Available via license: CC BY 4.0
Content may be subject to copyright.
Business Management and Strategy
ISSN 2157-6068
2024, Vol. 15, No. 1
205
The Influence of Organizational Resilience on SME
Firm Performance: A Conceptual Model
Yuefen Hu, Sang Long Choi, Shen Kian Tan
Faculty of Business, Raffles University, Johor Bahru, Malaysia
Received: March 5, 2024 Accepted: April 27, 2024 Published: May 1, 2024
doi:10.5296/bms.v15i1.21813 URL: https://doi.org/10.5296/bms.v15i1.21813
Abstract
SMEs’ performance has been affected due to the pandemic situation, and managers should
pay attention to the changing external environment and adjust their business strategies. For
long-term business sustainability, organizational resilience is nevertheless an important factor
that enables SME businesses to mitigate the disruption caused by the innate uncertainty
presented in the environment. This paper extends the research on the development of
organizational resilience in the field of business management by doing a complete literature
review and proposing a link between organizational resilience and firm performance. The
findings of this study indicate that there is a considerable association between organizational
resilience and firm performance. The proposed conceptual framework will make significant
contributions to future studies.
Keywords: organizational resilience, SEMs, firm performance
1. Introduction
The business environment is volatile and can be easily disturbed by changing conditions
(Gong et al., 2020). Furthermore, organizations are perceived to encounter myriad adversities
that threatens their operations and performances (Campagnolo, 2022; Williams et al., 2017).
Hence, businesses must seek changes in their operations and develop contingency plans to
stay competitive and acquire higher revenue in an ever-evolving market (Liu et al., 2020). In
fact, organizational resilience is both a process and an outcome, broadly defined as “the
process by which an actor builds and uses its capability endowments to interact with the
environment in a way that positively adjusts and maintains functioning before, during, and
following adversity” (Williams et al., 2017).
Due to the complex internal and external environmental influence, SMEs are confronted with
Business Management and Strategy
ISSN 2157-6068
2024, Vol. 15, No. 1
206
added difficulties in operating and sustaining high performance (Sun et al., 2021). Under such
circumstances, a resilient organization can identify relevant weak signals more quickly due to
its developed capability to respond to a broader array of events. One essential element for
organizational resilience is the high levels of slack resources, especially financial reserves
(Vogus & Sutcliffe, 2007). In other words, organizational resilience involves both planning
for future crises and adapting to chronic stresses or acute risks (Barasa et al., 2018).
Then, “make your organization more resilient” seems to be the buzzword in management
practice recently (Hillmann & Guenther, 2020). Although the concept of organizational
resilience has gained momentum in high-quality journals almost a decade ago (Clément &
Rivera, 2016; Williams et al., 2017), it has been criticized for being vague and lacking a
consistent definition (Burnard & Bhamra, 2011; Linnenluecke, 2017).
Given the multiple obstacles that SMEs confront, this conceptual study aims to address a
research gap by focusing on positive organizational resilience. The purpose of this study is to
investigate the relationship between organizational resilience and firm performance.
2. Literature Review
2.1 Organizational Resilience
Resilience has been increasingly acknowledged as an important capability for an organization
to “react to and recover from duress or disturbances with minimal effects on stability and
functioning” (Williams et al., 2017). Nevertheless, most researchers feel it is a firm capability
to successfully absorb, adapt to, and finally capitalize on the disruptive events that may
jeopardize existence (He et al., 2023; Melián -Alzola et al., 2020; Chowdhury et al., 2018).
Organizational resilience has been the focus which leads to rapid change in the world. It is an
organizational capability that firms demonstrate in a crisis, which is based on behaviors such
as acquiring, integrating, and leveraging entrepreneurial resources (Mzid et al., 2019). The
organization not only needs to develop the aforesaid capability, it is also important for it to
anticipate, react and adapt as well as respond in a creative, flexible and resilient manner (He
et al., 2023; Williams et al., 2017). It is nonetheless, the most direct component explaining
why companies can successfully overcome crises (Granig & Hilgarter, 2020).
2.2 Firm Performance
To measure firm performance, different criteria have been used so far. According to
Venkatraman and Ramanujam (1986), a company’s ability to accomplish its objectives is
shown by its performance, which is measured using both financial and non-financial metrics.
Non-financial success metrics include market share, quality, satisfaction, and market efficacy,
whereas financial measures include economic considerations (Zehir et al., 2016). Integrated
performance measurement systems “strive to align the organization’s process just as
production, marketing, and other traditional functional areas, with corporate strategy using
both performance drivers and outcome measures” (Bremser & Barsky, 2004).
Business Management and Strategy
ISSN 2157-6068
2024, Vol. 15, No. 1
207
Choongo (2017) pointed out there are two types of firm performance in SMEs: non-financial
performance and financial performance. Financial performance measures return on assets,
return on equity, profit-to-revenue ratio, cash flow from operations, profit, return on
investment, revenue growth, market share won, productivity, effectiveness, and efficiency.
Indicators of non-financial performance measures include corporate image, reputation,
quality of human resources, customer base, brand devotion, and investment in research and
development.
As a result, firm performance is the foremost strategic goal of a firm, with measures such as
return on investment to reflect the achievement of the economic goals of a company.
Commercial indicators such as sales growth, market share, or the success of a new product
launch, on the other hand, measure technological efficiency (Venkatraman & Ramanujam,
1986). The sales growth, reputation and image, customer satisfaction, market share, and
success of new product launches were referred to as the commercial success of the company
and used to measure commercial performance (González-Benito, 2007).
2.3 Relationship between Organizational Resilience and Firm Performance
In more recent reports, He, Huang, Choi and Bilgihan (2023) found that the relationship
between organizational resilience and organizational performance in service trades was
highly vulnerable during crises due to their specific characteristics. The findings revealed that
organizational resilience positively and significantly affects business performance.
Seraj, Fazal and Alshebami (2022) explored the impact of entrepreneurial resilience on the
relationship between competency and financial literacy with sustainable business
performance. The study applied a quantitative method for collecting data from 220 small
business entrepreneurs in Saudi Arabia using an online questionnaire. The study’s findings
suggested that entrepreneurial resilience had a significant impact on sustainable performance
while also mediating the effect of financial literacy and competency on sustainable
performance across Saudi SMEs. The study’s contribution, in addition to expanding the
corpus of knowledge, will assist policymakers in developing effective initiatives to encourage
SMEs that have been badly hit by the COVID-19 epidemic to perform sustainably.
Beuren, Santos and Theiss (2021) research the relationship between organizational resilience
and business performance in companies that have undergone corporate reorganizations. The
data was collected through a random selection of 102 executives and managers from Brazil.
The result showed that organizational resilience influences business performance (in the
dimensions of economics, customers, and processes). The primary implication of the study
focused on the benefits of active organizational resilience on multifaceted company
performance; notwithstanding, it also offered managers insight into how to deploy resources
to benefit both the employer and the employee. The findings show that organizational
resilience has a direct and positive effect on business performance.
García-Contreras, Valle-Cruz and Canales-García (2021) recently conducted an empirical
Business Management and Strategy
ISSN 2157-6068
2024, Vol. 15, No. 1
208
analysis of the correlation between organizational resilience and SME firm performance
during the COVID-19 pandemic. To gather data, the research obtained support from a sample
of 112 SME attendants in two Latin American countries (Mexico and Chile). Findings
suggested that there was a positive relationship and impact of organizational resilience on
SME performance.
Anwar, Coviello and Rouziou (2021) investigated the relationship between organizational
resilience and firm performance during the COVID-19 pandemic’s external disruption. The
findings indicated that when such companies are resilient, they perform significantly better
during times of crisis. At the same time, management team members’ resilience and
inter-functional cooperation improve organizational resilience. Organizational resilience is
also enhanced by the inter-functional cooperation and personal resilience of the management
team members. The results demonstrated that, in nascent ventures, organizational resilience
has a large and favorable impact on business performance.
Zahari, Mohamed, Said and Yusof (2021) aimed to examine the role of leadership capabilities,
organizational resilience, and organizational performance among higher private learning
institutions in Malaysia. The analysis of the 120 responses was accomplished by questionnaire
survey statistics. The study discovered that organizational resilience and leadership capabilities
have a positive and significant impact on the performance of private higher education
institutions. The work focuses on values that have an impact on organizational performance,
which is a critical aspect of surviving in an uncertain environment.
Marco-Lajara, Úbeda-Garcíam, Ruiz-Fernández, Poveda-Pareja and Sánchez-García (2021)
studied the rural hotel resilience during COVID-19, and the main objective is to assess the
influence of CSR strategies on the organizational resilience and the influence of
organizational resilience on the firm performance in the wake of COVID-19. The sample
contained a total of 100 Spanish managers’ responses, and PLS-SEM was used to tabulate the
statistics. The finding demonstrated a positive and significant impact of CSR strategies on
organizational resilience and the effect of organizational resilience on hotel performance.
Melián -Alzola, Fernández-Monroy and Hidalgo-Peñate (2020) proposed a holistic model to
measure organizational resilience in the tourism industry in the Canary Islands. The study of
hotel resilience is a critical topic for the survival and competitiveness of organizations and
destinations due to the tourism industry’s vulnerability, as proven by the COVID-19
pandemic. The research model proposes a two-factor structure for predicting organizational
resilience and hotel performance. Hotel performance not only recognizes resilience as a result,
but it also explains what organizations are resilient for. After analyzing the 72 usable surveys,
the findings showed that organization resilience has a significant effect on performance.
Zabłocka-Kluczka and Sałamacha (2020) built a theoretical research model and verified the
sample of 268 organizations operating in Poland (among manufacturing organizations 122,
trade organizations 59, and service organizations 72). The obtained research results showed
Business Management and Strategy
ISSN 2157-6068
2024, Vol. 15, No. 1
209
that the built regression model was valid and statistically significant. The obtained results
showed a statistically significant and high positive correlation between organizational
resilience and organizational performance. Hence, there is reason to believe that the role of
organizational resilience in shaping organizational performance seems to be a significant
issue in the management of modern organizations.
Suryaningtyas, Sudiro, Troena and Irawanto (2019) sought to further knowledge by
researching the relationship between organizational resilience and firm performance, both
directly and indirectly. The findings showed that organizational resilience was positively
related to firm performance. The investigation was carried out in three-star hotels and resorts
in two locations in East Java, Indonesia. The findings demonstrated that organizational
resilience has a significant impact on firm performance.
Rodríguez-Sánchez, Guinot, Chiva and López-Cabrales (2019) pointed out that organizations
must strive in an uncertain and tough environment, and the function of organizational
resilience at work has been of particular attention over the last decade. In the study, structural
equation modeling was used to test the research model with a sample of 296 companies from
different sectors. The result showed that organizational resilience had a positive influence on
firm performance via organizational learning capability. However, the direct relationship
between resilience and performance was not significant.
Chowdhury, Prayag, Orchiston and Spector (2018) concluded that the adaptive resilience of
tourism organizations has a positive and significant influence on business performance in the
post-disaster context of Christchurch, New Zealand. The sample is selected from 251
remaining operation organizations. The findings had several theoretical and managerial
implications, but most importantly they established the positive effects of organizational
resilience-building activities on business performance.
Prayag, Chowdhury, Spector and Orchiston (2018) investigated the influence of
organizational resilience on financial performance. The sample was collected from tourism
operators with 84 email surveys. Organizational resilience was divided into two dimensions
planned resilience and adaptive resilience. The study’s findings revealed that planned
resilience had no statistically significant impact on financial performance, however adaptive
resilience had a positive and significant impact. The findings validated organizational
resilience as a strong predictor of financial performance.
Ortiz-de-Mandojana and Bansal (2015) investigated 121 U.S-based 242 individual firms over
15 years, and because of the organizational resilience which is defined as a latent,
path-dependent construct, through the long-term outcomes, they all achieved improvement in
financial volatility, sales growth, and survival rate. The finding showed that organizational
resilience resulted in lower financial volatility, higher long-term growth, and higher
performance over 15 years of data.
Business Management and Strategy
ISSN 2157-6068
2024, Vol. 15, No. 1
210
3. Conceptual Framework
The framework components (shown in Figure 1) include independent and dependent
variables, with organizational resilience as the independent variable and firm performance as
the dependent variable.
Figure 1. Conceptual framework of the impact of organizational resilience on firm
performance
4. Propositions
Based on the aforementioned literature analysis, the following propositions will be addressed:
P1: Organizational resilience is significantly related to firm performance.
5. Conclusion
After reviewing the literature and discussing organizational resilience, it can be seen that
there is a significant effect between organizational resilience and firm performance. Given the
insufficient research on firm performance in the past, we need to call for the strengthening of
the importance of organizational resilience. This is a expanding research on performance
concerns in the field of organizational management, and it warrants additional investigation
in terms of fostering and developing organizational resilience. This study can help managers
and decision-makers in SMEs better understand the variables that influence firm performance.
Most essentially, they will identify the true causes of firm performance, and increase SMEs’
ability to respond to environmental change.
By increasing organizational resilience, organization can improve their ability to withstand
crises. With that ability, business managers, regardless of optimizing their management style
and improving the sense of belonging and cohesion of their employees, can efficiently make
organizational adjustments when a crisis strikes. In addition, after a crisis occurs, managers
need to reflect and look for problems promptly to prepare for possible future crises. The
enhancement of enterprise organizational resilience can improve firm performance.
Business Management and Strategy
ISSN 2157-6068
2024, Vol. 15, No. 1
211
Acknowledgments
Not applicable.
Authors contributions
Not applicable.
Competing interests
Not applicable.
Informed consent
Obtained.
Ethics approval
The Publication Ethics Committee of the Macrothink Institute.
The journal’s policies adhere to the Core Practices established by the Committee on
Publication Ethics (COPE).
Provenance and peer review
Not commissioned; externally double-blind peer reviewed.
Data availability statement
The data that support the findings of this study are available on request from the
corresponding author. The data are not publicly available due to privacy or ethical
restrictions.
Data sharing statement
No additional data are available.
Open access
This is an open-access article distributed under the terms and conditions of the Creative
Commons Attribution license (http://creativecommons.org/licenses/by/4.0/).
Copyrights
Copyright for this article is retained by the author(s), with first publication rights granted to
the journal.
References
Anwar, A., Coviello, N., & Rouziou, M. (2021). Weathering a crisis: A multi-level analysis
of resilience in young ventures. Entrepreneurship Theory and Practice, 14, 1-29.
https://doi.org/10.1177/10422587211046545
Business Management and Strategy
ISSN 2157-6068
2024, Vol. 15, No. 1
212
Barasa, E., Mbau, R., & Gilson, L. (2018). What is resilience and how can it be nurtured? A
systematic review of empirical literature on organizational resilience. International Journal
of Health Policy and Management, 7(6), 491-503.
Beuren, I. M., Santos, V. dos, & Theiss, V. (2021). Organizational resilience, job satisfaction
and business performance. International Journal of Productivity and Performance
Management, 71(6), 2262-2279. https://doi.org/10.1108/ijppm-03-2021-0158
Bremser, W. G., & Barsky, N. P. (2004). Utilizing the balanced scorecard for R&D
performance measurement. R and D Management, 34(3), 229-238.
https://doi.org/10.1111/j.1467-9310.2004.00335.x
Burnard, K., & Bhamra, R. (2011). Organizational resilience: Development of a conceptual
framework for organizational responses. International Journal of Production Research,
49(18), 5581-5599. https://doi.org/10.1080/00207543.2011.563827
Campagnolo, D., Laffineur, C., Leonelli, S., Martiarena, A., Tietz, M. A., & Wishart, M.
(2022). Stay alert, and save businesses. Planning for adversity among immigrant
entrepreneurs. International Journal of Entrepreneurial Behavior & Research, 28(7),
1773-1799. https://doi.org/10.1108/ijebr-02-2022-0164
Choongo, P. (2017). A longitudinal study of the impact of corporate social responsibility on
firm performance in SMEs in Zambia. Sustainability, 9(8), 1300.
https://doi.org/10.3390/su9081300
Chowdhury, M., Prayag, G., Orchiston, C., & Spector, S. (2018). Post disaster social capital,
adaptive resilience and business performance of tourism organizations in Christchurch, New
Zealand. Journal of Travel Research, 58(7), 1209-1226.
https://doi.org/10.1177/0047287518794319
Clément, V., & Rivera, J. (2016). From adaptation to transformation: An extended research
agenda for organizational resilience to adversity in the natural environment. Organization &
Environment, 30(4), 346-365. https://doi.org/10.1177/1086026616658333
García-Contreras, R., Valle-Cruz, D., & Canales-García, R. A. (2021). Selection
organizational: Resiliency deepened de las pymes en la era de la COVID-19. Estudios
Gerenciales, 37(158), 73-84. https://doi.org/10.18046/j.estger.2021.158.4291
Gong, H., Hassink, R., Tan, J., & Huang, D. (2020). Regional resilience in times of a
pandemic crisis: The case of COVID‐19 in China. Tijdschrift Voor Economische En Sociale
Geografie, 111(3), 497-512. https://doi.org/10.1111/tesg.12447
González-Benito, J. (2007). A theory of purchasing’s contribution to business performance.
Journal of Operations Management, 25(4), 901-917.
https://doi.org/10.1016/j.jom.2007.02.001
Business Management and Strategy
ISSN 2157-6068
2024, Vol. 15, No. 1
213
Granig, P., & Hilgarter, K. (2020). Organizational resilience: A qualitative study about how
organizations handle trends and their effects on business models from experts’ views.
International Journal of Innovation Science, 12(5), 525-544.
https://doi.org/10.1108/ijis-06-2020-0086
He, Z., Huang, H., Choi, H., & Bilgihan, A. (2023). Building organizational resilience with
digital transformation. Journal of Service Management, 34(1), 147-171.
https://doi.org/10.1108/josm-06-2021-0216
Hillmann, J., & Guenther, E. (2020). Organizational resilience: A valuable construct for
management research? International Journal of Management Reviews, 23(1). Wiley.
https://doi.org/10.1111/ijmr.12239
Linnenluecke, M. K. (2017). Resilience in business and management research: A review of
influential publications and a research agenda. International Journal of Management Reviews,
19(1), 4-30. https://doi.org/10.1111/ijmr.12076
Liu, L., Hou, Y., Zhan, X., & Wang, Z. (2020). Innovation efficiency of High-Tech SMEs
listed in China: Its measurement and antecedents. Discrete Dynamics in Nature and Society,
2020, 1-9. https://doi.org/10.1155/2020/8821950
Marco-Lajara, B., Úbeda-García, M., Ruiz-Fernández, L., Poveda-Pareja, E., &
Sánchez-García, E. (2021). Rural hotel resilience during COVID-19: The crucial role of CSR.
Current Issues in Tourism, 25(7), 1-15. https://doi.org/10.1080/13683500.2021.2005551
Melián-Alzola, L., Fernández-Monroy, M., & Hidalgo-Peñate, M. (2020). Hotels in contexts
of uncertainty: Measuring organizational resilience. Tourism Management Perspectives, 36,
1-14. https://doi.org/10.1016/j.tmp.2020.100747
Mzid, I., Khachlouf, N., & Soparnot, R. (2019). How does family capital influence the
resilience of family firms? Journal of International Entrepreneurship, 17(2), 249-277.
https://doi.org/10.1007/s10843-018-0226-7
Ortiz-de-Mandojana, N., & Bansal, P. (2015). The long-term benefits of organizational
resilience through sustainable business practices. Strategic Management Journal, 37(8),
1615-1631. https://doi.org/10.1002/smj.2410
Prayag, G., Chowdhury, M., Spector, S., & Orchiston, C. (2018). Organizational resilience
and financial performance. Annals of Tourism Research, 73, 193-196.
https://doi.org/10.1016/j.annals.2018.06.006
Rodríguez-Sánchez, A., Guinot, J., Chiva, R., & López-Cabrales, Á. (2019). How to emerge
stronger: Antecedents and consequences of organizational resilience. Journal of Management
& Organization, 27(3), 1-18. https://doi.org/10.1017/jmo.2019.5
Seraj, A. H. A., Fazal, S. A., & Alshebami, A. S. (2022). Entrepreneurial competency,
Business Management and Strategy
ISSN 2157-6068
2024, Vol. 15, No. 1
214
financial literacy, and sustainable performance—examining the mediating role of
entrepreneurial resilience among Saudi entrepreneurs. Sustainability, 14(17), 1-17.
https://doi.org/10.3390/su141710689
Sun, Y., Zeng, X., Zhao, H., Simkins, B., & Cui, X. (2021). The impact of COVID-19 on
SMEs in China: Textual analysis and empirical evidence. Finance Research Letters, 45, 1-8.
https://doi.org/10.1016/j.frl.2021.102211
Suryaningtyas, D., Sudiro, A., Troena, E. A., & Irawanto, D. W. (2019). Organizational
resilience and organizational performance: Examining the mediating roles of resilient
leadership and organizational culture. Academy of Strategic Management Journal, 18(2), 1-7.
Venkatraman, N., & Ramanujam, V. (1986). Measurement of Business Performance in
Strategy Research: A Comparison of Approaches. Academy of Management Review, 11(4),
801-814. https://doi.org/10.5465/amr.1986.4283976
Vogus, T. J., & Sutcliffe, K. M. (2007). Organizational resilience: Towards a theory and
research agenda. 2007 IEEE International Conference on Systems, Man and Cybernetics,
Huang 3418-3422.
Williams, T. A., Gruber, D. A., Sutcliffe, K. M., Shepherd, D. A., & Zhao, E. Y. (2017).
Organizational response to adversity: Fusing crisis management and resilience research
streams. Academy of Management Annals, 11(2), 733-769.
https://doi.org/10.5465/annals.2015.0134
Zabłocka-Kluczka, A., & Sałamacha, A. (2020). Moderating role of corporate reputation in
the influence of external support on organizational resilience and performance. Engineering
Management in Production and Services, 12(3), 87-102.
https://doi.org/10.2478/emj-2020-0021
Zahari, A. I., Mohamed, N., Said, J., & Yusof, F. (2021). Assessing the mediating effect of
leadership capabilities on the relationship between organizational resilience and
organizational performance. International Journal of Social Economics, 49(2), 280-295.
https://doi.org/10.1108/ijse-06-2021-0358
Zehir, C., Gurol, Y., Karaboga, T., & Kole, M. (2016). Strategic human resource
management and firm performance: The mediating role of entrepreneurial orientation.
Procedia - Social and Behavioral Sciences, 235, 372-381.
https://doi.org/10.1016/j.sbspro.2016.11.045
