LEANING INTO THE WIND: HARDSHIP, STAKEHOLDER RELATIONSHIPS, AND
ORGANIZATIONAL RESILIENCE
Morela Hernandez
Michael G. Foster School of Business
University of Washington
Megan F. Hess and Jared D. Harris
Darden School of Business
University of Virginia
Under Review at the Academy of Management Journal
Please do not cite without author permission.
ABSTRACT
In this article we theoretically derive a typology that explicates the psychological,
operational, and stakeholder strategies of organizational resilience. Using both qualitative and
quantitative methods, we then test our theoretical framework utilizing data we gathered from 140
small and medium sized companies across a range of industries, all experiencing a variety of
economic, geographic, environmental, and/or social hardships. Consistent with theory, our
findings demonstrate that organizational resilience results, in part, from psychological and
operational factors that enable coping. Crucially, our findings also demonstrate that an
organization’s relationships with its stakeholders play a significant role in organizational
resilience and firm performance. Specifically, engagement with the community as a stakeholder
group in response to hardship was positively related with firm growth over a five year period that
included the economic recession. We discuss the implications of our findings to theory and
practice, highlighting how our research changes the current understanding of how firms can
survive and thrive under adverse conditions.
2
“Our company faced a difficult choice: to fall back or to persevere... We decided to lean
into the wind and almost doubled our staff when many other employers were
downsizing,” - CEO of a small professional-services firm
What causes organizations to ‘lean into the wind’ when times are tough? Why do some
companies emerge from hardship strengthened whereas others languish? Considering the
challenges businesses face today – from the chronic stress of a prolonged economic recession to
environmental jolts, such as hurricanes and other natural disasters – the question of how
organizations can become resilient, to not only survive but thrive in the face of hardship and
adversity (Sutcliffe & Vogus, 2003), is of great practical and theoretical importance. Although
past research has shown that organizations can utilize failures as learning opportunities (Sitkin,
1992) and engage in constructive change (Kiesler & Sproull, 1982), it is unclear how such
resilient responses to hardship come about. Additionally, because past empirical studies of
organizational resilience have been case-based analyses – hospitals in response to a doctors’
strike (Meyer, 1982), the airline industry in response to 9/11 (Gittell, Cameron, Lim, & Rivas,
2006), a railroad museum in response to a blizzard (Christianson, Farkas, Sutcliffe, & Weick,
2009) – the generalizability of existing findings on organizational resilience is limited. Thus, we
cannot answer questions about how organizational resilience is created across industries, nor can
we advise managers as to the relative efficacy of different strategic approaches to overcoming
hardship.
To address these issues, we investigate the strategies firms use to overcome a variety of
hardships across a number of industry sectors and test the effectiveness of these approaches as
they relate to firm outcomes. In so doing, we seek to understand how organizational resilience
3
can be created and what effects it has on the success of the organization. The purpose of this
article is, therefore, three-fold. First, to provide a thorough examination of the strategies of
resilience, we theoretically derive a typology that consists of the psychological, operational, and
stakeholder factors that systematically contribute to organizational resilience. Drawing from the
work of past scholars who have argued that the capacity for resilience is based on the
development and utilization of resources in the form of beliefs, processes, and structures that
enable coping (Vogus & Sutcliffe, 2007), we propose that both psychological (i.e., beliefs) and
operational (i.e., processes and structures) factors can play a significant role in creating
organizational resilience. Moreover, other researchers have observed that relational reserves can
play a role in facilitating an organizations’ ability to cope with adversity, suggesting that
relationships with stakeholders can help the organization overcome hardship (Gittell et al.,
2006). Accordingly, we propose that active stakeholder relationships also foster organizational
resilience.
Second, to examine the relative effectiveness of psychological, operational, and
stakeholder strategies of resilience, we test their relationships with firm performance outcomes.
As noted by Vogus and Sutcliffe (2007: 3420), there is a “dearth of empirical work exploring
resilience in organization theory.” Our investigation begins to clarify the effects that different
facets of resilience can have on organizational outcomes. Specifically, we test the relationships
among different strategies of resilience and firm performance outcomes (growth in revenues,
number of employees, and profitability) during the economic recession while controlling for age,
size, and industry effects.
Finally, prior research suggests that not all forms of adversity are equally manageable.
Some hardship might help organizations to develop new routines that enable resilience, but there
4
is a limit to the frequency and intensity of adversity that the organization can respond to
effectively (Rudolph & Repenning, 2002). Thus, we explore the role that the experience of
hardship plays in shaping both organizational resilience and firm responses.
In the following sections, we begin by deriving a typology of strategies of resilience from
past theoretical frameworks and research findings, and theorizing about the experience of
hardship as a boundary condition to organizational resilience. We then utilize both qualitative
and quantitative data from 140 organizations across a range of industries facing a wide array of
hardships to expand our understanding of organizational resilience and to explore the
relationships among the experience of hardship, strategies of resilience, and firm performance. In
particular, our findings highlight the important role that community and other stakeholder
connections can play in fostering organizational resilience. We conclude by discussing the
implications of our findings for understanding organizational resilience and the symbiotic nature
of the relationship between business and society.
THEORETICAL BACKGROUND
Organizational Resilience
Organizational resilience has been defined as “the capacity to rebound from adversity
strengthened and more resourceful,” (Sutcliffe & Vogus, 2003: 97). This capacity involves the
development and application of internal and external resources that allow organizations to
positively cope with the unexpected. Resilient organizations thus resist the well-documented
inclination toward rigidity in the face of adversity (e.g., Staw, Sandelands, & Dutton, 1981), and
instead remain flexible and adaptable, adjusting to current hardships while building the capacity
to respond to new challenges in the future (Weick, Sutcliffe, & Obstfeld, 1999; Wildavsky,
1988).
5
Summarizing past work in this area, scholars have suggested that organizational
resilience originates from the development of resources in the form of beliefs, processes, and
structures that enable coping (Vogus & Sutcliffe, 2007), as well as slack financial resources and
relational reserves (Gittell et al., 2006; Meyer, 1982). Drawing on this previous work, we build a
typology to categorize these factors into psychological, operational, and stakeholder strategies of
resilience. In so doing, we develop theory about how the individual, the context, and the ties that
develop within that context can foster organizational resilience. We recognize that organizations
may employ these strategies in combination to identify and respond to hardship; however, to
clarify their distinct effects, we begin by analyzing each strategy of resilience separately.
Psychological Strategies of Resilience
The current literature often examines the psychological strategies of resilience at the
organizational level as a form of collective beliefs. These beliefs, which may be cognitive or
affective in nature, represent collective attitudes toward risk and failure on the one hand, and a
shared outlook about the organization’s ability to cope with hardship on the other (Vogus &
Sutcliffe, 2007). Members of resilient organizations are hopeful and confident in their abilities
to grow and cope with hardship (Vogus & Sutcliffe, 2007) and see opportunity emerging from
hardship (Lengnick-Hall & Beck, 2005). This hopefulness and sense of agency are critical for
fighting the threat-rigidity response. According to Sutcliffe and Vogus (2003: 108), “…jointly
believing that an organization has capacity and that this capacity makes a difference reduces
defensive perception, allowing an organization’s members to notice more details and to see more
ways in which they can intervene to resolve a challenge.”
Although these organizational beliefs are one of the least well understood aspects of
organizational resilience, especially with regard to their affective (emotional) dimension (Vogus
6
& Sutcliffe, 2007), their importance has been well documented at the individual level. A review
of the psychological literature on resilience highlights the roles of both cognitive problemsolving and affect-managing strategies in effectively ‘bouncing back’ from stressful
environmental demands. According to Block and colleagues (e.g., Block, 2002; Block &
Kremen, 1996; Klohnen, 1996) this adaptive flexibility is associated with more positive affect
and better psychological adjustment. Individuals without this resilient capacity, in contrast, are
more likely to “act in a stiff and perseverative manner or chaotically and diffusely” (Letzring,
Block, & Funder, 2005: 399).
Indeed, research has long shown that whereas positive emotions can broaden individuals’
thought-action repertoire by expanding their range of salient cognitions and behaviors, negative
emotions significantly narrow individuals’ perceptions, honing their attention toward singular
thought and action (see Fredrickson, 1998; 2001). Empirical evidence has demonstrated, for
example, that positive emotions amidst taxing circumstances can enhance individuals’ coping
strategies by finding positive meaning in hardships (Tugade & Fredrickson, 2004). Thus, it
follows that organizational resilience may be enhanced where psychological resources support
the development of positive affect and expansive cognitive frames among organizational
members.
Operational Strategies of Resilience
Existing frameworks of resilience point to the importance of developing dynamic
processes and structures in order to emerge strengthened through hardship (Vogus & Sutcliffe,
2007). These elements, which we categorize as operational strategies of resilience, can function
to help the organization recognize hardship, through search and scanning, and respond to it, by
learning and doing. Scholars have noted that members of resilient organizations appear to
7
develop strong environmental scanning processes to recognize hardship, demonstrating
mindfulness in their ability to continually update and share an understanding of the situation
faced by the organization (Weick et al., 1999). The experience of hardship may also trigger
more expansive searches for market opportunities (McGrath, 1999; Sarasvathy, 2001) and
provide opportunities for deeper cognitive processing, higher risk tolerance, and increased
motivations to find solutions (Sitkin, 1992).
Past research has also demonstrated the significant role that organizational learning plays
in creating resilience (Christianson et al., 2008). Organizations with structures such as positive
feedback loops, voice mechanisms, and effective cognitive problem-solving strategies that avoid
blaming and rumination and instead promote future-oriented learning strengthen their routines
and reserves as they respond to hardship (Kiesler & Sproull, 1982). In this way, processes,
routines, systems, and other operational approaches facilitate resilience by enabling
organizations to “investigate, to learn, and to act” in the face of hardship (Wildavsky, 1988: 70).
In practice, managers frequently adopt other operational strategies that may paradoxically
inhibit resilience. Many managers turn to cost cutting and other ‘belt tightening’ measures to
protect financial reserves during times of hardship (Gittell et al., 2006), but these approaches,
while targeting the cash-flow related side effects of hardship, can ignore opportunities to better
position the firm for improved environmental conditions. As such, this approach can create
deleterious long-term effects on organizational performance, especially when short-term
efficiencies are achieved through layoffs (e.g., Cameron, 1998).
Stakeholder Strategies of Resilience
A different strategy organizations can employ to build resilience is to build and protect
stakeholder relationships so that they may have the flexibility and adaptability needed to
8
overcome hardship. Stakeholder theory argues that organizations create value by serving the
needs of various stakeholders, especially key groups such as shareholders, employees,
customers, suppliers, and the community (Freeman, 1984). Freeman suggests that effective
stakeholder relationship management involves a process of understanding the needs of these
stakeholders and enacting strategies to benefit multiple stakeholders simultaneously (e.g.,
pursuing innovative projects that both increase employee satisfaction and benefit customers at
the same time). The benefits of stakeholder relationship management can include enhanced
coordination, cost avoidance, and risk mitigation (e.g., Dyer & Singh, 1998). Relationships with
stakeholders can also stimulate innovation, create demand, increase employee engagement, and
foster the flexibility needed to deal with unexpected changes in the environment (Freeman,
Harrison, & Wicks, 2007; Freeman, Harrison, Wicks, Parmar, & de Colle, 2010; Harrison,
Bosse, & Phillips, 2010).
Several studies have demonstrated that stakeholder relationships can play a role in
organizational resilience. For example, Gittell and colleagues (2006) found that resources
developed from internal stakeholders (i.e., employee goodwill) were an important predictor of
success in the airline industry following the catastrophic events of September 11, 2001.
Researchers have also demonstrated that close relationships with external stakeholders can
provide important pathways by which the organization can scan and respond to external stimuli
(Rudolph & Repenning, 2002). Organizations, for example, can leverage their social networks
when responding to adverse events for insight and assistance (Leana & Van Buren, 1999) or to
introduce variety and diversity into the organizational environment (Lengnick-Hill & Beck,
2005).
9
Previous research suggests that stakeholders, who are dealt with positively, feel a desire
or an obligation to directly reciprocate that positive association. Bosse and colleagues (2009:
453-454), for example, argued that firms “create value by sharing it with stakeholders,” and as
such, “the value created by the firm is the aggregate of the value created in each of its
stakeholder relationships.” Stakeholder relationships are thus conceptualized as a source of the
firm’s value. As such, we propose that these relationships might constitute a latent resource that
provides needed assistance during hard times.
Furthermore, stakeholder relationships can support sensemaking activities (Weick, 1995)
in the face of adversity by providing an important context for understanding and responding to
hardship. How an entity interprets and responds to challenges is based, in part, on attitudes,
expectations, feelings, and response possibilities derived from a history of prior experiences
(Meyer, 1982; Vogus & Sutcliffe, 2003), many of which involve interactions with stakeholders.
For example, Brickson (2005, 2007) found that organizations form a distinct identity orientation
vis-à-vis stakeholders, which reflects the perceptions of members with regard to the assumed
nature of the association between an organization and its stakeholders. These orientations
constitute a general heuristic, motivating organizational members to engage with stakeholders in
ways that are consistent with their organization’s dominant identity orientation (Brickson, 2005,
2007; Livengood & Reger, 2010). Specifically, “relational oriented” organizations see
themselves as connected to a particular group of stakeholders and are motivated by concern for
the welfare of this group, and “collectivistic oriented” organizations see themselves as connected
to a larger whole and are motivated by concern for a community (Brickson, 2005: 588).
These ties with the community can be especially important to an organization, as
stakeholders respond positively to evidence of generalized good citizenship on the part of firms.
10
Businesses proactively engaged in philanthropy, for example, experience positive reputational
gains (Brammer & Millington, 2005). A firm’s attentiveness to community interests also builds
up a reservoir of goodwill among the firm’s direct stakeholders that buffers the firm against
future crises (Godfrey, 2005; Godfrey, Merrill, & Hansen, 2009).
Taken together, this evidence suggests that an organization’s relationships with both
internal and external stakeholders may play an important role in organizational resilience.
Stakeholder relationships foster the flexibility needed to overcome hardship and provide latent
resources that may be called upon during crises. Relationships with stakeholders also provide
environmental scanning and sensemaking advantages that help organizational members
anticipate and overcome adversity. Relationships with the community may prove especially
important for organizational resilience, as these ties provide both latent resources and
reputational gains that may enable firms to not only survive hardships but emerge strengthened
and more resourceful.
The Effect of Strategies of Resilience on Organizational Outcomes
Past research in the area of organizational resilience has been motivated, in part, by the
expectation that the process of resilience yields performance benefits as resilient organizations
become more flexible and resourceful (Sutcliffe & Vogus, 2003; Weick et at., 1999). The
empirical study of organizational resilience is in its infancy, and few studies have systematically
examined resilience outcomes at the organizational level. A great deal of research, however, has
studied resilience at the individual level and thus, this individual-level research might be
instructive. Importantly, scholars have posited a positive relationship between individual
resilience and individual performance in the workplace (cf. Luthans, Vogelgesang, & Lester,
2006). In particular, individual-level research based on Fredrickson’s (2001, 2003) broaden-and-
11
build theory has demonstrated that positivity can expand an individual’s though-action
repertoire, leading to upward spirals of performance, well-being, and increased adaptation when
hardships are encountered (Fredrickson & Joiner, 2002).
At the organizational level, the ability for organizations to adapt to changing
circumstances, find meaning in hardship, and to improvise in order to deal with change and
uncertainty has likewise been theorized to contribute positively to organizational functioning
(Coutu, 2002; Sutcliffe & Vogus, 2003). Extensive evidence suggests that organizations learn
from challenges and failures (Cyert & March, 1963; Haunschild & Sullivan, 2002; Sitkin, 1992).
Indeed, organizations routinely engage in ‘problemistic search’ – the tendency of firms to search
for ways to improve upon poor performance or respond to other challenges and obstacles
(Bromiley, 1991; Levinthal & March, 1981). This past work suggests that anything that
improves an organization’s chances of learning effectively from failure or unmet aspirations can
enhance firm outcomes. Consistent with this rationale, we expect to find a positive association
between not only the type of strategy of resilience (i.e., psychological, operational, or
stakeholder) but also the number of strategies of resilience employed by the firm and its
performance.
The Experience of Hardship as a Boundary Condition for Organization Resilience
In exploring the types of strategies of resilience enacted by firms and the relationship
between these approaches and firm performance, we argue that it is important to also consider
how the experience of hardship affects these relationships. Because past analyses of
organizational resilience have been case-based, it has been difficult to determine the extent to
which the type of hardship experienced by the firm is related to organizational resilience. And
yet, research exploring organizational adaptation suggests that there is a limit to the amount and
12
intensity of hardship to which a firm can effectively respond (e.g., Rudolph & Repenning, 2002).
Thus, we suggest that the experience of hardship shapes the strategies of resilience enacted by
the organization and its performance. It may be that chronic hardships, such as a prolonged
economic recession, are more difficult to overcome than acute environmental jolts, like
disruptive severe weather events. Similarly, firms that develop routines to overcome one
particular type of hardship, such as geographic constraints, may find it difficult to surmount other
types of hardships requiring different capabilities. Hence, variety and breadth (rather than depth)
of hardship might provide the greater challenge for organizations (Lengnick-Hall & Beck, 2005).
In order to further explore the role that the experience of hardship plays in organizational
resilience, we draw from the psychology and the mental health literatures, which have examined
the relationships between similar concepts: Stress, coping, and well-being (e.g, Pearlin &
Schooler, 1978; Lazarus & Folkman, 1984). Researchers in these fields have observed an
inverted U-pattern between stress or adversity and well-being such that individuals experiencing
moderate levels of adversity are associated with higher levels of well-being as compared to those
experiencing either no adversity or high levels of adversity (Seery, Holman, & Silver, 2010).
Scholars explain this curvilinear relationship by theorizing that some exposure to stress is
beneficial, because it allows the individual to develop a sense of control and mastery over
difficult situations that makes them better prepared to face future challenges (Seery, 2011).
Applying these individual-level findings to current theories of organizational resilience, we
expect that moderate experience of hardship enables organizations to develop psychological,
operational, and stakeholder resources (the organizational equivalent of control and mastery) that
position the organization to better overcome future hardships. Strategies of resilience utilizing
these resources can mitigate the acute negative effects of hardship and facilitate improved
13
performance outcomes for the firm. Figure 1 below summarizes our theorized relationships
between the experience of hardship, strategies of resilience, and firm performance.
--- INSERT FIGURE 1 ABOUT HERE --METHODS
Because the current state of theory relevant to the phenomenon of organizational
resilience may be viewed as being at an intermediate stage of development (Edmondson &
McManus, 2007), we selected a hybrid (multi-method) research design that enabled us to
combine the richness of qualitative data for understanding the strategies of resilience with the
generalizable power of quantitative analysis to explore the relationships among the experience of
hardship, strategies of resilience, and firm performance (Jick, 1979). To answer our research
questions, we needed to understand the experiences of multiple cases of organizational resilience
across several industry sectors. By looking at the variance in the hardship experiences, strategies
of resilience, and firm performance outcomes across these cases, we thus provide a
comprehensive examination of the strategies of resilience enacted by firms in a variety of
contexts.
Because organizational resilience is a rare phenomenon, we used a convenience sampling
approach to efficiently recruit the large number of cases needed for our study. Specifically, we
recruited organizations for this study by publicizing a competition to recognize resilient
organizations within the Commonwealth of Virginia. As an incentive to participate in the
confidential data collection process, winning applicants received a commemorative plaque and
free enrollment in an executive education program. In following this recruitment method, we
weighed the benefits of the approach with concerns about convenience sampling and social
desirability bias. Allowing potential applicants to self-identify as exemplars of organizational
14
resilience enabled us to efficiently build a large and diverse sample from which to explore
variety in the experience of hardship and to study themes of resilience in greater depth.
It is also worth noting that the self-selected nature of organizational participation
enhanced the odds of obtaining a usable sample of firms demonstrating resilience. While
awareness and positivity – necessary conditions for volunteering, and characteristics not
unrelated to the psychological resources we hoped to study – did not guarantee that firms who
considered themselves ‘resilient’ in the colloquial sense would indeed prove to be ‘resilient’ in
the theoretically robust sense, the allowance for self-selection dramatically improved our chances
of obtaining usable observations over a semi-random sample of small to medium-sized firms. In
addition, our data collection process gave us the advantage of obtaining data from private, small
to medium sized firms where organizational resilience may be more salient than in larger
organizations with vast financial reserves and other slack resources.
To minimize the potential for social desirability bias using this recruitment method, the
initial pool of applicants were screened to eliminate those that were not located in economically
depressed communities (i.e., communities exhibiting lower rates of economic growth and higher
rates of poverty than others in the region), thus providing some assurance that the remaining
firms in our sample were indeed facing adverse conditions. Likewise, firms that did not provide
detailed descriptions of their experiences of hardship and/or how they overcame hardship were
eliminated from the sample. We also screened applicants to eliminate those who had been in
business less than five years, thereby limiting our sample to firms that had persisted through one
or more experiences of hardship for at least five years. While we were not able to completely
mitigate the risk of bias associated with these screening procedures, the length, detail, and candid
nature of the responses we collected suggest that the experiences described by our participants
15
were real and significant to them. In the following sections, we provide numerous examples to
illustrate this assessment of the quality of the responses provided by participants.
Our final sample included 140 small and medium sized firms representing a wide array of
industries, including the manufacturing, service, retail/wholesale, and agricultural sectors. These
firms employed, on average, 98 full time workers (SD = 494) and earned, on average, annual
revenues of $7.6 million (SD = $16 million). Thirty-seven firms in this sample (26%) had been
in business between five and ten years, but the majority of firms in this sample had been in
business much longer. In fact, the average age of the firm in the sample was 26 years (SD = 23
years) including 20 firms that had been in business for 50 years or more. Firms in our sample
experienced a range of hardships, including both unexpected shocks and the long-term stresses.
The firms studied faced not only the challenges of an economic recession, but also
environmental shocks (such as the unusually severe winter blizzard of 2009) and decades of
stress associated with the loss of manufacturing and tobacco jobs from this region. Thus, we
were able to build our theory by examining strategies of organizational resilience in response to a
variety of short-term and prolonged hardships.
Data Collection
We collected confidential information from organizational representatives (typically the
founder) of participating organizations using an online questionnaire. This questionnaire asked
participants to describe their organization’s mission and history, its leadership team, the
hardships it faced, and to provide examples of how the organization overcame these challenges.
For example, respondents were asked, “Please provide one or two examples of how your
business has overcome a situation that would have put a less resilient entrepreneur out of
business.” Another question prompted applicants “When presented with a crisis (e.g., financial,
16
personnel, etc.), how does your business address it and what steps does your organization take to
avoid similar crises in the future? Please explain based on an actual example from the last 12-18
months.” Respondents were also asked, “How has the location of your business impacted its
success, for better or worse, over the past five years?”
In order to test the relationships among different strategies of resilience and firm
performance outcomes during the economic recession (growth in revenues, number of
employees, and profitability), we also collected five years of financial information about each
firm. Specifically, we gathered financial information about revenues, profits, and number of full
time employees for the years 2007 – 2011 from which we could assess the size, growth, and
financial performance of the organization over this time period.
Data Analysis
Our data analysis included both inductive and deductive reasoning. To characterize each
organization’s experience of hardship, a dimension of organizational resilience that remains
relatively unexamined in the current literature, we used inductive methods in order to build
categories that we believe capture the themes that emerged from participants’ descriptions of the
hardships endured by their organizations. In contrast, our goals with regard to the examination
of strategies of resilience were deductive in nature. Through our review of the literature, we
derived an ex ante typology of the psychological, operational, and stakeholder factors that have
been theorized to contribute to organizational resilience. Thus, we examined participants’
descriptions of resilience in order to test the generalizability of this typology across a large
number of cases and to examine the relative effectiveness of these factors in relationship to firm
performance outcomes. The description of our deductive analysis of the strategies of resilience
17
is provided first, followed by the description of our inductive analysis of the experience of
hardship.
Strategies of Resilience
Our deductive analysis of the strategies of resilience employed by firms to overcome
hardship draws on the two areas of organizational theory highlighted in our literature review:
theories of organizational resilience (e.g., Vogus & Sutcliffe, 2007; Gittell et al., 2006) and
stakeholder relationship management (e.g., Bosse et al., 2009; Freeman, 1984), which together
suggest that organizations enact three distinct types of organizational resilience strategies to
overcome hardship: Psychological, operational, and stakeholder. To determine whether the
descriptions of resilience provided by participants in the study supported this typology, we
analyzed the content of their written responses and coded each example using these
categorizations. Where participants’ descriptions did not seem to fit these existing
categorizations, the co-authors discussed whether new categorizations should be added and
shared relevant literature to help refine the typology. We also employed a research assistant who
independently coded the data for both experiences of hardship (described in the next section) and
strategies of resilience (α = 0.89). Our analysis of each type of resilience strategy is provided
below.
Psychological Strategies of Resilience. We coded participants’ strategies of resilience
as psychological where they reflected cognitive or affective resources that enabled the
organization to overcome hardship. Prior research suggests that such psychological resources
are critical, because they enable adaptive flexibility in the face of hardship, creative thinking, and
they motivate action (Fredrickson, 1998; 2001; Vogus & Sutcliffe, 2007). Within this category,
we coded psychological resilience strategies as cognitive where they reflected particular
18
mindsets or problem frames that were hopeful and opportunistic, such as seeing the possibilities
that are created by hardship. For example, participants from one firm detailed how they
overcame the challenges of competition by seeing the positive benefits this hardship had on their
firm. The founder of this organization writes: “…having to compete with a large health system
has forced us to become a better company.”
Within the category of psychological strategies of resilience, we coded participants’
descriptions as affective where they described emotional resources that provided motivation and
inspiration in difficult circumstances. As predicted by the literature, many participants
highlighted the importance of having a positive attitude and attending to employee morale. What
surprised us, however, were the repeated references to being passionate about the organization’s
geographic location of business. This emotional connection to the local community (i.e., passion
for place) seems to affectively motivate persistence in the face of hardship. As an example, one
participant described their ability to overcome economic hardship as follows: “…we have a love
for [our town] as we have grown up here and simply refuse to give up on it.” Several firms in
the sample also commented on how the experience of hardship had brought them closer together
“like a family” and provided a sense of connectedness, which supported resilience within their
organizations. Thus, a passion for place and a sense of connectedness emerged as two important
affective dimensions of the psychological strategy of resilience.
After coding this resilience strategy, we scaled our responses to determine the extent to
which it was enacted by firms in our sample, counting each unique instance of psychological
resilience described by the firm. 31 firms in our sample (22%) described psychological
strategies (either cognitive or affective) as being important to overcoming their hardships. The
minimum number of psychological strategies enacted by a firm was 0, the maximum was 2 (M =
19
0.26; SD = 0.51), making this the least cited strategy of resilience in frequency, as compared with
the use of operational and stakeholder strategies. Table 1 below summarizes our analysis of the
psychological strategies of resilience.
-- INSERT TABLE 1 ABOUT HERE -Operational Strategies of Resilience. We coded participants’ strategies of resilience as
operational where they described process improvements, scanning and learning routines, cost
containment strategies, and other profit maximization efforts. Interestingly, prior literature
suggests that processes and systems that help organizations identify and respond to external
challenges can enable adaptation and resilience (e.g., Sutcliffe & Vogus, 2003), but that too
much focus on cost containment, particularly where it harms stakeholder relationships, may
actually impede resilience (e.g., Gittell et al., 2006).
The variety of operational strategies deployed in response to hardship by the firms in our
sample was considerably diverse, reflecting a great deal of ingenuity and bricolage (Baker &
Nelson, 2005). Some process improvements reflected an interest in finding ways to lower costs
and become more sustainable at the same time. For instance, one forest products company saved
money and reduced waste by using byproducts to fuel their drying kilns. Other operational
strategies were about adapting to changing customer preferences, often by changing the product
mix or finding new ways to market current inventory. As an example, one book seller responded
to competitive pressures from e-books by positioning the store as a destination and making the
process of buying a book more memorable by adding colorful murals and child-friendly
installations.
As predicted by the literature, some firms also used operational strategies to respond to
hardship in ways that may be limiting in the long run. For instance, many firms in our sample
20
faced the social-geographic problem of violent crime in their neighborhoods. Several firms
responded to crime by investing in security equipment or otherwise building buffers between
their organization and this problem. One firm, however, took a different approach to
overcoming this hardship and profited from its crime reduction efforts by rehabbing neighboring
derelict buildings and then renting these spaces to college students. Research would suggest that
the latter strategy may be more effective at tackling the underlying problem than the former
(Lengnick-Hall & Beck, 2005), and it exemplifies the capability of a resilient organization to
emerge from hardship strengthened and more resourceful (Sutcliffe & Vogus, 2003).
The next step in our analysis was to scale these codings to create a count variable for the
number of unique ways in which the firm deployed operational strategies of resilience to
overcome hardship. Perhaps not surprisingly, operational approaches were the most common
strategy for overcoming hardship, as compared with psychological and stakeholder strategies,
with 119 firms in our sample (85%) describing operational strategies as being important to their
resilience. Nevertheless there was a high degree of variance. The minimum number of
operational strategies deployed by a firm was 0, the maximum was 7 (M = 1.93; SD = 1.47).
Table 2 below summarizes our analysis of the operational strategies of resilience.
-- INSERT TABLE 2 ABOUT HERE -Stakeholder Strategies of Resilience. We coded participants’ strategies of resilience as
stakeholder where they described interactions with either internal (employees) or external
stakeholders (customers, suppliers, investors, community groups). Following Brickson’s
stakeholder organizational identity orientation categories (2005, 2007), we coded as relational
the responses to hardship that connected the organization to specific stakeholders, such as
employees, customers, and suppliers, or that emphasized the welfare of specific stakeholder
21
groups. As an example of this relational approach, one firm described their efforts to maintain
customer loyalty after losing their retail space as follows: “We maintained our sales momentum
and satisfied our die-hard fans by selling our products from the back of a van! This was the seed
of a grass-roots marketing system that has served us well.” Other firms in our sample partnered
with customers to overcome hardship by connecting with them on social media, by creating
loyalty programs, and/or by offering discounts for particular groups, such as law enforcement or
school children. Many firms responded to the challenge of recruiting skilled workers by
devising generous employee benefits packages, offering flextime, and supporting telecommuting.
Other firms reached out to their suppliers to help them get through tough economic challenges,
either by offering or by negotiating extended payment periods and lower terms. Some firms
extended their relational activities to other stakeholders, as well.
We coded responses to hardship that were generally oriented toward the community as a
stakeholder as collectivistic. Collectivistic responses to hardship, a sub-category of stakeholder
strategies of resilience, embedded the organization in its community or otherwise demonstrated
concern for the community, and emphasized the impact of the organization on community public
goods. For example, an engineering firm responded to the challenge of an unskilled local
workforce by starting a mentoring and scholarship program to encourage local youth to become
qualified engineers. Other firms engaged with their community during tough times by
volunteering time with community development agencies and merchant associations, through
charitable giving, and by buying local. The importance of these community-focused activities to
organizational resilience was described by one healthcare provider as follows: “the community
knows us and respects us and that has made a huge difference.”
22
We scaled these codings to create three count variables to represent the number of unique
ways in which the firm deployed stakeholder strategies of resilience to overcome hardship. The
first measure counts the number of unique ways in which the firm deployed relational strategies.
81 firms in our sample (58%) described stakeholder relational activities as being important to
overcoming their hardships. The minimum number of relational strategies deployed by a firm
was 0, the maximum was 6 (M = 0.98; SD = 1.13). The second measure counts the number of
unique ways in which the firm deployed collectivistic strategies. 54 firms in our sample (39%)
described collectivistic strategies as being important to overcoming their hardships. The
minimum number of collectivistic strategies deployed by a firm was 0, the maximum was 4 (M =
0.54; SD = 0.83). The third measure aggregates these two to create a composite stakeholder
strategies measure. 105 firms in our sample (75%) engaged with stakeholders to overcome
hardship, through either relational activities, by engaging with the community, or by doing both.
The minimum number of stakeholder strategies enacted by a firm was 0, the maximum was 6 (M
= 1.51; SD = 1.34). Table 3 summarizes our analysis of the stakeholder strategies of resilience.
-- INSERT TABLE 3 ABOUT HERE -The Experience of Hardship as a Boundary Condition for Organizational Resilience
Before we could test our theory about the experience of hardship as a boundary condition
for organizational resilience, we first had to determine a framework for understanding the kinds
of hardships experienced by the firms in our sample. To create this typology, we relied on open
coding techniques, which involved reading and coding participants’ written responses line-byline to identify all themes related to the experience of hardship and later generalizing these
themes into major categories of findings (Miles & Huberman, 1994). While analyzing the data,
the authors also met to discuss the themes that were emerging from the content analysis,
23
referenced relevant literature to refine our categorizations, and we exchanged memos to
document and reflect upon elements in the data analysis that we found particularly interesting or
surprising (Eisenhardt, 1989; Vaughn, 1992). In this iterative process of reading, analyzing,
coding, and generalizing, several themes related to the experience of hardship emerged.
We were surprised by the sheer breadth of hardship experienced by the firms in our
sample. Our initial coding identified 20 different types of hardship, which we ultimately
grouped into four broad categories – economic, geographic, environmental, and social. In the
category of economic hardship, we identified a number of challenges, some of them
interconnected, ranging from references to the economic recession (including declines in tourism
and consumer discretionary spending), the loss of industry in the region (manufacturing, tobacco,
lumber), tax challenges, Federal and State budget cuts, competition (both regional and global),
the rising costs of inputs to production (especially gas prices), and difficulties securing financing.
In the category of geographic hardship, we identified challenges recruiting qualified
workers to rural communities and concerns about ‘brain drain’ as young people moved away to
the city for jobs. We noted poor infrastructure conditions, such as outdated buildings, lack of
high-speed internet, poor cell phone coverage, frequent power outages, and unpaved or
treacherous mountain roads. In this category we also included concerns about local real estate
and a slow-down in local construction. In the category of environmental hardship, we identified
challenges with flood, drought, snow, fire, and for the ranchers in our sample, coyotes. Finally,
in the category of social hardship, we identified challenges with health issues (rising healthcare
costs, illness or death of a leader), crime, and concerns about immigration and/or environmental
reforms. In this category we also included references to a sense of hopelessness in their
24
communities resulting from prolonged unemployment and poverty, and comments that local
leaders were unwilling or unable to embrace change and progress.
After coding and categorizing the experience of hardship as described above, we scaled
our codes to determine two measures for each firm. The first measure we labeled hardship
breadth to represent the range in types of hardships experienced by each firm in our sample. A
firm received a score of 1 for each of the 20 different sub-categories or types of hardship it
experienced (else 0), and then these scores were summed to determine a hardship breadth score
for each firm (M = 3.71, SD = 1.79; min = 1; max = 9). Since we were looking for breadth rather
than depth with this measure, we did not count additional instances of the same hardship type
(i.e., even if a firm experienced multiple instances where they had difficulty securing financing,
they still only got one count for the financing sub-category). The second measure we labeled
hardship category to represent the primary category of hardship – economic, geographic,
environmental, or social – experienced by the firm. To determine which category fit the firm’s
experience best, we added up the scores for each sub-category within the four primary hardship
categories and selected the primary hardship category with the highest total for that firm. If two
or more primary hardship categories were tied (i.e., the firm experienced 3 types of economic
hardship and 3 types of geographic hardship), we returned to the textual responses provided by
the firm and selected the primary category given the most emphasis (word count) by the
participant.
By categorizing each firm according to both the breadth and primary type of hardship it
experienced, we were able to identify and examine relationships between the experience of
hardship and the strategies of resilience. Table 4 provides a summary of the sample by category
of hardship.
25
--- INSERT TABLE 4 ABOUT HERE --RESULTS
We sought to investigate the strategies of organizational resilience by providing a
comprehensive examination of how a variety of organizations overcame different types of
hardship. To this end, we used both inductive and deductive qualitative methods to capture the
richness of these experiences. We then scaled our categorizations to enable the following
quantitative analyses, which provide tests of the relationships among the experience of hardship,
the different strategies of resilience, and firm performance outcomes. These statistical analyses,
while not causal in nature, do highlight important associations that may spur future research.
Table 5 provides the means, standard deviations, and inter-correlations of the study
variables. The bivariate correlations are generally in the predicted direction; that is, most
experiences of hardship are negatively related to firm performance and most strategies of
resilience are positively related to firm performance. Regarding our control variables, we see an
expected negative relationship between firm age and growth, with younger companies growing
significantly faster in terms of revenues and employee headcount.
-- INSERT TABLE 5 ABOUT HERE –
Table 6 summarizes the strategies of resilience by industry sector for our sample.
Although the service sector enacted the greatest number of strategies of resilience on average (M
= 4.01), there were no significant differences across industry sectors in terms of the total number
of strategies of resilience described by the participants. However, both the retail/wholesale and
service sectors deployed significantly more stakeholder (collectivistic) strategies to overcome
hardship than those in either the manufacturing (t = 2.89, p < 0.01, t = 3.48, p < 0.001,
respectively) or the agricultural sector (t = 2.10, p = 0.04 and t = 2.45, p < 0.02, respectively).
26
There were no significant differences across sectors in the deployment of psychological,
operational, stakeholder strategies of resilience.
-- INSERT TABLE 6 ABOUT HERE –
We also wanted to understand firm-level patterns for strategies of resilience. For
instance, we wondered to what extent firms adopted singularly focused resilience strategies (e.g.,
used only operational strategies to overcome hardship) as opposed to combining resilience
strategies across our categories of analysis. The Venn diagram (Figure 2) below plots the
patterns amongst the 140 firms in our sample. One firm (1%) described only psychological
strategies of resilience as important to overcoming hardship, 28 firms (20%) described only
operational strategies, whereas only 7 firms (5%) deployed exclusively stakeholder approaches.
Fifty-four firms (39%) utilized a combination of operational and stakeholder strategies of
resilience, making this the most common approach. Eight firms (6%) combined psychological
and stakeholder strategies of resilience and 6 firms (4%) combined operational and psychological
strategies of resilience. Sixteen firms (11%) described activities across all three categories –
psychological, operational, and stakeholder. This analysis suggests that most firms develop a
hybrid approach to organizational resilience, balancing internally-focused activities with
stakeholder engagement to overcome hardship.
-- INSERT FIGURE 2 ABOUT HERE -To further explore the relative significance of each strategy of resilience, we also used
regression analysis to determine whether and how these efforts were related to performance
outcomes such as growth in revenues, profitability, and headcount over a five-year period (2007
– 2011). Although such financial measures are gross approximations of organizational
performance, ignoring important factors such as human capital development and sustainability,
27
we chose to consider growth across these metrics because they offer objective reference points,
and were considered to be important indicators of success by the firms in our sample.
Table 7 summarizes the results of this ordinary least squares regression analysis using
growth in profits as the dependent variable. Our control model (Model 1) shows no significant
differences in profitability growth for age of firm, size of firm (number of employees), or
industry sector (agriculture is the omitted category). Model 2 adds the total number of strategies
of resilience, which has a positive but non-significant relationship with profitability growth (B=
0.29, p = 0.13). Model 3 examines the relative effects of particular strategies of resilience.
Psychological, operational, and stakeholder strategies of resilience are all positively but not
significantly related with profitability growth. Because the majority of firms in our sample
combined both operational and stakeholder strategies of resilience, Model 4 tests the relationship
between this hybrid approach and profitability growth. The coefficient, while positive, is small
and not significant. Finally, we compared psychological, operational, and the two sub-categories
of stakeholder strategies of resilience – relational and collectivistic – in Model 5 to assess their
associations with profitability growth.
Model 5 – the full model – shows a significant positive relationship between stakeholder
collectivistic approaches, such as buying local, doing charitable work, or promoting the
community, and profitability growth (B = 1.22, p = 0.02). This effect was significant even when
we controlled for firm age, size (number of employees), and industry sector. Other strategic
responses to hardship – psychological and operational – were positively but not significantly
related to firm growth.
-- INSERT TABLE 7 ABOUT HERE --
28
The significant relationship between the deployment of collectivistic strategies and
profitability does not necessarily imply that engaging with the community causes firms to grow.
Consistent with the literature on stakeholder theory, it is possible that more profitable firms are
simply more likely to engage in community oriented activities, such as charitable giving (e.g.,
Berman, Wicks, Kotha, & Jones, 1999; Waddock & Graves, 1997). The organizational resilience
literature suggests that it is also possible that the significant relationship between a stakeholder
collectivistic strategy and profitability growth highlights the latent resources and reputational
benefits that community involvement offers organizations undergoing hardships. Communities
may rally to support valued organizations, just as participants in our study expressed a strong
‘passion for place’ and commitment to their communities.
-- INSERT TABLE 8 ABOUT HERE -Our last model examines the role that the experience of hardship plays in the relationship
between resilience strategies and firm performance. Specifically, we test whether the enactment
of multiple strategies of resilience mediates the negative effects of hardship on firm performance,
similar to the way that coping mediates the negative effects of stress on well-being at the
individual level. Table 8 provides the results of this analysis. Model 1 shows that hardship
breadth (the number of types of hardship experienced by the firm) has a negative but nonsignificant relationship with firm profitability, controlling for firm age and size. Model 2,
however, shows a significant positive relationship between hardship breadth and the number of
strategies of resilience enacted by the firm (B = 0.20, p = 0.05). Model 3 shows a significant
positive relationship between the number of strategies of resilience and firm profitability,
controlling for hardship breadth, age, and number of employees (B = 0.37, p = 0.055). Providing
additional support to our finding, indirect bootstrapping analyses (Preacher & Hayes, 2008) show
29
that the indirect effect of strategies of resilience is significantly greater than zero using a 95%
confidence interval (0.0031, 0.3070) based on 5,000 bootstrap samples. Thus, our results
suggest that the total number of strategies of resilience enacted by the firm significantly
suppressed the negative effects of hardship breadth on firm profitability.
DISCUSSION
We began this research with three aims: First, to develop a theoretical typology of the key
strategies of organizational resilience; second, to examine the effects of strategies of resilience
on firm outcomes; and third, to explore the role that the experience of hardship plays in
influencing both strategies of resilience and organizational responses. To accomplish these goals,
we gathered extensive qualitative and quantitative information from a sample of 140
organizations across a range of industries facing a wide variety of hardships. Our findings offer
important contributions to both theory and practice.
Theoretical Contributions
Our study provides a rich understanding of the psychological aspects of organizational
resilience. Organizations that use psychological strategies of resilience seem to be able to
reframe hardships in ways that inspire and motivate organizational members to persevere
through the darkest times, describing their efforts as “leaning into the wind” or “providing a
fortress in the storm.” In addition to finding evidence of optimism and hope among these
organizations, we also uncovered previously unexamined affective dimensions of resilience, such
as having a passion for the community and feeling a sense of connectedness. Past scholars have
theorized that social connections may function as critical resources for resilience in that they can
provide insight and support (Leana & Van Buren, 1999; Lengnick-Hill & Beck, 2005). Our
30
results demonstrate that these social connections are important to resilience, in part due to their
positive psychological benefits.
Our findings also extend past research on stakeholder theory, which has highlighted the
instrumental role social connections can play in organizations. Specifically, scholars have
theorized that the benefits of developing relationships with stakeholders, which facilitates the
exchange between trusting parties, can reduce costs, mitigate risk, create efficiencies (e.g., Dyer
& Singh, 1998; Jones, 1995), as well as stimulate innovation, increase employee engagement,
create demand, and foster flexibility (e.g., Freeman et al., 2010; Harrison et al., 2010).
Consistent with these ideas, our results demonstrate that organizational resilience can be built
and fostered through relational activities (directed toward particular stakeholders, such as
employees, customers, or suppliers) and activities that are collectivistic in nature (directed
toward the community). Interestingly, we found that the use of stakeholder collectivistic
strategies of resilience, such as buying local, doing charitable work, or promoting the community
had a significant positive relationship with firm profitability growth during the economic
recession years, even after controlling for the effects of industry sector, firm age, and firm size.
A positive relationship between business and society has been theorized by ethics
scholars for some time, many of whom have suggested that the goodwill developed through
corporate social responsibility efforts ultimately benefits the organization (e.g., Godfrey, 2005;
Waddock & Graves, 1997). Our findings provide empirical support for the positive relationship
between community involvement and firm performance, showing that greater engagement with
the community in response to hardship not only benefits the community, but also symbiotically
helps the organization thrive in the face of that hardship. Moreover, our finding that
collectivistic orientations toward stakeholders can help organizations overcome hardship has
31
important implications to the literature on stewardship. Organizations that adopt a stewardship
approach to governance are willing to sacrifice short-term, internally-oriented gains to protect
the longer-term well-being of a broad set of stakeholders (Hernandez, 2012). Scholars have
theorized that such stewardship practices can facilitate longevity and continuity of organizations
(Caldwell & Karri, 2005; Hernandez, 2012; Miller, Le Breton-Miller, & Scholnick, 2008). Our
research lends support for this assertion; a governance approach that encourages organizations to
contribute to the welfare of its external stakeholders can be especially successful in ensuring
organizational survival.
Finally, our research demonstrates that organizations that experienced a range of
hardships (i.e., hardship breadth) tended to develop more strategies of resilience, which in turn
mitigated the negative effects of hardship on firm performance. Contrary to past research
associating greater levels of adversity with increasingly worse outcomes, our finding supports
recent conceptualizations of individual resilience from the field of psychology, which suggest
that some experience with hardship actually helps individuals learn to cope adeptly with future
stressful situations (e.g., Seery, 2011). Thus, the experience of a range of hardships, which can
prompt the use of psychological, operational, and stakeholder strategies of resilience, may
enhance firm outcomes by allowing organizations to develop and test their abilities to adapt to
changing circumstances and environmental contingencies, utilizing failures as learning
opportunities (Sitkin, 1992).
Practical Implications
The primary practical implication from our analysis points to the importance of
community and a sense of connectedness in creating organizational resilience. Importantly, we
provide evidence for the positive effects of developing and maintaining relationships with
32
community stakeholders. Our findings thus suggest that managers should seek ways to extend
their interactions beyond organizational boundaries to develop more collectivistic orientations.
These interactions can range from formal business dealings that involve financial exchanges with
community-based suppliers, for example, to more informal interactions with schools, charitable
organizations, and community leaders. The goodwill and the heightened sensing and
interpretation benefits reaped from fostering closeness with the community may not only build
organizational resilience that buffers against hard times, but it could also be especially important
when organizations are moving into new regions or countries.
Our research also highlights how the use of different strategies of resilience can differ
across industries in response to different kinds of hardship. We found that firms in the service
sector experienced significantly more social hardships (e.g., illness, immigration issues, crime),
but also that service sector firms and retail/wholesale sector firms were significantly more likely
to enact collectivistic strategies of resilience. Considering the positive impact of such
collectivistic strategies, the cultivation of community engagement may be a prudent strategy.
Furthermore, although we found that agricultural firms were more likely to experience
environmental hardships associated with natural disasters (e.g., fire, flood, snow), which is not
altogether surprising, that data also showed that there were no differences in the experience of
economic or geographic hardship across sectors. It seems that firms of all types are vulnerable to
the economic challenges and hardships of growing a business in impoverished areas.
Limitations
Our study had several limitations. For instance, because we rely on self-report data, it is
possible that a response bias may be inflating the descriptions of the experience of hardship and
strategies of resilience provided by our participants. If responses were exaggerated, it would
33
diminish the significance of our findings. Nevertheless, we attempted to overcome this limitation
by triangulating data where possible and by using objective criteria (location and age of firm;
exclusion of firms headquartered in prosperous geographic locations) and subjective criteria
(length and detail of the responses themselves) to screen participants. This approach mitigated
our concerns about convenience sampling, enabling us to obtain extraordinarily detailed
information about small privately-held firms and giving us great insight into their resilience
strategies.
Moreover, our data relies on a single respondent per firm. Although the use of a single
respondent can often introduce bias into empirical work, in this case, because the majority of the
respondents were the founders of their organization, we had confidence that the responses
accurately reflected the organization’s experience. Founders have a strong ‘blueprinting’ effect
on their organizations (Baron & Hannan, 2002; Boeker, 1989), and are therefore less likely to
provide a non-representative view of the organizations they lead.
Finally, although the results are important and suggestive of causality, we also
acknowledge that our cross-sectional quantitative analyses show associations between the
experience of hardship, strategies of resilience, and firm performance outcomes, rather than
independently obtained time-lagged causal relationships. To better understand the significance of
our findings, longitudinal research should be conducted. Moreover, field experiments could be
designed to uncover the causal chain of events while controlling for possible confounds.
CONCLUSION
In this study we explored the phenomenon of organizational resilience through a
comprehensive examination of firms that had overcome significant hardship. Our findings
indicate that firms that manage for a broad set of stakeholders may be strategically well
34
positioned to suppress the negative effects of hardship on performance. Specifically, strategies
of resilience that were collectivistic in nature (oriented toward the community) had the strongest
connection to positive firm performance outcomes. This finding implies that organizations that
choose to engage with their external stakeholders can position themselves to not only survive
downturns but also to grow in periods of adversity and recession. In this way, businesses that
take an active role in society help both their communities and themselves.
35
REFERENCES
Baker, T. & Neslon, R. 2005. Creating something from nothing: Resource construction from
entrepreneurial bricolage. Administrative Science Quarterly, 50 Sep. 2005: 329-366.
Baron, J. N., & Hannan, M. T. 2002. Organizational blueprints for success in high-tech start-ups:
Lessons from the Stanford project on emerging companies. California Management
Review, 44(3): 8-36.
Berman, S. L., Wicks, A. C., Kotha, S., & Jones T. M. 1999. Does stakeholder orientation
matter? The relationship between stakeholder management models and firm financial
performance. Academy of Management Journal: 488-506.
Block, J. 2002. Personality as an affect-processing system. Mahwah, NJ: Erlbaum.
Block, J., & Kremen, A. M. 1996. IQ and ego-resiliency: Conceptual and empirical connections
and separateness. Journal of Personality and Social Psychology, 70, 349–361.
Boeker, W., 1989. The effects of founding and history. Academy of Management Journal,
32(3), 489-515.
Bosse, D. A., Phillips, R. A., & Harrison, J. S. 2009. Stakeholders, reciprocity, and firm
performance. Strategic Management Journal, 30: 447-456.
Brammer, S., & Millington, A. 2005. Corporate reputation and philanthropy: An empirical
analysis. Journal of Business Ethics, 61(1): 29-44.
Brickson, S. L. 2005. Organizational identity orientation: Forging a link between organizational
identity and organizations' relations with stakeholders. Administrative Science
Quarterly, 50 (4) (Dec.): 576-609.
36
Brickson, S. L. 2007. Organizational identity orientation: The genesis of the role of the firm and
distinct forms of social value. Academy of Management Review, 32(3): 864-888.
Bromiley, P. 1991. Testing a causal model of corporate risk taking and performance. Academy of
Management Journal, 34: 37-59.
Caldwell, C., & Karri, R. 2005. Organizational governance and ethical systems: A covenantal
approach to building trust. Journal of Business Ethics, 58(1-3): 249-259.
Cameron, K. S. 1998. Strategic organizational downsizing: An extreme case. Research in
Organizational Behavior, 20: 185-230.
Christianson, M. K., Farkas, M. T., Sutcliffe, K. M., & Weick, K. E. 2009. Learning through rare
events: Significant interruptions at the Baltimore & Ohio railroad museum. Organization
Science, 20(5): 846-860.
Coutu, D. L. 2002. How resilience works. Harvard Business Review, 80(5): 46-56.
Cyert, R. M., & March, J. G. 1963. A behavioral theory of the firm. Englewood Cliffs, NJ:
Prentice Hall.
Dyer, J. H. & Singh, H. 1998. The relational view: Cooperative strategy and sources of
interorganizational competitive advantage. Academy of Management Review 23(4): 66079.
Edmondson, A. C., & McManus, S. E. 2007. Methodological fit in management field research.
Academy of Management Review, 32(4): 1155-1179.
Eisenhardt, K. M. 1989. Making fast strategic decisions in high-velocity environments. Academy
of Management Journal: 543-576.
37
Fredrickson, B. L. 1998. What good are positive emotions? Review of General Psychology:
Special Issue: New Directions in Research on Emotion, 2, 300–319.
Fredrickson, B. L. 2001. The role of positive emotions in positive psychology: The broaden-andbuild theory of positive emotions. American Psychologist: Special Issue, 56, 218–226.
Fredrickson, B. 2003. The value of positive emotions. American Scientist, 91: 330-335.
Fredrickson, B. L., & Joiner, T. 2002. Positive emotions trigger upward spirals toward emotional
well being. Psychological Science, 13: 172-175.
Freeman, R. E. 1984. Strategic Management: A Stakeholder Approach. Boston, MA: Pitman.
Freeman, R. E., Harrison, J. S., & Wicks, A. C. 2007. Managing for Stakeholders: Survival,
Reputation, and Success. Princeton, NJ: Yale University Press.
Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L., & de Colle, S. 2010. Stakeholder
Theory: The State of the Art. Cambridge University Press.
Godfrey, P. C. 2005. The relationship between corporate philanthropy and shareholder wealth: A
risk management perspective. Academy of Management Review, 30(4): 777-798
Godfrey, P. C., Merrill, C. B., & Hansen, J. M. 2009. The relationship between corporate social
responsibility and shareholder value: An empirical test of the risk management
hypothesis. Strategic Management Journal, 30(4):425-445
Gittell, J. H., Cameron, K., Lim, S. & Rivas, V. 1006. Relationships, layoff, and organizational
resilience. Journal of Applied Behavioral Science. 42(3):300-329.
Harrison, J. S., Bosse, D. A., & Phillips, R. A. 2010. Managing for stakeholders, stakeholder
38
utility functions, and competitive advantage. Strategic Management Journal, 31(1): 5874.
Haunschild, P. R., & Sullivan, B. N. 2002. Learning from complexity: Effects of prior accidents
and incidents on airlines' learning. Administrative Science Quarterly, 47: 609-643.
Hernandez, M. 2012. Toward an understanding of the psychology of stewardship. Academy of
Management Review, 37(2): 172-193.
Jick, T. D. 1979. Mixing qualitative and quantitative methods: Triangulation in action.
Administrative Science Quarterly, 24(4): 602-611.
Jones, T. M. 1995. Instrumental stakeholder theory: A synthesis of ethics and economics. The
Academy of Management Review, 20(2): 404-437.
Kiesler, S., & Sproull, L. 1982. Managerial response to changing environments: Perspectives on
problem sensing from social cognition. Administrative Science Quarterly, 27 (4): 548570.
Klohnen, E. C. 1996. Conceptual analysis and measurement of the construct of ego-resiliency.
Journal of Personality and Social Psychology, 70: 1067–1079.
Lazarus, R. S., & Folkman, S. 1984. Stress, appraisal, and coping. Springer Publishing
Company.
Leana, C. R. & Van Buren III, H. J. 1999. Organizational social capital and employment
practices. Academy of Management Review: 538-55.
Lengnick-Hill, C.A., & Beck, T.E. 2005. Adaptive fit versus robust transformation: How
39
organizations respond to environmental change. Journal of Management, 31(5): 738757.
Letzring, T. D., Block, J., & Funder, D. C. 2005. Ego-control and ego-resiliency: Generalization
of self-report scales based on personality descriptions from acquaintances, clinicians, and
the self. Journal of Research in Personality, 39: 395-422.
Levinthal, D. A., & March, J. G. 1981. A model of adaptive organizational search. Journal of
Economic Behavior and Organization, 2: 307-333.
Livengood, R. S., & Reger, R. K. 2010. That's our turf! identity domains and competitive
dynamics. Academy of Management Review, 35 (1): 48-66.
Luthans, F., Vogelgesang, G. R., & Lester, P. B. 2006. Developing the psychological capital of
resiliency. Human Resource Development Review, 5(1): 25-44.
McGrath, R. G. 1999. Falling forward: Real options reasoning and entrepreneurial failure.
Academy of Management Review: 13-30.
Meyer. A.D. 1982. Adapting to environmental jolts. Administrative Science Quarterly, 27(4):
515-537.
Miles, M. B. & Huberman, A. M. 1994. Qualitative Data Analysis: An Expanded Sourcebook.
1994. Beverly Hills: Sage Publications.
Miller, D., Breton‐Miller, L., & Scholnick, B. 2008. Stewardship vs. stagnation: An empirical
comparison of small family and Non‐Family businesses*. Journal of Management
Studies, 45(1): 51-78.
40
Pearlin, L. I., & Schooler, C. 1978. The structure of coping. Journal of Health and Social
Behavior: 2-21.
Preacher, K. J., & Hayes, A. F. 2008. Asymptotic and resampling strategies for assessing and
comparing indirect effects in multiple mediator models. Behavior Research Methods,
40(3): 879-891.
Rudolph, J. W. & Repenning, N. 2002. Disaster dynamics: Understanding the role of quantity in
organizational collapse. Administrative Science Quarterly, 47: 1-30.
Sarasvathy, S. D. 2001. Causation and effectuation: Toward a theoretical shift from economic
inevitability to entrepreneurial contingency. Academy of Management Review, 26 (2)
(Apr.): 243-63.
Seery, M. D., Holman, E. A., & Silver, R. C. 2010. Whatever does not kill us: Cumulative
lifetime adversity, vulnerability, and resilience. Journal of Personality and Social
Psychology, 99(6): 1025-1041.
Seery, M. 2011. Resilience: A siver lining to experiencing adverse life events? Current
Directions in Psychological Science, 20, 390-394.
Sitkin, S. B. 1992. Learning through failure: The strategy of small losses. In B. M. Staw & L. L.
Cummings (Eds.), Research in organizational behavior, vol. 14: 231-266. Greenwich,
CT: JAI Press.
Staw, B. M., Sandelands, L., & Dutton, J. 1981. Threat rigidity effects in organizational
behavior: A multilevel analysis. Administrative Science Quarterly, 26 (4) (Dec.): 50124.
41
Sutcliffe, K., & Vogus, T.J. 2003. Organizing for resilience. In K. Cameron, J.E. Dunnon, R. E
Quinn (Eds.) Positive Organizational Scholarship: Foundations of a New Discipline:
94-110. San Francisco: Berrett-Koehler.
Tugade, M. M., & Fredrickson, B. L. 2004. Resilient individuals use positive emotions to bounce
back from negative emotional experiences. Journal of Personality and Social
Psychology, 86, 320–333.
Vaughan, D. 1992. Theory elaboration: The heuristics of case analysis. In C. Ragin and H.
Becker (Eds.) What is a Case? 173-202. New York: Cambridge University Press.
Vogus, T. J., & Sutcliffe, K. M. 2007. Organizational resilience: Towards a theory and
research agenda. Paper presented at Systems, Man and Cybernetics, 2007. ISIC. IEEE
International Conference.
Waddock, S. A. & Graves, S. B. 1997. The corporate social performance-financial performance
link. Strategic Management Journal 18(4): 303-319.
Weick, K. E. 1995. Sensemaking in organizations. Vol. 3, Sage Publications, Inc.
Weick, K.E., Sutcliffe, K.M., & Obstfeld, D. 1999. Organizing for high reliability: Processes of
collective mindfulness. Research in Organizational Behavior 21 : 23-81.
Wildavsky, A. 1988. Searching for safety. New Brunswick, NJ: Transaction Books.
42
FIGURE 1. Theoretical Model of Organizational Resilience
43
FIGURE 2. Observed Patterns of Strategies of Resilience
Percentages of firms (n = 140) enacting each category or combination of categories of strategies
of resilience.
44
TABLE 1. Psychological Strategies of Resilience
Strategy of Resilience
Illustration
Cognitive
Seeing hardship as an
opportunity
“Two things have had a large impact on our community and our business:
unemployment and a shortage of certified nursing assistants. With this in
mind the company began a nurse aide training program to deal with both
problems. Today the company is running a year-around school to train CNAs
and Med-techs… This has put people to work and lightened the need for
qualified caregivers!”
Expansive thinking
“We have tried to understand the dynamics of this dramatic reduction, and continue
to add services that traditional printers did not have. By thinking outside the
box…we have not limited ourselves to what was traditionally in our comfort
zone. We realize the industry has changed and will continue to change and that
we must change along with it. We have created a proactive business model
rather than a reactive one.”
Having a different
mindset
“We never lower our standards. Where projects don't exist, we create them. We
don't passively respond to the market here. We make it. This is one reason we
were fairly well prepared to maneuver through an economic slowdown. We've
been working in that situation for years and have learned how to keep your
mindset and business ethics tuned seeing and creating opportunities in
unconventional ways.”
Affective
Positive attitude
“[Our company] has made every effort to maintain positive employee morale and
stability to counteract the harsh economic times in which we live.”
Passion for place
“…we do not look at our location as being a challenge to our business. The owners
and staff …are local people and we are used to this area. We have always had
to deal with the crooked roads and steep mountains, and we love them. Many
of us have moved away from this area, but we returned home because of our
affection for this area and its people.”
Sense of connectedness
“…the ability to find new opportunities has been challenging. Cavalier responds to
the challenges as a family, helping each other and its neighbors find new
opportunities and just get stronger.”
45
TABLE 2. Operational Strategies of Resilience
Strategy of Resilience
Illustration
Process improvements
“To mitigate the economic impact on [our company], the company sought the
advice of a change agent, who was tasked to evaluate the effectiveness of the
company. After redesigning our business processes, the company was
restructured, per change agent recommendations, to improve its
effectiveness.”
Learning routines
“We have been able to keep our hospital teams together by learning to be more
efficient.”
Cost containment
“We have also had to put on hold major repairs to our building, particularly a roof.
Unfortunately, we had to resort to using heavy tarps to place over the roof for
several years.”
Inventory management
“We have had to scale back some types of inventory, namely tobacco related
farming products and have added inventory that is not as farming dependent.”
Expanding to new
markets/potential
customers
“In an effort to offset these losses, I have reached out to a wider geographical
customer base than originally intended.”
Advertising
“Needing a broad customer base, our adopted an advertising strategy to attract
shoppers within a 120 mile radius.”
General promotions and
discounts
“[Our business] has mitigated these impacts by keeping admission cost moderate
[and] offering school discounts.”
Building buffers
“24 hour security cameras and fencing have been installed.”
46
TABLE 3. Stakeholder Strategies of Resilience
Strategy of Resilience
Illustration
Relational
Customer loyalty
programs
“We also host special events for our wine club customers in December for the
holiday season and again in early spring as the slow season ends.”
Connecting through
social media
“We set up a Facebook page to keep customers aware of sales and specials at the
store.”
Employee support
“We offer higher than average wages and benefits. We stress we do not pay
minimum wage because we do not expect minimum effort.”
Teaming with suppliers
“We kept looking for other alternatives and finally teamed with Optima Health to
promote another option for commercial group health insurance in our region.”
Stakeholder-specific
promotions and
discounts
“We give discounts to the players from the county we are located in. We also give
store credits for good grades up to $25. Three dollars for A’s and two dollars
for B’s. We try to reinforce what the parents are preaching at home. We also
heavily discount for our military, police, fire, and EMT.”
Collectivistic
Involvement in
merchant associations
“[Our company] and most of [our town’s] retailers have formed a group, which
meets periodically to share problems, concerns, and ideas on how to encourage
people to shop locally.”
Buying local
“We make contributions to local concerns, and provide a stable work environment
for employees so they, in turn, can help support the local economy.”
Charitable work
“…[Our company] participates in Meals on Wheels and the Food Bank. Employees
volunteer their time by preparing meals, contributing food and driving and
delivering meals to those in the community struck by difficult times.”
Promoting the
community
“[We] became a ‘part of the solution’ – by actively participating in the marketing of
the revitalization of [our town] and spread the word about the comeback of the
city with specific examples of growth.”
47
TABLE 4. Summary of Sample by Experience of Hardship
Category of
Hardship
Examples
Participants by Sector
Economic
rising input prices; declining customer
discretionary spend; lack of financing
61 firms:
 4 agriculture
 17 manufacturing
 15 retail/wholesale
 25 service
Geographic
Difficulty attracting skilled workers;
“brain drain”; lack of infrastructure
(roads, high speed internet, cellular);
real estate
37 firms:
 1 agriculture
 5 manufacturing
 8 retail/wholesale
 23 service
Environmental
flood; fire; storms
17 firms:
 6 agriculture
 2 manufacturing
 4 retail/wholesale
 5 service
Social
illness; immigration issues; crime;
poverty; resistance to change
25 firms:
 4 agriculture
 3 manufacturing
 2 retail/wholesale
 16 service
48
TABLE 5. Bivariate Correlations
Controls
1 age
2 # of employees
Industry Sector
3 agriculture
4 manufacturing
5 retail/wholesale
6 service
Strategies of Resilience
7 number of strategies
8 psychological
9 operational
10 stakeholder (aggregate)
11 stakeholder relational
12 stakeholder collectivistic
Experience of Hardship
13 breadth of hardship
14 economic
15 geographic
16 environmental
17 social
Performance Measures
18 revenue growth
19 profitability growth
20 fte growth
*p<.05
mean
s.d.
26.60 23.00
98.80 494.00
controls
1
2
1.00
0.12
1.00
3
industry sector
4
5
0.18*
0.03
-0.04
-0.11
-0.04
1.00
-0.04 -0.17*
1.00
0.15 -0.18* -0.25*
1.00
-0.06 -0.34* -0.48* -0.50*
6
7
8
strategies of resilience
9
10
11
12
13
experience of hardship
14
15
16
17
1.00
3.70
0.26
1.93
1.51
0.98
0.54
2.05
0.51
1.47
1.34
1.13
0.83
-0.12
-0.10
-0.03
-0.11
-0.06
-0.10
-0.04
-0.01
0.02
-0.09
-0.05
-0.06
-0.04 -0.03
-0.08 -0.03
0.03
0.05
-0.06 -0.08
0.01
0.06
-0.11 -0.21*
-0.13
-0.08
-0.11
-0.05
-0.12
0.07
0.15
0.15
0.03
0.14
0.04
0.17*
1.00
0.17*
0.70*
0.69*
0.57*
0.34*
1.00
-0.15
0.04
0.05
0.00
1.00
0.04
0.06
-0.02
1.00
0.79*
0.54*
1.00
-0.09
1.00
3.71
1.86
1.06
0.12
0.66
1.79
1.21
0.84
0.33
0.77
0.03
0.06
-0.03
0.18*
-0.06
0.07
0.15
-0.16
0.19*
0.03
0.15 -0.17
0.06
0.01
0.06 -0.15
0.30* -0.07
0.06 -0.21*
0.02
0.13
-0.06
0.03
-0.10
0.02
-0.15
0.13
-0.15
0.21*
0.14 -0.08
0.12 -0.12
0.09
0.06
-0.03 -0.19*
0.06
0.00
0.21*
0.19*
0.07
0.03
0.10
0.02
0.02
0.03
-0.01
-0.02
0.05
0.01
0.06
0.05
0.00
-0.03
0.02
-0.03
-0.08
-0.03
1.00
0.64*
0.55*
0.34*
0.57*
1.00
-0.08
0.10
-0.03
1.00
0.08
0.28*
1.00
0.13
1.00
1.67
0.09
0.68
6.10 -0.20*
3.83
0.01
2.40 -0.21*
-0.01
0.11
-0.03
-0.07
-0.07
-0.08
-0.10
-0.11
-0.01
0.18*
0.16
0.09
-0.02
0.14
0.15
-0.07
0.04
0.04
0.06
0.14
0.12
0.05
0.01
0.12
0.02
0.22*
0.03
-0.09 -0.17
-0.15 -0.20*
-0.10 -0.19*
-0.03
0.07
0.05
0.16
-0.10
-0.08
0.02
-0.05
0.04
-0.07
-0.03
-0.04
performance measures
18
19
20
0.01
0.10
0.17
1.00
0.16
0.70*
1.00
0.27*
1.00
TABLE 6. Strategies of Resilience by Industry Sector
Strategy
Firms
Mean
Total Number of Strategies
Agriculture
15
3.47
Manufacturing
27
3.59
Retail/Wholesale
29
3.17
Service
69
4.01†
Psychological
Agriculture
15
0.13
Manufacturing
27
0.22
Retail/Wholesale
29
0.17
Service
69
0.33†
Operational
Agriculture
15
2.07
Manufacturing
27
2.07
Retail/Wholesale
29
1.62
Service
69
1.97
Stakeholder (aggregate)
Agriculture
15
1.27
Manufacturing
27
1.30
Retail/Wholesale
29
1.38
Service
69
1.71
Stakeholder Relational
Agriculture
15
1.00
Manufacturing
27
1.11
Retail/Wholesale
29
0.72
Service
69
1.03
Stakeholder Collectivistic
Agriculture
15
0.27
Manufacturing
27
0.19
Retail/Wholesale
29
0.66**
Service
69
0.68***
†
p<.10, *p<.05, **p<.01, ***p<.001 (two-tailed test)
Std. Dev.
Min
Max
2.03
1.31
1.95
2.30
1
1
1
1
7
6
10
11
0.35
0.51
0.38
0.59
0
0
0
0
1
2
1
2
1.44
1.21
1.74
1.46
0
0
0
0
5
5
7
6
0.96
1.17
1.21
1.52
0
0
0
0
3
4
4
6
1.00
1.25
1.07
1.15
0
0
0
0
3
4
4
6
0.46
0.40
0.77
0.98
0
0
0
0
1
1
3
4
TABLE 7. OLS Regression Results: Strategies of Resilience on Firm Profitability Growth
Model 1:
Control
Variable
β
Model 2:
Total
Strategies of
Resilience
Std.
β
Dev.
1.32 -2.39
Std.
Dev.
1.58
Model 3:
Comparing
Strategies of
Resilience
β
Std.
Dev.
1.59
Model 4:
“Hybrid”
Strategy of
Resilience
β
Std.
Dev.
1.38
Model 5:
Specific
Stakeholder
Strategies of
Resilience
β
-1.05
-2.43
-1.24
-2.48
Constant
Control Variables a
age of firm
0.01
0.02 0.01
0.02
0.02
0.02
0.01
0.02
0.02
employees
0.00
0.01 0.00
0.01
0.00
0.00
0.00
0.01
0.00
manufacturing
0.30
1.50 0.33
1.49
0.38
1.50
0.34
1.51
0.32
retail
0.08
1.42 0.28
1.41
0.26
1.42
0.14
1.43 -0.20
service
1.24
1.31 1.26
1.30
1.16
1.31
1.24
1.32
0.82
Independent Variables
number of strategies
0.29
0.19
Psychological
0.78
0.78
0.83
Operational
0.15
0.26
0.20
operational * stakeholder (aggregate)
0.04
0.08
stakeholder (aggregate)
0.43
0.30
stakeholder relational
0.14
stakeholder collectivistic
1.22*
N
98
98
98
98
R2
0.03
0.06
0.07
0.04
Adjusted R2
-0.02
-0.00
-0.02
-0.03
F-change test b
2.37
1.09
0.25
df (regression, residual)
(5, 92)
(6, 91)
(8, 89)
(6, 91)
†
p<.10, *p<.05, **p<.01, ***p<.001
Unstandardized regression coefficients shown.
a
agriculture is the omitted category
b
F-change test compares model to control model except for Model 5, which is compared with Model 3
51
Std.
Dev.
1.57
0.02
0.01
1.48
1.42
1.30
0.77
0.26
0.33
0.51
98
0.10
0.01
2.87†
(9, 88)
TABLE 8. Mediation Analysis: Total Strategies of Resilience as a Suppressor in the
Relationship between Hardship Breadth and Firm Profitability Growth
Model 1:
Hardship Breadth
on Profitability
Growth
Variable
β
Std. Dev
Model 2:
Hardship Breadth
on Strategies of
Resilience
β
0.83
1.11
3.43
Constant
Control Variables
age of firm
0.01
0.02 -0.01
employees of firm
0.00
0.01 -0.00
Independent Variable
hardship breadth
-0.28
0.22 0.20*
Mediating Variable
total strategies of resilience
N
98
2
R
0.01
Adjusted R2
-0.01
F-change test
df (regression, residual)
(2, 95)
†
p<.10, *p<.05, **p<.01, ***p<.001
Unstandardized regression coefficients shown.
Std. Dev
0.47
0.01
0.00
0.01
0.00
0.02
0.01
0.10
-0.37†
0.23
0.37†
0.19
98
0.07
0.03
3.76†
(4, 93)
125
0.05
0.03
(3, 121)
52
Model 3:
Hardship Breadth on
Profitability Growth
including Strategies of Resilience
Bias Corrected
Std.
and
Bias Corrected
β
Dev
Accelerated
95% CI
95% CI
-0.41
1.27
[.0031, .3070]
[.0009, .2922]