Moita Antecedents of Organizational Resilience in Economic Crises an Empirical Study of Swedish...

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Antecedents of organizational resilience in economic crises—an

empirical study of Swedish textile and clothing SMEs

Rudrajeet Pal a,b,n, Håkan Torstensson a,1, Heikki Mattila a,b,2

a The Swedish School of Textiles, University of Borås, Bryggaregatan 17, SE-50190, Borås, Swedenb Department of Material Science, Tampere University of Technology, P.O. Box 589, FIN-33101, Tampere, Finland

a r t i c l e i n f o

Article history:

Received 22 May 2012Accepted 27 February 2013Available online 15 March 2013

Keywords:

Resilience

Crisis

Small and medium-sized enterprise

SME

Textile and clothing

Sweden

a b s t r a c t

Economic recessions have created challenges for small and medium-sized enterprises (SMEs) and

contributed to disruptions requiring them to be resilient. At times of economic crises, SMEs face majorthreats to their nancial performance and ultimately to their survival. The average number of Swedish

textile and clothing (T&C) rms that went bankrupt during the recent crisis (2007–09) escalated twofold

compared to the average over 2000–10. Following the 1990s economic crisis nearly 12 per cent of the

T&C companies went bankrupt in 1994–95. The structural industrial statistics also plummeted in these

crisis years, aggravating many internal problems in SMEs as a ripple effect.

This study concentrates on the constraints faced by Swedish textile-related SMEs, primarily during

the economic crises of the past two decades (1990–93 and end 2007–09), and identifying the

antecedents and their different degrees of inuence on economic resilience. It also deepens the

understanding of the underlying patterns in the antecedents, observed in SMEs, favouring or inhibiting

resilience due to their signicance or decit, respectively.

The paper adopts an exploratory research conducted in two phases, rst through a survey and

followed by a series of interviews, responded by eight Swedish T&C SMEs. Annual reports provide a

detailed account of the nancial performances of these rms. A conceptual resilience framework was

developed earlier, based on a review of extant literature.

Findings provide insight on how the responding

rms considered resourcefulness, viz. cash

ow andinvestment nance, relational networks and material assets, along with ‘dynamic competitiveness’

through strategic and operational exibility to be key enablers of resilience and nancial performance,

mostly through generation of protability, cash ow/liquidity and sales turnover. Responses also

highlighted the indirect inuence of the ‘soft’ learning and cultural aspects like attentive leadership

and collectiveness on economic resilience, considered tacit and ingrained in small or medium-sized

family businesses. Additional process initiatives, in particular growth and continuity strategies, were also

emergent patterns to properly utilize and direct the antecedents for resilience development. These are

benecial for rms to understand the key areas, in which to invest for developing resilient business

models.

& 2013 Elsevier B.V. All rights reserved.

1. Introduction

The recent economic recessions and global trade conditions

have created challenges for many Western economies and theirembedded industries, particularly to the small and medium-sized

enterprises3 (SMEs). According to Acs et al. (1990), SMEs are

particularly vulnerable to failures in both continuous shifts and

unpredictable events. They are susceptible to nancial uctuations

(i.e. cash ow), legislation, supply network relationships (i.e.

power issues), changing customer requirements and demandsand even collapsing of national nancial systems (as it happened

recently in Greece) (Bhamra and Dani, 2011).

The Scandinavian market, however, has been somewhat stable

with stagnant growth rates though the main export market has

fallen during the recent global credit crunch since 2007–08 (Keay,

2012). There has not been any particular evidence showing the

effect has been more pronounced in case of the textile-related

Contents lists available at ScienceDirect

journal homepage: www.elsevier.com/locate/ijpe

Int. J. Production Economics

0925-5273/$- see front matter & 2013 Elsevier B.V. All rights reserved.

http://dx.doi.org/10.1016/j.ijpe.2013.02.031

n Corresponding author at: The Swedish School of Textiles, University of Borås,

Bryggaregatan 17, SE-50190, Borås, Sweden. Tel.: þ46 704 294 791;

fax: þ46 33 435 40 09.

E-mail addresses: [email protected] (R. Pal),

[email protected] (H. Torstensson), heikki.r.mattila@tut. (H. Mattila).1 Fax: þ46 33 435 4009.2 Fax: þ358 3 3115 2955.3 The European Commission (2011) denition of SMEs is used as enterprises

with headcount lesser than 250 or turnover≤€ 50 million or balance sheet total≤€

( footnote continued)

43 million (http://ec.europa.eu/enterprise/policies/sme/facts- gures-analysis/sme-

denition/index_en.htm , 14.02.2012).

Int. J. Production Economics 147 (2014) 410–428

http://www.elsevier.com/locate/ijpehttp://www.elsevier.com/locate/ijpehttp://dx.doi.org/10.1016/j.ijpe.2013.02.031mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htmhttp://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htmhttp://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htmhttp://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htmhttp://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htmhttp://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htmhttp://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htmhttp://dx.doi.org/10.1016/j.ijpe.2013.02.031http://dx.doi.org/10.1016/j.ijpe.2013.02.031http://dx.doi.org/10.1016/j.ijpe.2013.02.031http://dx.doi.org/10.1016/j.ijpe.2013.02.031http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htmhttp://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htmmailto:[email protected]:[email protected]:[email protected]://crossmark.crossref.org/dialog/?doi=10.1016/j.ijpe.2013.02.031&domain=pdfhttp://crossmark.crossref.org/dialog/?doi=10.1016/j.ijpe.2013.02.031&domain=pdfhttp://crossmark.crossref.org/dialog/?doi=10.1016/j.ijpe.2013.02.031&domain=pdfhttp://dx.doi.org/10.1016/j.ijpe.2013.02.031http://dx.doi.org/10.1016/j.ijpe.2013.02.031http://dx.doi.org/10.1016/j.ijpe.2013.02.031http://www.elsevier.com/locate/ijpehttp://www.elsevier.com/locate/ijpe


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sectors, but it is noticeable from Swedish central statistics that the

average number of Swedish textile and clothing (T&C) rms that

went bankrupt during the recent crisis (2007–09) escalated two-

fold, compared to the average over 2000–10 (cf. Fig. 1—adapted

from SCB database statistics). The 1990s economic crisis was the

toughest in the Swedish context, with nearly 12 per cent of the

T&C rms going bankrupt in 1994–95. It was also evident that

most of these rms were small with less than 50 employees.4

The structural industrial statistics also plummeted in these

crisis years. For example, during the global credit crunch (2007–

09) the textile and wearing apparel industries made massive losses

(from a prot of 419 mSEK in 2006 to losses of 387, 223 and 155

mSEK, respectively, 2007 onwards) (adapted from SCB database

statistics).5 Other indicators, like the net turnover and total assets,

also reduced by 19.4 per cent and 8 per cent, respectively, though

no substantial dip was observed in other structural indicators.

During the 1990–93 crisis the repercussion was worse as the total

operating revenues and value addition for the industries declined

by 24 per cent and 20.4 per cent, respectively, though it picked up

again in 1994 but did not reach the level before the crisis until

1997.5

It is thus evident that the Swedish textile-related SMEs faced

major threats to their nancial performance and ultimately to

their survival at times of economic crises, and thus economic

resilience has become a prerequisite to be fostered in such rms in

order to be successful.

In this context, the central objective of the paper is to identify

the nature of problems and constraints faced by Swedish textile

related SMEs, primarily during the economic crises of the past two

decades (mainly 1990–93 and end 2007–09) as well as the

antecedents and the differential degree of inuence they exhibit

on economic resilience. The study also deepens the understandingof the underlying patterns favouring or inhibiting resilience in

such rms.

2. Framework for antecedents of SME resilience

Small- and medium-sized enterprises are highly vulnerable to

times of crisis, then being affected by the cascading and aggravat-

ing effects of several related problems and constraints, especially

regarding nancial and human resources (Vargo and Seville, 2011).

As Thun et al. (2011) asserted, SMEs usually face conditions of

weaker cash ow and less equity reserves; they lack resources and

are overloaded with short-termism, thus, lack the necessary skills

to pursue long-term strategies to drive resilience (Ates and Bititci,

2011; Wesson and De Figueiredo, 2001). However, due to their

relative small size, they are exible, and as Salavou et al. (2004)

assert, market- and learning-oriented SMEs tend to be more

innovative and resilient. The relative strength of SMEs is argued

to be characterized by exibility, adaptability and innovation

(Vossen, 1998), instrumental in fostering resilience, although they

have varying resource constraints. Previous research has found

that SMEs generally lack resources and capabilities (Herbane,

2010; Vossen, 1998), hence attempt to build resilience through

strategic and operational readiness or rapidity (Ismail et al., 2006;

Shef , 2007; Sullivan-Taylor and Branicki, 2011), positive adjust-

ments (Weick et al., 1999) or knowledge creation. Resilience of

SMEs requires knowledge retention through exible workforce,

strategic thinking, and top management support (Levy et al.,

2003), although it has been argued there that SMEs lack knowl-

edge retention. However, SMEs need to improve both their access

to nance and their individual competitiveness for optimizing

their most common constraints, hence, balance their soft and hard

assets (Beer and Nohria, 2000; McElroy, 1996) to develop win-win

solutions (Gunasekaran et al., 2011).

The following section highlights three broad assets, in general

required by rms to bolster resilience. They are resourcefulness,

like nances, materials, people (social assets) etc., competitiveness

(exibility, networking, robustness and redundancy) and ‘learning

and cultural’ aspects (cf. Fig. 2).

2.1. ‘ Resourcefulness’ and resilience

Resource constraint is considered to be a key inhibitor of SME

resilience, while its availability can be a potential enabler as well

(Sullivan-Taylor and Branicki, 2011). From this perspective, a

recent study described that SMEs mainly lack resources like

control, cash and compressed time to respond (Herbane, 2010).

Similarly, Vossen (1998) and Van Gils (2005) described SMEs to be

suffering from resource constraints predominantly material

(related to economies of scale and scope), nancial (cash ow

and investment nance) and technological resources, while

Ghobadian and Gallear (1997) highlighted how this leads to

success or failure of SMEs. Wesson and De Figueiredo (2001)

pointed at a similar lack of long-term resources in SMEs, as they

are overloaded with short-term cash and payment problems,

Fig. 1. Bankruptcy statistics of Swedish textile and clothing rms (1993–2010).

4 Only 2 rms, with number of employees450 were bankrupt in 1995 and

2008 and 1 each in 2000 and 2001.5 Statistiska Centralbyrån (http://www.ssd.scb.se/databaser/makro/start.asp ,

27.02.2012).

R. Pal et al. / Int. J. Production Economics 147 (2014) 410–428 411

http://www.ssd.scb.se/databaser/makro/start.asphttp://www.ssd.scb.se/databaser/makro/start.asphttp://www.ssd.scb.se/databaser/makro/start.asp


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setting them apart from larger organizations. Another key aspect,

found in research, is the lack of external support and synergy

effects for SMEs, which is essential for increased competitiveness

(Fassoulsa, 2006; Ghobadian and Gallear, 1997). Moreover, SMEs

have started outsourcing and market diversication, which high-

lights the need to integrate more information technology and

information systems for signicant SME resilience.

Overall, in the present paper ve categories of resources

(material/systems, nance, social, network, and goodwill) are

highlighted, along the lines of Freeman (2004) emphasizing

resources as (i) wealth as cash and other assets, (ii) systems:

internal coordination, processes and technical expertise, (iii)

human resources: people with requisite skills, and (iv) network

connections and relationships with stakeholders; essential con-

tributors to superior organizational performance, hence resilience.

These ve categories and their relationship to resilience devel-

opment are briey described as follows:

a. Material resources and resilience—Material assets, like stock of

raw materials, work in progress or nished goods as inventory,

used strategically can help to overcome immediate problems of

disruption. Building-up such a system with safety stocks needs

organizational planning to attain internal ef ciency to cushion

every part of an organization (Shef , 2007).

b. Financial resources and resilience—Mobility and deposits of the

nancial assets are other important resources to create a

critical asset stock (Gittell et al., 2006). A large capital baseacts as a buffer or shock absorber and prevents the impacts of

crisis, along with immediate access to adequate insurance

coverage.

c. Social resources and resilience—Freeman (2004) emphasized the

essence of human resources, or people with requisite skills, as a

critical contributor to superior organizational performance.

Teamwork and enhanced trust among the employees are

essential to distinguish organizations having the potential to

bounce back from plausible disruptions by their ability to

develop an internal risk management culture and collaborate

and communicate proactively (Shef , 2007).

d. Network resources and resilience—Collaborative inter-

organizational relationships (IORs) through mergers and acqui-

sitions, strategic alliances or outsourcing help to transfer and

exchange uniquely complementary sets of knowledge

resources and relationships (Leiblein, 2011; Lippman and

Rumelt, 2003), accounting for correct alignment of the organi-

zation, both along the value chain and to the environmental

conditions. This is indispensable in order to reduce and spread

risks and manage market turbulences through appropriate

strategies, enterprise culture and relationship (Shef , 2007).

Networked organizational structures offer greater agility and

adaptability by maintaining countless secured relationships

with quality stakeholders (suppliers, customers, nancers

etc.) thus intertwining integrally to organizational success

patterns (Leiblein, 2011; Starr et al., 2003). Such strategic

choices yield fullest utilization of slack resources, sharing of

risks and also provides nancial reserves and bargaining power

to rms for organizational growth (Li et al., 2011).

e. Intangible resources and resilience—Building a deep social fabric

of goodwill, inter-personal relationships and brand is also

evident to lay a foundation for developing contextual resilience

(Adler and Kwon, 2002; Lengnick-Hall and Beck, 2005) by

developing deep pockets of intangible resources acting as a

mask to temporarily protect the organization from tightly-

coupled situations (Perrow, 1984).

A unifying resource-based view (RBV) framework justies how

an organization's competitive advantage can be achieved through

possession of various assets and resources (nancial, physical,

human, technological, organizational and reputational) (Grant,1991a,b) for resilience development.

2.2. ‘ Dynamic competitiveness’ and resilience

Effective deployment of heterogeneous slack resources results

in development and reconguration of core competencies in rms

(Eisenhardt and Martin, 2000; Grant, 1991a,b; Prahalad and

Hamel, 1990), like long-term exibility, redundancy and robust

responses (Shef , 2007) fostering competitive advantages, and it is

instrumental in reducing or absorbing market turbulence

(Lengnick-Hall and Beck, 2005). Such dynamic capability develop-

ment is important for response activation in crises, as proposed by

Burnard and Bhamra (2011) as a key determinant of organizational

exibility (Hatum and Pettigrew, 2006) or ‘adaptive capacity’

Fig. 2. Theoretical framework.

R. Pal et al. / Int. J. Production Economics 147 (2014) 410–428412


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needed for developing resilience. Rice and Caniato (2003) stressed

the common approach of rms using reactive instruments, like

exibility and redundancy, to build resilient supply chains.

Here four categories are in focus, viz. (a) exibility,

(b) redundancy, (c) robustness, and (d) networking and their

relationship to resilience development, briey as follows:

a. Flexibility and resilience—In case of SMEs, strategic exibility

appears to be, predominantly in the form of rapid decision-making, rapid and effective internal communications, capacity

for fast learning and the ability to quickly adapt routines and

strategies (Vossen, 1998). Such exible and adaptable beha-

vioral characteristics prove to be key enablers of SME resilience.

In a similar study, rapidity in decision-making and inter-

organizational relationship emerged to be key enablers of

SME potential for timeliness and agility to demonstrate resi-

lience capabilities (Sullivan-Taylor and Branicki, 2011). Such

exible and rapid decision-making criteria were also pointed

out by Vargo and Seville (2011) as a means to yield crisis

strategic readiness. On the other hand, Shef (2007), Shef and

Rice (2005) and Peck (2006) addressed the role of operational

and structural exibility in rms for building resilience, but

mostly in large rms. Resilience can be built in rms through

operational exibility, like by building inter-operable standar-

dized materials and processes, effective lean management,

closeness of operations to demand via postponement, building

ef ciency through training programs, seamless integration of

processes, concurrent engineering techniques, shortened lead

times etc. (Peck, 2006; Shef , 2007). From the resilience

engineering perspective, exibility and agility emphasize the

ability of the system to respond to unexpected situations and

restructure rapidly by developing adaptive capacity (Hale and

Heijer, 2006; Westrum, 2006; Woods, 2006). However, in a

study by Thun et al. (2011), such preventive instruments (on-

time delivery, strategic supplier development, improved track-

ing etc.) rendering operational exibility were found to be

minimal in case of SMEs, due to resource constraints.

b. Redundancy and resilience—Another mechanism for achieving

resilience in rms is by building redundancy of resources, such

as unused capacity, multiple sourcing etc. (Shef and Rice,

2005). Shef (2007) and Shef and Rice (2005) have empha-

sized creation of redundancies for building resiliency, mostly in

case of large rms, though Thun et al. (2011) have shown how

small rms can also thrive on developing redundancy-based

reactive instruments for dealing with crises. However,

Dangayach and Deshmukh (2001) have shown how redun-

dancy building can be an essential precursor for resilience

development in case of non-family rms, but not for small

family-owned ones as they are expected to have the disadvan-

tages of inadequate technological capabilities, lack of nancial

strength and infrastructure. This highlights the trade-off in

balancing the cost of redundancy and generating long-termeconomic benets as an antecedent of resilience (Linnenluecke

and Grif ths, 2010).

c. Robustness and resilience—Organizational robustness is another

imperative element to achieve resilience by resisting disrup-

tions and building reliability (Mangan et al., 2008). Christopher

and Rutherford (2004) suggested that robust organizations

have a culture of quality awareness and ‘lean thinking’, while

Tang (2006) stated that they are effective in deploying con-

tingency plans and resources when facing disruptions. This

enhances the organization's ability to develop internal quality

control on variability and lean processes, thus, adding a great

degree of resilience through stabilized processes, reduced

supply chain variability and low inventory levels (Christopher

and Rutherford, 2004). Total quality management (TQM)

suggests building of robustness through quality managed lean

processes and continuous improvements (CI) to control and

manage disruptions to a great extent, particularly researched in

case of large organizations (Dean, 2010). Ismail et al. (2011)

asserted that robustness is one of the key necessities to develop

SME operational agility, apart from responsiveness and pro-

activeness to develop consistent quality in products and pro-

cesses. In SMEs' customized environment, this calls for imple-

mentation of quality management frameworks and models forcontinuous improvement (CI), as proposed by Kumar et al.

(2011) and other related researches.

d. Networking and resilience—Building networks and knowledge

integration for considerable conceptual slackness in tightly-

coupled situations assert the development of long-term resi-

lience (Schulman, 1993). Such organizational networking and

connectivity not only reduce the risks of crises but at the same

time result in creation of deep interpersonal skills and relation-

ships at the social level (Coutu, 2002). As highlighted by

Sullivan-Taylor and Branicki (2011), increased inter-

organizational relationships enable rapid implementation of

decisions in SMEs, develop supply dependencies and also

trusted relationship with nancial institutions. Similarly,

Demmer et al. (2011) also highlighted the need of ‘executing

renewal’ in SMEs through incorporation of customers in value

chains, externalizing innovations through M&As, alliances etc.

for engendering resilience, as proposed by Reinmoeller and

Baardwijk (2005) for large rms. At the intra-organizational

level, this also adds to the possibilities of reducing ‘silo

mentalities’ and complexities, leading to higher visibility and

trust (Ireland et al., 2002), within the organization.

2.3. ‘ Learning and culture’ and resilience

In an organizational setting, resilience merit is hinged to

various softer, less tangible aspects of an organization such as its

culture, leadership and vision (Seville et al., 2006). Resilience is

thus enhanced through development of specialized knowledge of

individuals and also collectively in an organization to respond

effectively to unfamiliar or challenging situations. Barton and

Christianson (2006) underline the need to learn more about these

organizational- and people-oriented soft processes to create resi-

lience, while McElroy (1996) and Beer and Nohria (2000) mention

the role of soft aspects, viz. people, motivation, communication,

building coalition and training etc., to be pivotal in building

resilient rms through a change process. Some previous organiza-

tional learning theories, from various perspectives, articulate

common traits or behavioral patterns in organizations promulgat-

ing two central themes, viz. (i) collective awareness and learning,

and (ii) change of organizational structure in response to change in

environment (Appelbaum and Gallagher, 2000) (adaptation).

Senge (1990) and (Edmondson and Moingeon, 1998) have popu-larized this newly-conceived concept of organizations for adapta-

tion to the changing environment. On the other hand, group/team

learning reveals equivalent dynamics for developing organiza-

tional motivation, ef cacy and skills and degrees of positive

adjustment for mastering new situations (Sutcliffe and Vogus,

2003). This generates a sense of positive adaptation in the

organization (Bunderson and Sutcliffe, 2002; Edmondson, 1999).

Thus ‘learning and cultural’ aspects, in general, play a pivotal

role in enabling organizational resilience, perhaps to a higher

degree in case of SMEs.

In the present study these aspects have been clustered into

three vital enablers, viz. (a) leadership and top management

decision-making, (b) collectiveness and sense-making, and

(c) employee wellbeing.



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a. ‘ Leadership and top management decision-making ’ and resilience

—In a study, Vossen (1998) described small rms having

relative advantages (over large ones) in terms of rapid deci-

sion-making, capacity for fast learning and rapid internal

communications making them learning-oriented for enabling

resilience. Decision-making to a large extent in SMEs is

subjected to the role of a powerful and decisive CEO, supported

by a powerful top management team (Bourgeois and

Eisenhardt, 1988). Though crisis times can lead to organiza-tional retrenchment and assertion of an authoritarian manage-

ment style in SMEs, due to high proprietary rights of manager-

owners ( Jones, 2003; Rainnie, 1989); entrepreneurial leader-

ship through higher qualications and experience can, on the

other hand, instil adoption of more knowledge creation and

innovation in the rm ( Jones and Crompton, 2009).In many

cases the effect of large-scale economic crises on SMEs can be

signicantly diminished through resilient leadership

(McManus et al., 2008; Mitroff et al., 1992; Penrose, 2000). In

several cases, such inspiring, yet realistic leadership, supported

by an able top management team, proves to be crucial in

corporate turnarounds after the crises (Seville et al., 2006).

b. ‘ Collectiveness and sense-making ’ and resilience—Leadership dur-

ing crises is much more than decision-making (Vargo and

Seville, 2011). It includes the assurance of optimism among

employees, setting out a clear sense of vision and also ascribing

sense-making (Weick et al., 1999) yielding collectiveness. Such

relevant mechanisms for promoting cognitive resilience

(Lengnick-Hall and Beck, 2005, 2009) at the organizational

level are argued to be accumulating knowledge, collective

ef cacy and shared belief, essential for developing coordinative

and interactive dynamics (Bandura, 1998). Such strong collec-

tive identity leads to constructive organizational sense-making

(Weick, 1993, 1995), through positive perception of experi-

ences, emotions, realism (Coutu, 2002) and tolerance, to steer

the organization through crises. Operationally, such learning

capabilities and mindfulness align the organization not only

structurally and strategically but also cognitively towards the

demands of the crises for building resilience (Weick and

Sutcliffe, 2007).

c. ‘ Employee wellbeing ’ and resilience—Role of employee account-

ability and sense of ownership, along with continuous

improvement through knowledge sharing, learning and right

mind-set are essential for organizations to build resilience and,

hence, long-term performance (Keller and Price, 2011). In sum,

working together effectively across the company leads to a

sense of cognitive wellbeing through alignment of the organi-

zational values, corporate culture, shared vision and responsi-

bilities (ideational foundation) for promoting adaptive learning

capabilities (Boisot and Child, 1999; Chakravarthy, 1982).

However, contrary ndings are supported by some notable

researches like Gray (2002), Ates and Bititci (2011) etc., who

highlight that the SMEs are more likely to be owner-centric

(especially the family-owned ones), relying more on informal

routines and focus on day-to-day operations rather than on

long-term growth. This consequently gives evidence that SMEs

fail to embed changes into organizational culture for long-term

sustainability but rather emphasize on short-termism and re-

ghting approaches (Ates and Bititci, 2011).

2.4. Framework diagram

Following the above discussion, based on extant literature on

SME resilience, the key antecedents or enablers of resilience have

been clustered as shown in Fig. 2.

The model has been in accordance to the general way to study

any complex phenomenon and its effects based on consciously

unraveling the antecedents and processes conceptualizing the

phenomenon; as proposed by Davidsson et al. (2007) in case of

studying small rm growths. In the present study, the antecedents

have been clustered into three broad categories viz. (a) assets and

resourcefulness, (b) dynamic capabilities, and (c) learning and

culture. However, an investigation of the process and pathway

adopted for building resilience is beyond the scope of the paperand is left open for future research, even though they are in this

paper categorized as ‘other process initiatives’.

3. Methodology

3.1. Case selection and data collection

Case selection was via theoretical sampling (Flick, 2009; Glaser

and Strauss, 1967). Earlier in the project, annual reports (mainly

income statements and balance sheets) of 20 Swedish rms

(selected via theoretical sampling) were studied for twenty-one

years (1989–2010) to make their Z-score transition proles for

characterizing economic resilience in terms of business ‘health’

(cf. (Pal et al., 2011) for details). Data collection, in this study, was

done in two phases. In phase 1 a survey was conducted between

November 2011 and January 2012, where eight rms were

respondents among these twenty, qualifying them for next phase

of interview to get more in-depth knowledge on the issue. All the

rms were Swedish textile-related SMEs and family-owned

through most of the time in their history.

The survey questionnaire in phase 1 was based on a deductive

theoretical framework, as shown in Fig. 2. It was categorized into

four sections aimed at nding out the major challenges faced

during crises and to what extent the responding rms regarded

the inuence of the three major resilience antecedents (cf. Fig. 2)

to affect their economic resilience. The predominant nature of the

question was ‘how do you relate the signicance or lack […] to the

economic transition prole […

]’? The questionnaire was translatedfrom English to Swedish and then mailed to the companies for

higher comprehensibility. All the respondents were owner-

managing director of the rms. The survey was customized in a

way, as each of the companies was provided with a project

description and brief analysis and an explanation of its 20-year

Z-score transition prole. Following the survey, an acknowledg-

ment and research ndings synopsis were e-mailed/mailed to

each of the respondents, and they were asked to participate in a

short face-to-face interview.

Each interview, of phase 2, lasted between 45 and 90 min and

with a combination of both focused and semi-structured form of

questions (Flick, 2009). The aim of the interview was to have a

clear understanding of the survey responses made in phase 1. For

this purpose all the companies were emailed a scanned copy of their survey responses. Some of the interview questions were

aimed at identifying directly the reasons (emerged out of the

survey results) behind their Z-score transition prole and its

contributing ratios (focussed), while some were more open in

nature (semi-standardized). All the interviews were conducted in

English and at the respondents' premises.

3.2. Data analysis method

The data analysis followed thematic coding, as the procedure

was derived from the research question, and thus a dened

deductive framework (Flick, 2009). First, the survey results were

analyzed using descriptive statistical techniques suited to the

research objective (cf. Table 2). The closed nature of the survey



6/19

questionnaire allowed the respondents to answer either ‘signi-

cantly’, ‘moderately’ or ‘poorly’ to each question. The scoring

system used in Table 2 along the three categories of resilience

antecedents was obtained by counting the frequency of response

options. The most frequent option is also marked with a (n) while

the last column indicates the frequency of total responses among

all the responding rms (cf. Table 2). This was followed by a short

description of each case in terms of their economic resilience

expressed by Altman's Z-score6 (cf. Table 1; for more details about

the coding see Pal et al. (2011). A deepening analysis is

provided through interpretation of the interviews having been

digitally recorded and transcribed. The coding paradigm suggested

by Strauss (1987), pp. 27–28) was used as follows: rst, a

short description of each case was produced and modied along

the coding process, second, each of the cases was analyzed

individually and nally, a cross-case analysis was made to

Table 1

Case companies—Business description, business ‘health’ and economic resilience.

Case* Business type Business Health in terms of Z-score

Notations: H—Healthy, U—Unhealthy, C—Catastrophic

Economic

resilience

1990–93 2007–09 1990–

93

2007–

09

U Mostly H

1 Manufacturer of safety and

occupational

footwear

1.43–2.58 (unhealthy) between 1989–95, due to low liquidityratio, retained earnings and poor EBIT

3.03–3.06 (healthy) between 2007–08, due toincreasing solvency ratio

2.21–2.39 (unhealthy) between 2009–10, mainly due

to declining EBIT

No No

2 Sewer of air-bag

fabrics

Women-wear

brand marketer

Mostly H Partly H

Yes P ar tly Average 2.98 (healthy most years) between 1990–95 due

to consistent turnover and other Z-score components

Healthy range of 2.98–3.42, except 2008 (2.08) due

to falling liquidity ratio and poor EBIT

U Mostly H

3 Designer and

manufacturer of

shirts and jackets

2.16–2.56 (unhealthy) between 1990–94 due to poor

protability and leverage ratios

Gradual recovery since 1995 (2.97 owing to growing

turnover-ratio)

Over 3 (healthy) due to increasing solvency ratio

(Most of the Z-score components were good)

No Yes

U Mostly H

4 Textile

machinery

Clothing labels

and transfers

Printing

solutions


protability, leverage and solvency ratios and declining

liquidity ratio (declining working capital)

Recovery in 1995 (3.07) due to increasing turnover ratio

Healthy range since 2003 (2.93–3.57), due to high

capital-turnover and solvency, except 2009 (2.65)

due to lowered turnover and protability ratios and

reduced liquidity ratio

No Yes

U Mostly U

5 Weaver of

upholstery

fabrics

1.27–2.66 (unhealthy) between 1990–93 due to low

protability, solvency and leverage ratios

Fast recovery in 1994–95 owing to high sales (turnover

ratio) and solvency ratio (increase in equity)


protability ratio and negative liquidity ratio

No No

U Mostly H

6 Manufacturer of

leather jackets

1.51–2.07 (unhealthy) between 1990–95 due to declining

sales-turnover and poor protability and leverage ratios

Overall ‘unhealthy’ (1989–2010)

0.87–1.61(unhealthy/catastrophic) between 2007–10

due to negative EBIT, declining sales-turnover and

leverage ratio (retained earnings)

No No

U Fully U

7 Weaver of

upholstery

fabrics

0.64–1.01 (catastrophic) between 1990–92 due to negative

liquidity ratio and poor protability (Infact all the Z-score

components were poor)

Recovery in 1993 (3.17) due to high net sales

2.14–2.63 (unhealthy and declining) between 2007–

10 due to poor EBIT, declining net sales (hence

turnover ratio) and declining solvency ratio

No No

U Mostly H

8 Manufacturer of

women

underwear

Unhealthy Z-scores owing to lower turnover ratio along

with poor protability and leverage ratios (except '92, '94)

2.91–3.55 (healthy) between 2007–10 due to good

solvency and turnover ratios

No Yes

n All cases are Swedish SMEs and family-owned for substantial time in their long history. All numbers denoted are Z-score values.

6 Altman's Z-score is generally used to predict bankruptcy potential by

categorizing business as ‘safe’, ‘unsafe’ or ‘distress’ to measure nancial success.

( footnote continued)

It includes criteria of economic viability based on protability, solvency, liquidity,

leverage and activity. Thus it considers factors like working capital, total assets,

retained earnings, protability, net worth or shareholder 's equity, total liabilities

and total sales.



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identify and describe the emergent pattern in the antecedents and

how their inhibition or facilitation inuences economic resilience.

The validity and reliability of the present study is secured as

follows: (a) construct validity—is demonstrated by the derivation of

a deductive resilience framework from extant literature review of

conceptual underpinnings, by the use of multiple sources of

evidence (surveys and interviews) for data triangulation and also

by reviewing the interview drafts along the thematic coding

procedure (Yin, 2009); (b) internal validity—is also justied con-

sidering the pattern matching of general ndings from the survey

and the interviews according to the model to synthesize an

emergent pattern and also support rival explanations highlighting

the inuence of process initiatives and exogenous factors (Yin,

2009); (c) external validity—is also expected to be consistent

considering the generalizability of the resilience framework for

application in case of any environmental turbulence and in any

time-spatiality (Yin, 2009) for most Swedish textile-related SMEs,

though this is beyond the scope of the present research; and

nally (d) reliability—is moderate as by using the same framework

protocol authors reached at conicting revelations about the

inuence of ‘learning and cultural’ aspects on SME resilience,

though the rest of the results were commensurable.

Table 2

Case-based aggregate scoring.

Firms

responses

Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Σ

‘Resourcefulness’ factors

2007–09

Signi cantly 9* 8* 6* 4 4 11* 4 0 46*

a¼4, b¼2, c ¼2,

e¼1

a¼3, b¼2, c ¼2,

d¼1

a¼2, b¼2, c ¼1,

e¼1

a¼1, b¼1, c ¼1,

e¼1

b¼2, d¼1, e¼1 a¼3, b¼3, c ¼2, d¼2,

e¼1

a¼2, b¼1, c ¼1

Moderately 3 0 5 8* 7* 2a¼2 11* 4 40a¼2, d¼1 a¼2, c ¼1, d¼2 a¼4, b¼1, c ¼1,

d¼2

a¼5, c ¼2 a¼5, b¼2, c ¼1, d ¼2,

e¼1

b¼3, d ¼2

Poorly 2 6 4 3 4 2 0 11* 32a¼1, b¼1 a¼4, b¼1, e¼1 a¼3, b¼1 a¼2, b¼1 a¼2, b¼1, d ¼1 a¼2 a¼7, c ¼2, d¼1, e¼1

1990–93

Signi cantly 3 5 3 5 2 7* 0 0 25b¼2, e¼1 a¼3, c ¼2 b¼2, e¼1 a¼1, b¼2, c ¼1,

e¼1

a¼1, d ¼1 a¼2, b¼1, c ¼2, d¼1,

e¼1

Moderately 8* 1 7* 7* 9* 6 14* 6 58*

a¼5, c ¼2, d¼1 b¼1 a¼4, c ¼1, d¼2 a¼4, c ¼1, d¼2 a¼4, b¼2, c ¼2,

e¼1

a¼4, b¼1, d¼1 a¼7, b¼3, c ¼2, d ¼1,

e¼1

a¼2, b¼3, d¼1

Poorly 3 8* 5 3 4 2 1 9* 35a¼2, b¼1 a¼4, b¼2, d¼1,

e¼1

a¼3, b¼1, c ¼1 a¼2, b¼1 a¼2, b¼1, d¼1 a¼1, b¼1 d¼1 a¼5, c ¼2, d¼1,

e¼1

‘Dynamic competitiveness’ factors

2007–

09 Signi cantly 7* 8* 3 3 3 8* 6 0 38 f ¼3, g ¼1, h¼1,

i¼2

f ¼3, h¼1, i¼4 f ¼2, i¼1 f ¼3 f ¼3 f ¼5, i¼3 f ¼2, h¼1, i¼3

Moderately 6 1 5 6* 4 2 8* 1 33 f ¼2, g ¼2, i¼2 f ¼1 f ¼2, g ¼1, i¼2 f ¼1, g ¼1, h¼1,

i¼3

h¼1, i ¼3 g ¼1 i¼1 f ¼3, g ¼3, i¼2 h¼1

Poorly 1 5 6* 5 7* 4 0 13* 41*

i¼2 f ¼1, g ¼3, h¼0,

i¼1

f ¼1, g ¼2, h¼1,

i¼2

f ¼1, g ¼2, i ¼2 f ¼2, g ¼3, i¼2 g ¼2, h¼1, i¼1 f ¼5, g ¼3, i¼5

1990–93

Signi cantly 0 7* f ¼2, h¼1, i¼4 1 f ¼1 3 f ¼3 4 f ¼3, i¼1 8* f ¼5, i¼3 0 0 23

Moderately 11* 2 6 6* 3 2 14* 6 50*

f ¼4, g ¼3, i¼4 f ¼2 f ¼2, g ¼1, i¼3 f ¼1, g ¼1, h¼1,

i¼3

h¼1, i ¼2 g ¼1, i ¼1 f ¼5, g ¼3, h¼1, i ¼5 f ¼5, h¼1

Poorly 3 5 7* 5 7* 4 0 8* 39 f ¼1, h¼1, i¼1 f ¼1, g ¼3, i ¼1 f ¼2, g ¼2, h¼1,

i¼2

f ¼1, g ¼2, i ¼2 f ¼2, g ¼3, i¼2 g ¼2, h¼1, i¼1 g ¼3, i¼5

‘Learning and cultural’ factors2007–09

Signi cantly 6* 7* 9* 6* 2 8* 6* 0 44*

j¼3, k¼1.5, l¼1.5 j¼2, k¼3, l ¼2 j¼5, k¼3, l ¼1 j¼3, k¼2, l¼1 k¼1, l ¼1 j¼4, k¼2, l ¼2 j¼3, k¼2, l¼1

Moderately 4 3 1 4 4* 2 3 0 21 j¼2, k¼2 j¼3 l¼1 j¼2, k¼1, l ¼1 j¼2, k¼1, l ¼1 j¼1, k¼1 j¼1, k¼1, l ¼1

Poorly 0 0 0 0 4* j¼3, k¼1 0 1 j¼1 10* j¼5, k¼3, l ¼2 15

1990–93

Signi cantly 2 7* 3 6* 1 8* 6* 0 33*

j¼3, k¼1, l¼1 j¼2, k¼3, l ¼2 k¼2, l ¼1 j¼3, k¼2, l ¼1 k¼1 j¼4, k¼2, l ¼2 j¼3, k¼2, l¼1

Moderately 5* 2 6* 4 5* 2 3 1 28 j¼3, k¼1, l¼1 j¼2 j¼4, k¼, l ¼1 j¼2, k¼1, l ¼1 j¼2, k¼1, l ¼2 j¼1, k¼1 j¼1, k¼1, l ¼1 j¼1

Poorly 3 1 1 0 4 0 1 9* 19 j¼2, k¼1 j¼1 j¼1 j¼3, k¼1 j¼1 j¼4, k¼3, l ¼2

a¼Material/systems assets, b¼Financial assets, c ¼Social assets, d¼Network assets, e¼Intangible assets, f ¼Flexibility, g ¼Redundancy, h¼Robustness, i¼Networking,

j¼collectiveness and sense-making, k¼employee wellbeing, l¼ leadership and top-management decision-making.

n Most frequent response.



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4. Case companies—business type and economic resilience

Fig. 3 below shows the ‘Z-score transition proles’ of all the

case companies over the studied period (1989–2010). The Z-score

transition prole of each case company is obtained by plotting its

Z-score values over the years 1989 to 2010, and classifying them as

either ‘healthy’, ‘unhealthy’ or ‘catastrophic’.

Further interpretation of the Z-score transition proles in terms

of business ‘health’ over the crisis periods, and hence theireconomic resilience, has been enlisted in Table 1, along with the

business description of each case rm. For further details about

the methodology, see Pal et al. (2011).

5. Findings

The results of survey questions, how the rms considered the

signicance or lack of ‘resourcefulness’, ‘dynamic competitiveness’

and ‘learning and culture’ to be important in inuencing their

economic performances during crises are described below.

5.1. ‘ Resourcefulness’ factors and economic resilience

The responding rms considered reliable information support

along with innovative operations and technologies to be the most

essential factors among material/systems resources, affecting their

economic resilience prole during the recent credit crunch. Back

in 1990s crisis, innovation was considered to be an essential

precursor for yielding better economic performance, hence, resi-

lience. The other material assets had moderate inuence in

effecting performance during the crises. However, nancial

resources, mainly in the form of cash ow and liquidity, along

with proper budgetary control and strong nancial reserves were

considered to be the most signicant factors to keep rms buoyant

amidst the recent global crisis, while proving to be moderately

inuential in the 1990s crisis. Brand reputation and goodwill with

the customers, suppliers and bankers were also considered inevi-

table factors inuencing sound business health in such periods.

Social resources (as employees) and relational networks and

partnerships with suppliers and other members in the value chain

were also considered to be moderately important in inuencing

economic performance during the crises.

Inter-rm differences in responses were noticeably observed as

rms 1, 2 and 6 mostly considered resources to be signicantly

important to inuence their economic resilience, particularly in

the recent crisis, while case company 8 was the only rm to reect

on poor correlation between ‘resourcefulness’ and economic

resilience. The rest of the responding rms mostly revealed

moderate to strong relational evidence between the asset/resourcefactors and their economic resilience. However in the 1990s crisis,

only case 6 revealed a strong inuence of resources on resilience

development (cf. Table 2).

5.2. ‘ Dynamic competitiveness’ factors and economic resilience

The second antecedent of resilience is ‘dynamic competitive-

ness’ categorized into long-term exibility (operational and stra-

tegic), redundancy, robust responses and networks along the value

chain. The responding rms considered these ‘dynamic competi-

tiveness’ aspects to be less inuential in affecting their economic

resilience during the two crises periods, except operational and

strategic exibilities, deemed to bear high degree of correlation for

bolstering resilience.Flexible internal processes, and in particular exible decision-

making and customer-centricity were adjudged to be strong

enablers of positive economic performance, hence, resilience in

the recent credit crunch. During the 1990s crisis, the responding

rms still considered market intelligence and customer centricity

to be strong enablers of resilient performances. However, redun-

dancy in terms of parallel processes, multi-channel distributions

and alternate suppliers and strategies were deemed to be poorly

inuencing rms to combat economic disruptions (in both the

crises) and so were value chain networking and investments into

other supply chain members. Intra-organizational collaboration in

decision-making was, however, deemed to be moderately impor-

tant in handling performance measures.

Inter-rm responses showed that most of the companies

exhibited poor to moderate relationships for redundancy and

robustness to foster economic resilience. Particularly case compa-

nies 3-5 and 8 considered dynamic competitiveness to be poor in

inuencing their economic resilience in both crises. However,

Fig. 3. Z-score transition proles (1989–2010).



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companies 1, 2 and 6 rated it to be strongly to moderately

inuential in effecting their economic performances. It was

evident that the rms considered organizational exibility (both

operational and strategic) to be the only inuencing competitive-

ness factor enabling resilient performances in both crises, how-

ever, except rm 8 (cf. Table 2).

5.3. ‘ Learning and cultural’ factors and economic resilience

The third antecedent of resilience highlighted in the research

framework is broadly classied as ‘learning and cultural’ factors

categorized into (i) collectiveness and sense-making, (ii) employee

wellbeing, and (iii) leadership and role of top management.

The responding rms considered valuable and attentive leader-

ship, along with employee wellbeing through higher accountabil-

ity and respect, to be the core of ‘learning and culture’, inuencing

healthy economic performances through resilience amidst crises.

Overall, collectiveness and organizational sense-making were

considered to have strong to moderate inuence on economic

resilience in the recent times, particularly group/team learning

and sense of purpose and trust (among employees). However,

these factors were not considered very inuential in supporting

resilience during the 1990s crisis, except trustworthiness of the

employees.

Inter-rm cases showed similar relationship between ‘learning

and cultural’ factors and economic performances for most of the

companies. Particularly, case companies 2, 3 and 6 considered the

inuence of this aspect on economic resilience to be very high

during the recent crisis, while rms 1, 4 and 7 adjudged it to be

moderately inuencing the rm’s resilience development. Simi-

larly, during the 1990s economic crisis companies 2, 4, 6 and

7 considered ‘learning and cultural’ factors to be strongly to

moderately inuential in dealing with the crisis. On the other

hand, rm 8 consistently reported insignicance of this aspect as

an essential antecedent for fostering better economic perfor-

mances, hence resilience in crisis times (cf. Table 2).

Cross-case analysis of the survey ndings (cf. Table 2) can be

assimilated as follows:

‘Resourcefulness’ was asserted to have a strong degree of

correlation with the ‘Z-score transition prole’ inuencing eco-

nomic resilience in the recent credit crunch, while having

moderate correlation in the 1990s crisis. ‘Dynamic competitive-

ness’ of rms exhibited a moderate to poor correlation with the

‘Z-score transition prole’, thus proving to offer a lesser degree of

causation in bolstering economic resilience. ‘Learning and cultural’

factors exhibited a signicantly strong correlation with the ‘Z-

score transition prole’ of the studied rms amid the economic

crisis of 2007–09 but a moderate degree of correlation in the

1990s crisis.

Table 3 is an outcome of the analyses of Table 2, asserting thedifferential degree of inuence by the antecedents the rms

considered in bolstering their economic resilience, and Table 1,

identifying the business ‘health’ of the rms in terms of their

Z-score transition proles during the crises.

For example, case rm 1 considered all its antecedents to have

signicant correlation in affecting its poor economic resilience

amidst the recent crisis (2007–09), thus, suggesting lack of these

antecedents. While in the 1990s crisis, the rm's lack of economic

resilience could be attributed moderately to the lack of these

antecedents, signifying the effect of other factors as well. While for

case rm 6, its poor economic resilience amidst both the crises

was signicantly correlated to all the antecedents, thus signifying

considerable lack of these factors. The case-wise relationship that

emerged out in the study was as follows:

To have a deepened understanding of these antecedents

favouring or inhibiting resilience development in Swedish

textile-related SMEs, rst a case-wise and then a cross-case

analysis was made of the interviews. Results of the interviews

are reported in appendices 1 and 2 and favor understanding of the

antecedents, the signicance or lack of which subsequently

bolstered or inhibited economic resilience.

5.4. Interview ndings and Z-score transition pro le analysis

Along the process of nding out the emergent pattern among

the antecedents facilitating or inhibiting economic resilience

development, authors have related the interview ndings (cf.

Appendices 1 and 2) to rms' Z-score transition performance.

Firm 1's lack of resilience arose out of cash ow problems and

loss of investments along with effects of currency devaluation

resulting in lower liquidity, leverage and protability ratios,

amidst 1990s crisis. Firm 3's lack of resilience was an outcome of

Table 3

Identifying the degree of relation between economic resilience and its enablers.

Resourcefulness (R) Learning and Culture (LC) Dynamic Competitiveness (DC)

2007–09 1990–93 2007–09 1990–93 2007–09 1990–93

Case 1 (↗) (-) (↗) (-) (↗) (-)

R -−Res R -−Res LC-−Res LC-−Res DC-−Res DC-−Res

Case 2 (↗) (-) (↗) (↗) (↗) (↗)

R -~Res R -þRes LC-~Res LC-þRes DC-~Res DC-þRes

Case 3 (↗) (-) (↗) (-) (↘) (↘)

R -þRes R -−Res LC-þRes LC-−Res DC-þRes DC-−Res

Case 4 (-) (-) (↗) (↗) (-) (↘)


Case 5 (-) (-) (-) (-) (↘) (↘)


Case 6 (↗) (↗) (↗) (↗) (↗) (↗)


Case 7 (-) (-) (↗) (↗) (↗) (-)


Case 8 (↘) (↘) (↘) (↘) (↘) (↘)


Symbols in parentheses () represent degree of correlation.

↗: Signicant/High correlation, -: Moderate correlation, ↘: Low/Poor correlation.

Symbol in front of ‘Res’ represent resilience of the rm in terms of Z-score transition prole analysis, cf. (Pal et al., 2011).

þ: Signicant/High, ~: Moderate, −: Low/Poor.



10/19

lack of nance and cash ow along with lower manufacturing and

decision-making exibilities resulting primarily in volume and

margin ramp down, forcing a dip in the protability and leverage

ratios as well. Lack of proper market penetration and marketing

strategies further aggravated the sales decrease. For rm 4,

however, the lack of economic resilience was considerably due

to lowering of most of the Z-score components owing to cash ow

and investment problems in the 1990s. Firm 5 showed constrained

cash liquidity and lack of proper networking followed by lack of proper growth strategies which led to lower protability, solvency

and leverage ratios while for rm 6 the declining turnover,

protability and leverage ratios could mostly be attributed to

problems in setting up good relational networks with suppliers,

banks and customers. Lack of operational exibility and structural

changes inherent to the leather goods industry were also critical

reasons behind rm 6's poor Z-score components. On the other

hand, factors critical to lack of resilience in rm 7 was losing of

orders due to price competition, incorrect product positioning and

production knowledge, hence, driving down most of the Z-score

components while for rm 8 the poor protability and leverage

ratios were considerably due to increase in costs of production,

lack of production exibility and other strategic initiatives like lack

of market development and penetration. The only rm (rm 2)

which showed economic resilience in the 1990s crisis maintained

a stable nancial situation and exible production and decision-

making to redene its business model, resulting in a secured and

‘healthy’ Z-score.

Amidst the recent global credit crunch, rm 1 showed poor

protability ratio due to poor sales and lack of nance and asset

management along with lack of exibility in operations resulting in

high nished goods stock. However, rms 2–4 and 8 mainly showed

high solvency ratio and capital-turnover due to good nancial

reserves, good relational networks with suppliers, customer base

and banks along with optimum exibility to keep on making prots

amidst recessionary trends. These rms also followed right market

and product related growth initiatives for optimum diversication

and consolidation. However, rms 5–7s' poor Z-score components

(mainly poor protability and sales-turnover ratios) were consider-

ably because of similar reasons as prominent in the 1990s viz. lack

of nance and cash ow, lack of relational networks and lack of

exibility at all levels. Lack of fast decision-making for adjusting to

the recessionary trends along with the ability to reduce stocks

resulted in huge losses during the crisis. These rms also lacked a

proper product portfolio development and growth strategy

initiatives.

6. Discussion: explanation of evident patterns

Several key patterns are emergent through the data analysis

following the survey and detailed interviews. Within the organi-

zational resilience framework prescribed here, the key enablers or

antecedents have been identied that were considered essential

by the owner-managers of the SMEs in bolstering resilience in

crises. Table 4, herein, simplies these patterns, observed and

analyzed through the matching of the theoretical frame and the

interview empirics, in generating proper explanation to the

correlation outcome of the survey.

6.1. Financial resources: cash ow and investment nance

Cash ow in rms emerged to be of signicant inuence, as

purported by the owner-managers, along with investment nance,

in facilitating or inhibiting resilience at crises in some way or the

other, as also highlighted by Vossen (1998) and Van Gils (2005).

Cash ow constraint arising out of too much borrowing of

foreign currency during the 1990s, followed by the sudden

Swedish currency devaluation in 1992, affected the liquidity ratios

(in rms 1 and 5), while rising costs of production and overheads

also affected cash reserves in many ways (in rm 8). A decrease in

sales turnover due to volume and margin ramp-down and a

decrease in customer base and low price competition in the

1990s also inhibited rms' cash ow affecting the leverage ratios

(in rms 3, 6 and 7). Cash ow problems due to a sudden shift

Table 4

Pattern recognition from case study observations.

Relation Resilience Firms Inference/Reasons*

Resourcefulness (R)

2007–09 ↗, - ↗, - 2–4 Considerable cash ow, investment nance, relational networks and asset management

↗ ↘ 1, 6 Lack of cash ow and investment nance, workforce lay-off

↘ ↗ 8 Insignicant contribution (except good bank relationships)

- ↘ 5, 7 Moderate inuence of lack of relational networks with suppliers and nancing

1990–93 ↗, - ↘ 1–7 except 2 Lack of cash ow and investment nance

↘ ↘ 8 Insignicant contribution (except lack of nancial reserve)

↘ ↗ 2 Other predominant antecedents

Learning and Culture (LC)

2007–09 ↗, - ↗, - 2–4 Good leadership, employee collectiveness (except in 2)

↘ ↗ 8 Insignicant contribution

↗, - ↘ 1, 5–7 Lack of suf cient evidence (except lack of formal leadership observed in 5 and 7)

1990–93 ↗, - ↘ 1–7 except 2 Lack of suf cient evidence (except lack of leadership and employee collectiveness in 3, 5, 7)

↗ ↗ 2 Lack of evidence

↘ ↘ 8 Insignicant contribution

Dynamic Competitiveness (DC)

2007–09 -, ↗ ↗, - 2, 4 Signicant strategic and operational exibilities

↗ ↘ 1, 6–7 Lack of strategic and operational exibilities

↘ ↗ 3, 8 Insignicant contribution (except operational exibility in 8)

↘ ↘ 5 Insignicant contribution

1990–93 ↗, - ↘ 1, 6–7 Main ly l ack of strateg ic an d operati onal exibilities

↘ ↘ 3–5, 8 Insignicant contribution (except lack of strategic exibility)

↗ ↗ 2 Considerable strategic and operational exibilities

Relations: ↗: Signicant/High correlation, -: Moderate correlation, ↘: Low/Poor correlation.

Resilience: ↗: Signicant/High, -: Moderate, ↘: Low/Poor.n

cf. Appendix 1 and 2 for details.



11/19

from supplier's credit to cash payment scheme (in rm 6) or

sudden postponement of installation orders from customers (in

rm 4) were among other reasons.

Along with this, mostly an investment nance constraint is

evident in rms, due to wrong business ventures, bankruptcies of

group subsidiaries or newly made investments in acquisitions and

new product development (NPD), thus limiting their nancial

reserve during quick crisis recovery (evident in rms 1 and 4 as

they suffered from considerable losses in the 1990s crisis, thusshowing decrease in leverage ratios as the crisis recovery process

was nanced by utilizing retained earnings). Such investment

nance problems are aggravated by lack of proper credit support

from banks as highlighted by Sullivan-Taylor and Branicki (2011)

(evident in rms 5 and 6), while good bank support may lead to

better liquidity and leverage ratios (evident in rms 2, 3, 4 and 8).

6.2. Relational networks

Freeman (2004) analyzed how close relationships in working

with the suppliers, customers and marketing partners to get more

order volumes were essential antecedents of resilience develop-

ment. Such a pattern was observable amidst the recent credit

crunch as key antecedents of resilience development (in rms

3 and 4), contributing to the development of capital-turnover ratio.

On the other hand, lack of external support seems a potential

resilience inhibitor, particularly for SMEs (Fassoulsa, 2006). This

considerably increases the supply chain vulnerability during crisis

(as observed in rms 3, 5 and 6 during the 1990s crisis, as they faced

a lot of problems owing to their diminishing supplier and customer

base). The analysis emphasized several factors contributing to the

shrinking supply and customer relational networks of SMEs, as

highlighted by the owner-managers, like ‘consolidation of suppliers

into few large ones’, ‘lack of alternate high-quality suppliers’,

‘restricted customer base due to low-price competition’ etc.

6.3. Material assets

Current asset problems, aggravated by price hikes along with

huge stock lots, due to a sudden decrease in orders, are common

during crisis. Such constraints were evident during the recent

credit crunch (in rms 1, 5, 6 and 7), in terms of excess raw

material stocks or sometimes shortage of supply or huge storage of

nished goods. They were considered to be potential inhibitors of

resilience development, as it compelled the rms to depreciate

their stock values and think of consolidated internal restructuring

for higher ef ciency planning. This considerably affects the prot-

ability, sales-turnover and leverage ratios.

6.4. Strategic exibility

Strategic exibility in terms of decision-making is a critical

aspect in small rms (Vargo and Seville, 2011). Such exiblestrategic planning lay in devising rolling long-term plans to

maintain necessary readiness even during crises and supported

by oligarchic decision-making, unlike most family rms run

through monocratic leadership (Gunasekaran et al., 2011) (evident

in rm 4). Such strategic exibilities are also essential to devise

changes in organizational design/business model by delocalizing

production completely or shifting product core from fashion

clothing to industrial products etc. (as was evident in rm 2 soon

after the 1990s crisis). Vargo and Seville (2011) also highlighted

how the lack of a proper crisis strategic planning, mainly due to

slack resource constraints, was also deemed to be a key inhibitor

to resilient functioning in small rms (evident in rms 5, 6 and 8).

Overall, strategic exibility can be critical for growth aspects in

rms related to capital-turnover increase.

6.5. Operational exibility

Even though Shef (2007) and other authors have emphasized

the role of operational and structural exibility only in case of

large rms for building resilience, it seemed to be quite an

emergent resilience building theme in SMEs as well. The recent

study highlighted the role of structural exibility in determining

the make-buy decisions in case of small manufacturing rms

(evident in rms 2, 4 and 8) for contributing considerably towardsresilience development by increasing protability and cash ow.

Such control over one's own manufacturing pipeline results in

lower lead-time and inventory management advantages as well.

However, lower exibility in inventory management by handling

raw materials or nished goods inventory (evident in rms 1 and

6), lower exibility in manufacturing or make-buy decisions

(evident in rms 3 and 8 – in the 1990s crisis) also resulted in a

lack of resilience by affecting protability and liquidity, in line with

Thun et al. (2011) highlighting the lack of preventive instruments

in SMEs in tackling supply chain risks.

6.6. Continuous improvements

Quality issues maintained through continuous improvement

were a key antecedent to resilience (in rm 2) to cater to the

requirements of its large automotive sector customers. The

responding rm applied ef cient small batch manufacturing to

improve the production ef ciency, reduce lead times and be

suf ciently lean, thus enhance operational agility, also highlighted

by Ismail et al. (2011) and Kumar et al. (2011) as a necessity to

maintain quality criteria for resilience development in case

of SMEs.

6.7. Learning and cultural aspects

The survey emphasized a strong degree of correlation for this

‘soft’ antecedent in bolstering resilience, as also shown by Vargo

and Seville (2011). Even though a majority of the owner-managers,

when questioned for this study, accepted such strong relation-

ships, they could not justify how it could inhibit or facilitate

resilience in economic crises. This vacuum and non-specicity in

justifying the strong inuence to empirically support the extant

research can be attributed to some reasons. Firstly, the owner-

managers considered employee collectiveness, know-how and

well-being to be very much ingrained or obvious in case of small

rms, as also found by Acquaah et al. (2011). So whether in crisis

periods or not, these soft values are considerably high in small

rms and do not directly facilitate economic resilience develop-

ment, unlike in large organizations. A complementary considera-

tion is the degree of informality existing in small rms' visions and

knowledge, which tends to make these learning and cultural

aspects very tacit (Ates and Bititci, 2011). Secondly, such ‘soft’

aspects do not facilitate economic resilience directly. Moreover,authors perceive such learning or cultural aspects to be long-term

in augmenting rm performance and not crisis dependent, where

small rms mostly rely on short-termism. However, some of the

respondent rms (3, 5 and 7) considered lack of ‘cross-functional

training for developing working teams’, ‘silo organizational struc-

ture’, and lack of ‘formal education’ to be inhibiting resilience

development during the crisis of the 90s. The role of leadership

and management decision-making were inuential factors in

facilitating resilience during the recent crunch (evident in rms

3 and 4), in line with ndings by McManus et al. (2008) and Seville

et al. (2006) Firms like those could break-away from the ‘com-

mand and control culture’ (Ates and Bititci, 2011) generally

prevalent in small family rms, and became more entrepreneurial

and open, and showed better economic resilience.



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6.8. Additional factors engendering resilience

The research also surfaced out a set of factors not considered

in the initial survey as antecedent to resilience development. In

fact these factors cannot be clustered as ‘contents’ enabling

resilience but as the process of deploying these ‘contents’/ante-

cedents for developing a constant ‘growth/business continuity’

initiative in the rms. These factors or processes (growth process)

are indicated to be strategic and operational initiatives (Ismailet al., 2011) of a rm in effectively deploying their antecedents, as

also prescribed by Penrose (1959) and Davidsson et al. (2007).

This answers more towards ‘how’ resilience is developed

(through ‘strategic and operational’ process initiatives) rather

than ‘what’ is essential for it (antecedents). This conforms to the

requirement of developing rm initiatives for organic growth

(along the Ansoff matrix: market penetration, market develop-

ment, extending process capability, or market diversication

(Ansoff, 1957)) or inorganic growth (through merger and acquisi-

tions (M&A) or take-overs) or simply survival in crises (business

continuity planning).

In reality the responding rms did not consider having

contingency planning in their rms, as it deviates the rm's

limited resources and assets. Lack of a proper product portfolio

structuring seemed to be a common problem in small rms,

aggravated in the crises when sales-turnover and customer base

decrease, resulting in improper market penetration or product/

capability development strategies (evident in rms 1, 3, 6, 7 and

8 during the 1990s and in rms 5 and 6 during the recent credit

crunch). Most of the owner-managers responded saying, ‘ lack of

proper positioning along the product pyramid’ and ‘low-price

competitions’ to be the key reasons for this. Firms (2, 3 and 4)

able to diversify into new product segments/labels and achieve

cost effectiveness through right make-buy trade-off dealt with

the crisis better.

Market development and diversication strategies through

innovative product launches and additional sales channels to enter

new markets or customer base (evident in rms 2, 3 and 4 in the

recent crisis) are also critical contributors towards economic

resilience.

M&As were indicated by Penrose (1959) to be less observable in

case of small rms owing to their resource constraint, though

volume growth for high-growth rms does lead to such growth

modes as well. Such trends were noticeable in most of the studied

manufacturing rms (1, 2, 3, 4 and 8) through delocalization of

production to be more cost-effective, though rm 1 could not

capitalize on its venture due to some exogenous reasons.

Finally, exogenous factors like ‘foreign exchange uctuation’

and ‘low-price competition’ also emerged as predominant macro-

inhibitors of resilience development in the recent credit crunch,

while ‘SEK devaluation’ and ‘change in basic textile industry

structure from make-to-buy’ were more deliberating factors in

the 1990s crisis.

7. Conclusion: implications and further research

A major conclusion that emanates from this research is how

rms can develop their resilience potential by tuning their

strategic assets and capabilities (available antecedents of resili-

ence). For the Swedish SMEs the key among them are: (a)

investment nance and cash ow, (b) material assets and net-

working, (c) strategic and operational exibility, and (d) attentive

leadership.

These evident patterns are revealed through the discussion

above. Financial reserves and their mobility enhanced invest-

ment opportunities for the resilient responding rms through

suf cient growth perspectives (along product and market

developments), while rms that showed nancial constraints

succumbed to the crises effects, showing bad nancial perfor-

mance. This is supported by close relationships in the value

chain for the resilient responding rms to continue getting

considerable order bookings from the customers and for price

negotiations with suppliers. Such protable inter-organizational

relationships (IOR) also ensured easy access to raw material

assets at competitive price, as discussed above. Next, exibilityin strategic decision-making was evident in resilient rms for

proper crisis strategic planning, complemented by exibility in

manufacturing and distribution to get cost and lead time

advantages over competitors. For the manufacturing rms,

economic resilience through production effectiveness also

demanded proper execution of lean management and contin-

uous improvement (CI) approaches. Overall, the resilient

respondents were able to ef ciently utilize their slack nancial

and material assets through better relational networking,

higher exibility and continuous improvement (CI) to develop

resilient economic performance in crises, steered attentively

through realistic leadership and decision-making.

Practical implications of the research ndings to the business

practitioners are manifold. First, Swedish textile SMEs can have an

understanding of the underlying factors/antecedents and their

differential effects, bolstering resilience for successful performance

amidst crises. Particularly this unfolds great possibility for rms to

devise resilient solutions based on their nancial and material

asset availability, enhanced by higher exibility, continuous

improvement in ef ciency and networking by developing IORs,

for dealing with future economic crises, like the double-dip

recession or Euro-zone crisis.

Second, rms can have a clearer understanding of ‘where’ and

‘how’ to invest to develop their unique response repertoire in crisis

periods, essential for building strategic readiness, and utilize the

slack resources for resilience building (Ismail et al., 2011). This can

eventually have a strong impact on a rm's resilience by addres-

sing a range of crisis-related problems.

From the academic perspective, rst, there is little empirical

research investigating the different effects of various organiza-

tional capabilities, unifying resource-based view, dynamic cap-

abilities and organizational learning to explore their relationship

in crisis situations to support resilience development. This paper

conceptualizes such a framework for validation. Furthermore, it

investigates empirically, in the context of global economic crises,

how resilience development is favoured or inhibited by the

signicance or lack of antecedents, respectively.

However, considering the diversity and inherent complexity in

the topic of resilience for success/survival of rms there are some

limitations of the present study mainly related to: (a) its narrow

economic crisis context for Swedish textile SMEs i.e. lesser

possibility of generalizability over diverse environmental turbu-

lences, as the study was conned to a homogeneous environ-mental context (two economic crises) for a particular sector

(textile and related) and location (Sweden), (b) that the study

mainly highlights the effects of the internal building blocks of

resilience of a rm, while the external inhibitors or facilitators like

globalization or industrial changes and policies are not detailed

separately in the survey part, (c) that the study does not capture

the interactive (or moderated) effects of each antecedent on

economic resilience of the rms, in orchestration with other

antecedents as control variables; (d) that the study only highlights

the ‘contents’ of building resilience rather than the strategic

process of growth or continuity to achieve it. However, the

theoretical framework of the paper is universal for testing and

application in case of any type of environmental turbulence and in

any time-spatiality.



13/19

Table A1

Emergent pattern in the key antecedents during 1990s crisis.

Antecedents Other process initiatives Exogenous factors

Case 1 Inhibitors Lack of ability to hold back declining capacity of

volume and market share due to higher price

pressure due to delocalization of production and

entry of foreign competitors

Lack of dened growth strategies and

adjustments in product pyramidl(i, ii)

SEK devaluationo

Lacked economic

resilience

Resource and asset problems

Escalation of foreign currency loan

amount incurred for infrastructural

and capacity development due to

SEK devaluationa

Heavy loss incurred in the potential

recovery years following crisis (due

to investments in a sister concern)c

Case 2 Facilitators Knowledge of their core assets and strengths in

production to redene business model and

organizational design by delocalizing production

and shifting product core from fashion clothing to

industrial product

Showed some economic

resilience through

W-shaped recovery

Resource and asset

Stable nancial situation of the

family owing to considerable

retained earningsa

Competitiveness

Flexible production and logistics

with near-by manufacturing in

Sweden, Finland and Portugalg

Flexible decision-making related to

the need to change the business

model and organizational designf

Declining customer base and low-price

competition requiring more stringent market

penetration strategiesl(i)

SEK devaluationo (in September 1992)

Case 3 Inhibitors Lacking market penetrationl(i) strategy owing to

stringent low-price competition owing to

outsourcing trends

Lack of marketing skills

Incredible hike in wages and production

cost forcing outsourcing of productionm

Devaluation of currency (SEK)oLacked economic

resilience

Resource and asset problems

Reduced nancial leverage due to

volume and margin ramp-downb

Reduced number of suppliersd

Learning and culture problems

Lack of cross-functional structure,

hence exible manufacturingg, j,k

Lack of long-term shared vision of

the employees instigating more

self-centred silo structure and

mentalityk

Competitiveness problems Challenging strategic decision-

making owing to both volume and

margin related problemsf

Case 4 Inhibitors Devaluation of the Swedish currencyo

Collapse of Soviet Union, the company 's

biggest marketnLacked economic

resilience

Heavy investment incurred in

developing new product (in 1991-

92) reducing cash owc

Bankruptcy of the packaging

division of one of the group's

subsidiaryc

Fairly new acquisition of business

subsidiaries increasing liabilities

without reaping prots initiallyc

Case 5 Inhibitors Lack of dened growth strategies in the rm's

‘developmental ’ stage under new ownershipsurplused by crisis effects

SEK devaluationo considered to be most

inuential in driving the prots andleverage down

Market problems resulting in loss of big

customers and order-volumen

Lacked economicresilience

Resource and asset problems Constrained cash liquidity due to

too much borrowing of foreign

exchangea

Diminishing number of yarn

suppliers in the European marketd

Lack of bank supportd

Learning and culture problems

Lack of experienced and attentive

leadership in the crisis time

considering the change into new

ownership since 1990i

Lack of cross-functional training for

developing working teams and

employees j,k



14/19

Thus certain future research directions are left open. This can be

related to either understanding the process of uti

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