposes a typology of GMS responses during a crisis.Research limitations/implicationsThis study does not specify which types of green marketing activities lead to more investment or divestment during a crisis.Practical implicationsThe study offers insights for allocating resources to green marketing during recessions. Supporting GMSs during unpredictable times is important to successfully navigate performance both during and after a crisis. Six crisis response profiles are offered: green-nonbelievers, dis-investors, reluctants and cautious-, opportunistic- and strategic-green investors.Social implicationsThe study proposes a balanced approach to environmental sustainability, marketing strategy and firm performance during a crisis.Originality/valueThe study argues that GMSs enable firms to survive a crisis and recover from financial shocks.

Firm resilience, stressors, and entrepreneurial well-being: insights from women entrepreneurs in Ghana

PurposeThis study draws on the conservation of resources logic to theorize the role of firm resilience in explaining variations in entrepreneurial well-being under varying conditions of supply chain disruption and dependency ratio.Design/methodology/approachThe study uses ex-post survey data from 373 women entrepreneurs in diverse agricultural supply chains in Ghana, a sub-Saharan African country. Moderated regression analysis is employed to test the research hypotheses.FindingsThe results indicate that firm resilience has both positive and negative relationships with economic and subjective well-being, depending on the level of supply chain disruption and dependency ratio women entrepreneurs face. Notably, the findings suggest that firm resilience contributes more to economic and subjective well-being of women entrepreneurs when dependency ratio is low and supply chain disruption is high.Originality/valueThe study integrates firm resilience research and entrepreneurial well-being literature to provide new insights into theorizing and analyzing the benefit of firm resilience for women entrepreneurs’ well-being.

Evaluating firm resilience through responsiveness and logistics outsourcing in the COVID-19 era

PurposeThis paper aims to investigate how firms can enhance their resilience in response to the disruptions caused by the COVID-19 pandemic. Specifically, the study focuses on assessing responsiveness as an antecedent and logistics outsourcing as a boundary condition to resilience.Design/methodology/approachSurvey data collected from 286 manufacturing firms in Finland during 2021 are analysed to examine the relationships between supply chain responsiveness, logistics outsourcing and resilience.FindingsFirm responsiveness is found to improve resilience, while an increasing level of logistics outsourcing weakens this relationship. Surprisingly, geographic dispersion does not significantly affect supply chain responsiveness.Research limitations/implicationsLimitations of the study include the focus on manufacturing firms in Finland and the reliance on survey data. Future research could explore additional factors influencing resilience and consider a broader range of industries and geographical regions.Practical implicationsThe findings offer valuable insights for managers seeking to enhance their firms’ resilience in the face of disruptions. By understanding the importance of responsiveness and the potential drawbacks of excessive logistics outsourcing, managers can make informed decisions to improve their firms’ ability to cope with unexpected challenges.Originality/valueThis research contributes to the understanding of resilience in supply chain disruptions by addressing fundamental questions related to efficiency, responsiveness, control and complexity. By examining the interplay between responsiveness, logistics outsourcing and resilience, the study enriches the understanding of how firms can effectively navigate unexpected challenges.

Artificial intelligence adversity event, inter-organisational trust, and firm resilience: the moderating effect of responsible innovation

ABSTRACT Research on the impact mechanism of the adverse event set of artificial intelligence (AI) on firm resilience (FR) is still limited. This study explores the relationship between the intensity of AI adversity events (AIEI), inter-organisational trust (IOT), and firm resilience in 217 Chinese emerging AI-related firms. We find that greater AIEI negatively impacts FR. Additionally, IOT partially mediates the connection between AIEI and FR. Notably, responsible innovation (RI) significantly moderates this relationship. These findings enhance our understanding of how the application risks of emerging technologies, like AI, impact FR.

Impact of Board Members’ Social Capital on the Resilience of Public Companies to Exogenous Shocks

The objective of this study is to estimate the impact of board members’ social capital on firms’ market-based metrics of resilience to exogenous shocks. The social capital of directors was measured by their professional, political, and international connections. Firms’ resilience was evaluated based on their ability to resist and recover from the impact of shocks, as determined by stock market data. The data covers the period from 2007 to 2020 for over 200 Russian companies whose shares were included in the calculation of the Moscow Exchange Broad Market Index. During this period, three exogenous shocks occurred: the global financial crisis of 2008–2009, commodity price shock and sanctions in 2014–2015, and the COVID-19 pandemic in 2020. The system generalized method of moments is used to estimate the effect of directors’ connections on theability to mitigate shocks, while OLS with robust standard errors is used to reveal the influence of directors’ connections on firms’ ability to recover from shocks. The results indicate that professional connections moderated the negative impact on firms’ resistance to shocks and improved recovery speed during the global financial crisis. However, this type of connection reduced stock recovery speed after the COVID-19 crisis. Political and international connections have different effects on market-based metrics of firm resilience. It is possible that shocks of different nature require firms to leverage various forms of social capital from their directors in order to mitigate the negative effects of such shocks.