Organisational resilience through crisis strategic ... - Inderscience Online

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Int. J. Decision Sciences, Risk and Management, Vol. 4, Nos. 3/4, 2012

Organisational resilience through crisis strategic planning: a study of Swedish textile SMEs in financial crises of 2007–2011 Rudrajeet Pal* The Swedish School of Textiles, University of Borås, Bryggaregatan 17, SE – 501 90 Borås, Sweden and Department of Material Science, Tampere University of Technology, Fibre Materials Science, P.O. Box 589, FIN – 3310 Tampere, Finland Fax: +46-33-435-40-09 E-mail: [email protected] *Corresponding author

Roy Andersson School of Engineering, University of Borås, Allegatan 1, SE-50190, Borås, Sweden Fax: +46-33-435-40-08 E-mail: [email protected]

Håkan Torstensson The Swedish School of Textiles, University of Borås, Bryggaregatan 17, SE – 501 90 Borås, Sweden Fax: +46-33-435-40-09 E-mail: [email protected] Abstract: Global financial crises of 2007–2011 have created tremendous impact on Swedish organisations, particularly small and medium-sized enterprises (SMEs). In such a context, study of organisational resilience, to survive and thrive, becomes increasingly significant. Key to economic resilience is upheld by crisis management (CM), business continuity planning (BCP) and growth perspectives. Thus crisis strategic planning (CSP) becomes fundamental in underpinning resilience. The study categorises resilient and less resilient SMEs in terms of their financial performance, and identifies what strategies differentiate them. Resilient firms showed better short-term CM through higher operational flexibility, while the less resilient firms lacked strategic readiness. Resilient firms showed more long-term strategies through BCP and growth strategies through market penetration, diversification and transformational initiatives. Multi-strategic initiatives help to develop CSP model, categorising firms along different resilience types, characterised by low and high degrees of planning and adaptation, respectively. Resilient Swedish SMEs mostly showed planned resilience in financial crises.

Copyright © 2012 Inderscience Enterprises Ltd.

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Keywords: resilience; crisis strategic planning; CSP; growth; small and medium-sized enterprises; SMEs; business continuity planning; BCP; crisis management; CM; Sweden; textile and clothing; T&C. Reference to this paper should be made as follows: Pal, R., Andersson, R. and Torstensson, H. (2012) ‘Organisational resilience through crisis strategic planning: a study of Swedish textile SMEs in financial crises of 2007–2011’, Int. J. Decision Sciences, Risk and Management, Vol. 4, Nos. 3/4, pp.314–341. Biographical notes: Rudrajeet Pal is a doctoral candidate at The Swedish School of Textiles, Sweden and Tampere University of Technology, Finland in the field of textile management. His area of research and interest relates to organisational strategies for success and survival of textile SMEs, hence, business continuity and resilience. He also lectures in supply and demand chain management, fashion logistics and supply chain risk and resilience at The Swedish School of Textiles and School of Engineering. Roy Andersson has been working as consultant, in different companies for ten years. Before that, he has worked as a Production Engineer in the automotive sector and as a Quality Manager in a service company, where he has implemented ISO 9000:2000. He has spoken in several international conferences in Sweden, Mexico, Italy, England, Thailand and Russia and has published articles on TQM, lean, Six Sigma, agile, risk management, resilience and collaboration in the supply chain. His research relates to combining different quality management tools and techniques in order to make supply chains robust and resilient. He has a PhD in Logistics from Chalmers University in Sweden. He also lectures in quality management and supply chain, in University of Borås. Håkan Torstensson is a Professor in Transportation Safety and Logistics at the University of Borås since 2001. His areas of research interest covers risk and security in logistics systems and efficient and sustainable supply chains. He has been teaching logistics information technology, packaging technology, risk assessment, recovery engineering, supply and demand chain management, and applied textile management.

1

Introduction

The recent economic conditions have created severe challenges for small and medium-sized enterprises (SMEs), particularly related to difficulties in raising funds and controlling costs, as well as shrinking profitability, heavy reliance on few customers, increasing account receivable problems, etc. (Chan, 2011). Furthermore, SMEs are considered to be more sensitive to financial fluctuations in cash flow and to changing customer requirements and demands (Bhamra and Dani, 2011), while Ingirige et al. (2008) considered them to be least prepared of all organisations. Christopher and Holweg (2011) referred to such an increase in turbulences by highlighting the rise in the supply chain volatility index (from 0.166, as the previous peak in 1973 to 0.254 in 2008). This cumulatively indicates the swing in key business parameters, like exchange rates, commodity and raw material prices, interest rates and shipping costs, in the recent times. During the global credit crunch (2007–2009) the Scandinavian market has in comparison shown more signs of stability, however, there has been a somewhat stagnant growth with

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falling exports (Keay, 2012). Even though there was no particular evidence showing that the effect has been significantly higher for the textile and clothing (T&C) sectors, the Swedish central statistics confirm that the average number of Swedish T&C firms that went bankrupt during the recent crisis (2007–2009) was twice the average over 2000–2010. The bankruptcy level increased almost 13 times, from 0.8% in 2007 to 9.9% in 2008, and most of those firms were small with less than 50 employees.1 Overall profits for the textile and apparel industries decreased from 419 MSEK in 2006 to consecutive three year losses till 2009, while the net turnover and total assets also reduced by 19.4% and 8%, respectively. Hence, the Swedish textile-related SMEs faced major threats to their financial performance in the economic crises of 2007–2009. Thus, in such a constantly changing business climate, managing these challenges and turbulences calls for developing organisational capacity to survive, adapt and sustain them, which makes the concept of resilience development highly contextual. Although the importance of SMEs has been ever increasing in the wider economy, still there has been very ‘little’ consideration of concepts, findings and outcomes related to ‘crisis management (CM)’, ‘business continuity management (BCM)’ or ‘disaster recovery’ in key small-business journals, and such businesses are still underrepresented (Herbane, 2010; North et al., 1998). So, from an academic perspective, the authors extend the business continuity concept to organisational resilience, incorporating the notion of growth in small firms facing crises and turbulences. A key to economic resilience is thus provided by the CM, business continuity and growth perspectives. Without doubt, the assessment of a firm’s business continuity and growth becomes a relevant choice for studying economic resilience, as resilience is not only about surviving crises but also thriving in them. Two decades of management research suggest that the relationship between crisis strategic planning (CSP) and performance is positive, both for large firms (Miller and Cardinal, 1994) and for SMEs (Peel and Bridge, 1998; Schwenk and Shrader, 1993). Thus, fundamental transitional behaviours in firms’ economic ‘health’ are translated into the abilities to maintain a growing or constantly healthy state over time (represented in terms of economic parameters), subjected to negative events, or as an effective recovery to make quick positive transitions in the business ‘health’ state (Sundström and Hollnagel, 2006; Wildavsky, 1988). This suggests how inevitable it becomes in the research arena to relate such business ‘health’ transitional analysis to a CSP repertoire in organisations. It favours a ‘top-down’ approach for developing the strategic initiatives in an organisation, combining both pro-active planning and reactive adaptation, and assessing the financial contributions and perceived avenues for growth (Ismail et al., 2011). Thus in this paper, authors aim to investigate how Swedish T&C SMEs dealt with recent economic crises (2007 onwards) in terms of strategies and identify if there exists some identifiable pattern or difference in the responses along these underlying strategies (discussed in the section below) between the resilient companies and the less resilient ones (in terms of transitions in Z-score: a multivariate financial parameter). Hence, the exploration is carried out along the following procedure to: 1

categorise the resilient and less resilient firms

2

identify the type of turbulences/problems faced during the crises

3

identify what factors are essential for the firms to deal with these crises, and how they are effective

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analyse the key strategic initiatives of resilient SMEs and how they differ from less resilient ones.

The authors finally propose a model classifying the organisations in terms of different levels of resilience and recommend strategies for enabling higher resilience in less resilient firms.

2

Theoretical framework

According to Vargo and Seville (2011) CSP is the process by which organisations can deal with any major unpredictable event threatening the organisation by preparing its available resources and organisational structure, building the required capability and designing a plan for addressing them. This calls for balancing both CM, in response to the threat during the period of crisis, and strategic planning to manage the opportunities inherent to the changes and threats. This orchestrates the defensive and preventive capabilities of CM, more short-term in nature and pertaining only to the period of crisis, to the offensive product-market positioning orientation of strategic management (SM), more long-term in nature (Preble, 1997). Thus, CSP is a way of integrating the two into one resilience planning process, as the ability to survive is addressed by CM, while the aspect of thriving is in strategic planning (Seville, 2009; Vargo and Seville, 2011). A comprehensive CSP initiative offers a broad response repertoire in firms that can help them sustain as well as grow in crises. Such growth or sustenance processes construct a holistic response repertoire, combining two complementary organisational behaviours of planning and adaptation. Vargo and Seville (2011) underscored an organisation’s ability to effectively manage a crisis by ‘finding the silver lining’ of strategic opportunities (combining planning and adaptiveness). This essentially generates the broad repertoire of ‘strategic readiness’, as highlighted by Ismail et al. (2011), to engage strategic thinking and planning by examining both capabilities and weaknesses in devising multiple growth strategies. From the SME context this encourages them to act, either preventively by focusing on threats (by CM) or opportunistically (by strategic planning), to deal with inherent uncertainties of the future (Burnett, 1998). So, this asserts the four dimensions of the response repertoire for devising the multi-strategy tool for yielding strategic readiness as shown in Figure 1. Figure 1

The four strategic dimensions of CSP

2.1 Growth strategies – planned and adaptive A major aspect of CSP relates to the development of a SME strategic agility framework, which is expected to promote business growth and capability development using resources effectively, enhance resilience that serves multiple growth avenues and induce

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a shift towards structured strategic behaviour in SMEs (Ismail et al., 2011). According to Li and Tan (2004) and Li et al. (2011), there are three major theoretical perspectives on growth for strategic choices. First, the breadth-on-top-of-depth (BTD) perspective is related to ‘generic’ expansion by balancing technical depth with product breadth for either increasing the knowledge and exposure to related areas or developing additional areas of expertise. In the growth model context, this is viewed as the full utilisation of firms’ resources for the incremental process of generic expansion. On the basis of developing basic strategic growth options along an Ansoff (1957) matrix, BTD strategies can be assessed with respect to possible tactics for market penetration and process capability extension (c.f., Figure 2). Figure 2

Possible tactics within the Ansoff’s matrix for growth strategy

Source: Adapted from Ismail et al. (2011)

The second growth perspective is related to diversification by expanding into new markets through a variety of inter-organisational relationships, such as strategic alliances and joint ventures, to achieve growth by gaining access to complementary assets for reducing environmental impacts (Kale et al., 2000; Li et al., 2011; Sarkar et al., 2001). Such development of networks of firms leads to market development through expansion of product ranges or other core competences, either by attracting new customers in the existing sector, by attracting competitors’ customers, by expanding into overseas markets and by moving into new market niches or through joint ventures and collaborations (c.f., Figure 2). Inter-partner cooperation, resource dependence and complementary capabilities are highly necessary for such developmental growth processes (Salancik and Pfeffer, 1978). The third growth perspective is transformational (Li et al., 2011), achieved through expansion of the boundary of the firm by engaging in acquisition of various business subsidiaries or by transforming the existing business model. This is achieved through full employment of under-utilised resources in the organisation and gaining excess capacity. Figure 3 illustrates the three perspectives of the business growth model.

Organisational resilience through crisis strategic planning Figure 3

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Three perspectives of business growth model

Source: Li et al. (2011) and Li and Tan (2004)

2.2 Sustenance strategies 2.2.1 Short-term CM strategies Short-term CM strategies are mostly characterised as adaptive responses, typically consisting of incremental actions to buffer an organisation and to provide for limited remedies, often termed as ‘fire-fighting’ responses (Smart and Vertinsky, 1984). Authors like Whitman and Mattord (2003) and McCartney et al. (1999) defined CM as the actions taken during and after a disaster, considering it to be a sub-function of contingency planning but more adaptive in nature. However, Mitroff et al. (1992) considered the similarities existing between CM and SM and suggested possible integration of them. Even though CM when integrated with SM defines a systematic process, by which an organisation attempts to predict potential crises and can encounter, prevent and minimise the effects (Preble, 1997), CM in case of small firms has mostly been crisis-based turnarounds, through top-management change, external management expertise or organisational retrenchment (Cater and Schwab, 2008). Smart and Vertinsky (1984) highlighted similar short-term strategic responses to a crisis, along with cost effectiveness as a plausible choice in practice.

2.2.2 Long-term business continuity strategies Business continuity can be defined as “the processes, procedures, decisions and activities to ensure that an organization can continue to function through an operational interruption”.2 In other words it is about identifying organisational threats and anticipating failures and taking planned and rehearsed steps to protect the business and its stakeholders’ interests by synthesising appropriate hard and soft assets to maintain a competitive advantage and preserve value (Herbane et al., 1997, 2004). BCM encompasses a strategic precursor, involving long-term development of competitive advantages and value creation and drawing upon both CM and disaster recovery planning (DRP) approaches (Herbane et al., 2004). Such planning processes through a CM approach posit crisis incubation in the pre-crisis phase, rooted into the sequence of organisational and environmental analysis and the development of plans for prevention, back-up and recovery (Preble, 1997), while DRP is dedicated to more reactive planning, emphasising recovery over prevention (Fink, 1986; Quarantelli, 1988). But BCM is

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argued to go beyond just CM and DRP, incorporating alignment with strategic initiatives within the organisation, putting into place planning approaches, structures and skills with a proactive strategic role organisation-wide (Herbane et al., 2004). This encompasses distinct managerial skills to ensure business continuity and operational resilience, in order to face minimum possible disruptions. Such BCM incorporates proactive or reactive strategies, highlighting mainly the survival instincts in the organisation. Business continuity is thus more about coping with crises or building CM options/plans (Vargo and Seville, 2011). From the operational perspective, BCM includes a focus on human resource and responsibilities, BC planning and processes (planning on the basis of resource and capability configuration), proper organisational communication and structure, and attitude and ownership of leaders and management (Herbane et al., 2004). This leads to the development of continuity processes to improve resilience. With the streams of research reviewed above and taken together, we can emphasise that all the three strategic choices for organisations to develop their resilience response repertoire adopt the distinct pathway of generating excellence and innovation through co-management to utilise the slack resources. Such slack resources (financial, relational, material or cognitive), as pointed out by Sutcliffe et al. (2003) and Vogus and Sutcliffe (2007), are key enablers for reducing risks by exploiting under-utilised resources (Penrose, 1995). Co-management or dynamic balance between exploration of new opportunities (long or short term), through search, variation, flexibility, innovation, etc., and exploitation of existing capabilities, through refinement, production, efficiency, etc., acts as a proper pathway for attuning the resilience antecedents, as similar research on managing trade-offs between growth (in terms of variety and innovation) and building competencies (in terms of efficiency and capability building) is required for building adaptive processes, as suggested by March (1991) and Bunderson and Sutcliffe (2002).

3

Developing a model for CSP to yield resilience

The above theoretical framework highlights the three strategic initiatives broadly brought forward in the paper as: 1

short-term CM strategies

2

long-term business continuity strategies

3

long-term and crisis-based growth strategies (BTD strategy for market penetration and product development, diversification strategy for market development and diversification and transformational strategy for business model diversification and acquisition).

Based on such a broad repertoire of strategic choices, firms can model their CSP built around planned and adaptive strategies. These two generic labels diagnose an organisation’s ability and tendency to effectively manage crises, while ‘finding the silver lining’ of strategic opportunities (Vargo and Seville, 2011). Using the framework as suggested above, authors categorise organisations along different types of resilience, predominantly planned or adaptive or a combination of the two [proposed by Vargo and Seville (2011)]. Figure 4 proposes a model for categorising organisations along different types of resilience achieved, depending on the approach to CSP. Latent resilience refers to an organisation with low levels of planning and adaptability, where their resilience is


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undeveloped and thus has substantial opportunities for improvement (Vargo and Seville, 2011). Planned resilience refers to an organisation with high level of planning but low level of adaptability that thus is well-structured but somewhat inflexible in taking fast crisis-management measures. Such resilience is mostly based on long-term business continuity or growth strategic abilities (Vargo and Seville, 2011). Adaptive resilience refers to an organisation with high levels of adaptability but low levels of planning that thus is highly agile but unsystematic in its approach. This is similar in concept to ad-hoc resilience, as coined by Vargo and Seville (2011). Dynamic resilience refers to an organisation with both high levels of planning and adaptability, thus being highly resilient (Vargo and Seville, 2011). Such a model can serve as a reliable benchmarking tool for organisations to measure resilience and grow it to alter placement on the fourquadrant chart (c.f., Figure 4). Figure 4

Type of resilience achieved depending on approach to CSP

Source: Adapted from Vargo and Seville (2011)

4

Research design and methodology

4.1 Methodology The research methodology adopted in this study is based upon a comprehensive literature review for developing the theoretical framework, in order to highlight the strategic initiatives to develop firms’ response repertoire for building resilience. This is followed by a qualitative empirical study, quite explorative in nature. Based on the literature review, the major strategic initiatives taken by organisations in crisis were categorised as: 1


2


3

long-term/crisis-based growth strategies.

This provided a coherent and consistent protocol to study the cases during the interviews (Eisenhardt, 1989; Yin, 2003). Twelve firms, all SMEs, were contacted for interviews. The small sample size however does not hinder analytical generalisation, particularly

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when the interest is predominantly on making an information-oriented selection of deviant cases (Flyvbjerg, 2006). Table 1 provides a detailed description of all the case firms in terms of their business description and model, SME characteristics and ownership type. Here, we adopt the European Commission definition of SMEs as “enterprises with headcount lesser than 250 or turnover ≤ € 50 million (approx. 400 MSEK) or balance sheet total ≤ € 43 million” (Liikanen, 2003). All the case firms have sales turnover below 500 MSEK showing SME characteristics in this respect; however, two firms have more than 250 employees, characterising them as non-SMEs in this regard. But considering them to be manufacturing firms with outsourced production facilities and recently acquired group subsidiaries we still characterise them as SMEs (showing other SME behaviours). Table 1

Participating firms Business description

A

Weaving and finishing of textile textiles

B

Weaving of technical textiles and upholstery fabrics

C

Finishing of technical textiles and upholstery fabrics Branded clothing marketer

D

E

F

Textile machinery and clothing labels and transfers and printing solutions Wholesaler/manufacturer of safety and occupational clothing and footwear

G

Sewer of air-bag fabrics and women-wear brand marketer

H

Designer and manufacturer of shirts and jackets

I

Weaver of upholstery fabrics

J

Manufacturer of leather clothing

K

Weaver of upholstery fabrics

L

Manufacturer of women underwear

SME characteristics

Ownership

Business model

Eav = 91 Salesav = ~129 MSEK Eav = 411 Salesav = ~486 MSEK Eav = 154 Salesav = ~296 MSEK

Private, non-listed in share market

Textile manufacturer

Eav = 23 Salesav = ~142 MSEK Eav = 167 Salesav = ~248 MSEK Eav = 179 Salesav = ~250 MSEK Eav = 519 Salesav = ~145 MSEK Eav = 10 Salesav = ~26 MSEK Eav = 27 Salesav = ~45 MSEK Eav = 13 Salesav = ~10 MSEK Eav = 31 Salesav = ~40 MSEK Eav = 25 Salesav = ~65 MSEK

Notes: Eav = Average number of employees (including group subsidiaries) over 2007–2011 Salesav = Average Sales Turnover (in MSEK) over 2007–2011.

Textile manufacturer Textile manufacturer Branded clothing marketer Textile and accessories manufacturer Clothing and shoes manufacturer Textile manufacturer Clothing manufacturer Textile manufacturer Clothing manufacturer Textile manufacturer Clothing manufacturer


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4.2 Data collection Data collection was made in two ways, through interviews and secondary data sources like firms’ annual reports 2007–2011. The data collection comprised a visit to the company premises and interviewing the owner/managing director in a semi-structured interview session. The interview questions were closely associated to the research questions and the theoretical framework and comprised three parts. The first set of questions was general and contextual, aimed at finding the basic business principles, practices and facts about the organisation. The second part of the interview aimed at identifying the type of problems the organisations faced in crisis times. The third part delved deeper with the focus on identifying the organisation’s business strategies followed in the crisis and ‘how’ and ‘when’ they were formulated. They specifically highlighted the overall business directions, any change in the business model or strategy, how and when these originated and whether they were short-term (adaptive) or long-term (planned). The ‘when’ related the strategic development to the crisis on a timeline, while the ‘how’ was essential to identify the pathway followed to generate them. An interview protocol is appended with the paper (c.f., Appendix). The interview sessions ended with the interviewer summarising the key highlights of the interview and asking for additional feedbacks or input (if any) from the interviewee. All the interviews were in English and were tape recorded, with permission from the interviewee, for later transcription. For increasing the reliability of the study and mitigate the researchers’ biasness as far as possible, most of the interviews were conducted by two interviewers. All the interviews lasted between one and one and a half hour. In addition, the secondary data collected was from the annual reports of the studied firms for a period of five years (2007 to 2011). Through triangulation with multiple data sources, the validity could be increased in such research and the claims can be better justified.

4.3 Data analysis Considering the collection of data was made from two different sources: interviews and secondary documents, the analysis was also made following two separate structures.

4.3.1 Interviews Data reduction and coding are important research activities in order to interpret large amounts of messy qualitative data (Miles and Huberman, 1994). The data from the semi-structured interviews was analysed using ‘summary sheets’, as suggested by Miles and Huberman (1994). Considering the pre-understanding of the prescribed framework the transcribed interviews were investigated by clustering information under the following convergent themes to understand the phenomena beyond each firm’s context and increase the generalisability (Eisenhardt, 1989). The themes were: 1

organisational responses to the financial crisis-related problems

2

recognising the patterns emerging from the strategies underlying these responses

3

antecedents and pathways followed to develop this strategic repertoire.

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Considering that the purpose of the paper is to identify the underlying multiple strategic initiatives behind resilient responses, authors further clustered the strategies into three emerging themes, referenced from the literature review. They are: 1


2


3

growth strategies.

The growth strategies were further sub-divided along three perspectives for business growth model, viz.: 1

BTD perspective,

2

transformation perspective

3

diversification perspective.

Further these perspectives were sub-divided into ‘generic’ expansion strategies using the Ansoff (1957) matrix as a basis for developing strategic growth options.

4.3.2 Secondary documents The key financial performance indicators from the income statement and balance sheet were analysed by using a multivariate discriminant analysis (MDA) technique, as proposed by Altman (1968, 2000) (called the Altman’s Z-score), underpinning the practicality of relating business systems as healthy, unhealthy or catastrophic, in terms of the Z-score. The score is a predictive measure of bankruptcy potential of firms, cumulatively affecting the economic viability of an organisation. This indicator of business growth is characterised by five practical financial ratios, viz. 1

working capital/total assets, measuring liquidity

2

retained earnings/total assets, measuring leverage or cumulative profitability

3

earning profits/total assets, measuring profitability or operating efficiency

4

shareholder’s equity/total liabilities, measuring solvency

5

sales/total assets, measuring capital-turnover ratio.

As the key interest in this context is to identify the growth and business continuity strategies and how they have been determinants of economic resilience at times of crisis, this process of growth is conceived as a change process in two perspectives, viz. 1

growth underpinning resilience, as a developmental process in terms of ‘positive’ Z-score transition profile of the firm, improving the quality of its business health

2

growth underpinning the change in amount of various economic growth indicators.


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In both ways it satisfies the construct of growth in firms, as highlighted by Penrose (1959). The transition profiles were based on analysing the business health over the period of crisis, by categorising them in zones of discrimination for private firms as follows: Safe zone

Z > 2.9

Grey zone

1.23 < Z < 2.9

Distress zone

Z< 1.23.

For details about the Z-score transition profile analysis to characterise economic resilience, see Pal et al. (2011). However, this measure of economic resilience is a composite multivariate score, combining various income and balance sheet parameters, and does not directly incorporate other performance metrics, like employee engagement, innovation-related performance, top management merits, etc., many of which are proposed by Demmer et al. (2011) as key metrics for measuring SME performance. Some of these metrics are lag indicators for capturing firms’ performance, like revenue earned or turnover, while some are pro-active or predictive in nature (e.g., employee engagement). However, in this study a robust multivariate metric (Z-score) is considered to reflect on overall firms’ health and a normal measure of its result, while other renewal performance metrics, like staff engagement, all boil down in contributing towards this overall economic performance. The Z-score also serves as a both lagging and leading indicator, as it is calculated from the real income and balance sheet parameters annually, while it also predicts the bankruptcy potential of the firm in the next two years. Table 2 shows how the Z-score transition profile analyses into growth, business continuity and decline can be interpreted into the economic resilience of firms. Finally, the pattern matching between the strategic response repertoire and the underlying initiatives was linked to the Z-score transition profile analysis for firms classified as resilient and less resilient, respectively. Such pattern matching followed certain thematic coding principles (Flick, 2009) and aimed at differentiating the strategies of resilient and less resilient firms by diagnosing the resilient firms’ tendencies to move towards planned or adaptive strategic approaches, while less resilient ones are still latent in such initiatives.

5

Interview findings

Main research objectives were about organisational responses to crisis-related turbulences and the ‘understanding’ of the strategies underpinning them. The interview findings are structured under three sub-sections below.

5.1 Type of turbulences During the global credit crunch of 2008 and subsequent double-dip recession most of the peers experienced problems related to decrease in volume of orders. Two thirds of the firms considered it to be the largest problem. Such an order volume decrease was also aggravated by additional firm-specific problems, like diminishing customer base, increased low-price competition or reduced market share.

Unhealthy Z-score (2007–2011) due to negative EBIT, declining sales-turnover and leverage ratio (retained earnings)

Unhealthy Z-score (2007–2011) due to poor EBIT, declining net sales (hence turnover ratio) and declining solvency ratio

K

Poor EBIT

Unhealthy Z-score due to poor profitability ratio and liquidity ratio

After crisis, no signs of recovery with declining EBIT and shareholder’s equity

Healthy before crisis due to increasing solvency ratio

2010 was better than 2008–2009 due to higher sales and EBIT

Unhealthy Z-score (2007–2010) due to negative or lower EBIT and decreasing sales-turnover

However, EBIT were high

Unhealthy Z-score (2009–2011) due to low sales-turnover ratio and leverage ratio

Poor profit before (2007) and after the crisis (2009)

J

I

F

C

A

Healthy Z-score (2.98–3.42), except 2008 (2.08) due to falling liquidity ratio and poor EBIT

G

Falling turnover in 2010

Healthy Z-score (2007–2010) due to good solvency and turnover ratios

Stable turnover and EBIT over 2007–2011

Healthy Z-score due to increasing solvency ratio (most of the Z-score components were good)

Recovered fast from the 2008 crisis

Reduced turnover, liquidity and profitability ratios in 2009

High capital-turnover and solvency ratios, except 2009

L

H

E

Lesser growth in 2011 reflected on poor solvency, negative EBIT and decreased liquidity ratio

Very healthy Z-score (2007–2011) due to increasing sales-turnover and high EBIT except in 2011

2007–2010: Growth in healthy zone

2009–2010: Further decline

Lowly resilient

2009: Decline to distress zone 2007–2011: Business continuity in unhealthy zone

Lowly resilient Fully in ‘unhealthy’ zone

2007–2011: Business continuity in unhealthy zone

2009–2010: Growth to healthy zone

2007–2009: Business continuity in unhealthy zone

2008 onwards: Decline in unhealthy zone

2007–2008: Business continuity in healthy zone

2007–2008: Further decline

2007–2010: Business continuity in unhealthy zone except in 2008

2010–2011: Grow to healthy zone

2009–2010: Decline in unhealthy zone

2007–2008: Under different ownership

2007–2008: Decline to unhealthy zone

2007–2010: Business continuity in healthy zone except 2008

2007–2010: Alternative growth and decline in healthy zone

2007–2011: Business continuity in healthy zone with growth b/w 2009–2010

2008–2009: Decline to unhealthy zone

2007–2011: Periodic growths in healthy zone except 2009

2010–2011: Decline in healthy zone

Mostly in ‘unhealthy’ zone

Lowly resilient


Less resilient


Less resilient

Fully in ‘unhealthy’ zone

Less resilient


Partly resilient

Mostly in ‘healthy’ zone

Very resilient

Fully in ‘healthy’ zone

Very resilient


Very resilient

Mostly in ‘healthy’ zone

Very resilient


2007–2010: Business continuity in healthy zone

Z-score transition profile analyses: into growth, business continuity and decline

Table 2

D

Very resilient


Lesser growth in 2009 reflected on negative EBIT and decreased sales-turnover ratio

B

Healthy Z-score (2007–2010) due to good sales-turnover and high EBIT except in 2009

Economic resilience

Firm

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Crisis effects on business health characteristics and economic resilience


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5.2 Factors and pathways enabling resilience A general trend, which was observed between the resilient group of firms and the less resilient ones, was related to the creation of slack resources in the organisation for developing and executing strategic initiatives. All the resilient firms were able to create slack finances, either by delocalising production or reducing fixed costs or by adjusting the product assortment by investing in an extension of the product range or new product development (NPD) and being more cost-effective, i.e., operationally excellent. However, half of the less resilient firms (I, J and K) were poor in creating financial slacks by improving profits and turnover, due to lack of cost-effectiveness and cost-reduction measures. This resulted in lack of proper product range development, lesser investments in NPD and constrained market expansion initiatives for these firms. I, J and K were hence lowly resilient under the present categorisation. However, firms A, C and F did not lack much in financial slacks but were not able to control or pressurise their costs, considering the short crisis time window, and also made losses in certain subsidiary businesses. Further, interpretation of the antecedents of resilience development is beyond the theme of this paper, involving an altogether separate analysis. However, a general trend that was observed among all the lowly resilient firms (I, J and K) was their lack of cash flow, owing to either high price pressure from the factor market, poor credits from the bank or reduced order volume. However, insignificant differences in the measure of resilient antecedents were found among the rest of the firms (whether resilient or not).

5.3 Key strategic initiatives Two thirds of all the firms considered themselves focused on CM strategies, predominantly through retrenchment and other cost-effectiveness measures, irrespective of being categorised as resilient or not. Such short-term fire-fighting measures (adaptive strategies) were more or less developed by all the firms under study. Along the long-term business continuity strategies, two thirds of the resilient firms (B, G, H and L) reported sufficiently competent initiatives through cost-effectiveness by delocalising production, continuous improvements (CI) and long-term investment projects, while three of the firms that reported lack of long-term business continuity planning (BCPs) were categorised as lowly resilient. These firms did not show BCPs at all or did not have a proper production efficiency and inventory management. For growth strategies, a similar trend was observed in their long-term planned measures as well. Two thirds of the resilient firms (B, D, E and L) showed comprehensive growth plans along the three highlighted growth initiatives. The lowly resilient firms, however, lacked proper longterm growth plans, either lacking in market expansion strategies, market penetration strategies or future diversification plans. Finally, in terms of the crisis-related growth plans, more than 50% all the firms lacked proper initiatives. One fourth of the firms (A, C and H) that showed sufficient crisis-based growth initiatives grew a certain productvolume turnover during the crisis, though firms A and C were non-resilient ones. For detailed information about the case-wise analyses of the strategic initiatives, contact the authors.

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Comparative pattern analysis: of Z-score and interviews

The objective of the comparative pattern analysis was to identify any observable similarity or difference in the strategic response repertoire between the two groups of firms clustered as resilient and less resilient, respectively. Such pattern analysis is appropriate, not only to develop a strategic tool for differentiating resilient firms from less resilient ones and prescribe solutions for less resilient ones, but also from the academic perspective to help refining the theory development (Eisenhardt, 1989) (through model/framework development), relating the thriving concept of resilience to organisational theories and strategies, as the necessity was emphasised in the studies of Bhamra et al. (2011).

6.1 Z-score analysis and resilience categorisation The Z-score transition analysis of the 12 firms under study was conducted according to the algorithm prescribed by Pal et al. (2011). Further discussion regarding the procedure is beyond the scope of this paper, however, it was evident that out of the five years of Z-score values (2007–2011), firms B, D, E, H and L had four or more Z-scores in the ‘healthy’ zone and were considered to be economically resilient during the period of analysis. Firm G was coined as partly resilient, as it had three Z-scores in the ‘healthy’ zone, while firms A and F were less resilient, having 1 or 2 ‘healthy’ Z-scores. The remaining firms (C, I, J and K) did not show any ‘healthy’ Z-score value and were considered to be lowly resilient firms. The categorisation of the firms according to their economic resilience is shown in Table 2 (column 3).

6.2 Pattern recognition Table 3 summarises the observations along the convergent theme of the paper, i.e., strategic initiatives in order to focus on the generalised pattern (analytical generalisation) from the respondents’ answers. This forms the basis for developing the resilience model proposed in the later section. It is observed that all the firms, irrespective of being classified as resilient or not, adopted retrenchment and other cost-cutting measures to reduce their fixed costs. However, the major difference between the resilient and the less-resilient ones, in terms of devising short-term CM strategies, was in operational flexibility to ramp down the production (observed in case of the manufacturing firms), due to reduced order volume. Such lack of flexibility of the less resilient firms was posed by resource constraints, resulting in lack of strategic readiness (Ismail et al., 2011). Considerable difference was also noticeable in terms of long-term business continuity initiatives. All the resilient firms have developed unique initiatives to improve their cost-effectiveness, on a long-term basis, by delocalising production to low-cost bases, adopting lean and CI approaches (Kumar et al., 2011) and stock management. However, one sixth of the less resilient firms did not have long-term stock management and production efficiency strategies for cost effectiveness during the crisis.

Long-term business continuity

Short-term crisis management strategy

(Firms with in-house or delocalised production have better control on long-term business continuity measures)

• All firms with in-house production (1 out of 6) leveraged on cost-cutting through various quality control measures (TQM, CI, lean, etc.)

• All manufacturing firms (5 out of 6) with delocalised production used this tool to reduce fixed costs

1 out of 6 firms showed long-term business continuity strategy or could pressurise fixed costs by stock management or maintain production efficiency (Rest 5 out of 6 firms showed lesser or sluggish ability to ramp down)

2 out of 6 firms were having flexible production to respond fast to the decrease in order-volume

All manufacturing firms (5 out of 6) were having flexible production system (along with control over the outsourced production) to respond fast to the decrease in order-volume

All firms have developed unique initiatives to improve cost-effectiveness

All the firms (6 out of 6) considered retrenchment and other cost-cutting measures aimed at fixed cost reduction to be their strategies during crisis

5 out of 6 firms considered retrenchment and other cost-cutting measures aimed at fixed cost reduction to be their strategies during crisis

Pattern in response repertoire along underlying strategies

3 out of 6 firms were poor in creating financial slacks by improving profits and turnover due to lack of cost-effectiveness and cost-reduction measures

All the firms were able to create slack finances either by delocalising production, reducing fixed costs or by adjusting the product pyramid to invest in extension of product range or NPD and be more cost-effective

Less resilient firms 4 out of 6 firms considered the biggest problem during the 2008–2009 global credit crunch was in terms of decreasing order volume (apart from that all the firms had some firm-specific problems viz. diminishing customer base, increased low-price competition, reduced market share, problems with product portfolio mix, etc.)

4 out of 6 firms considered the biggest problem during the 2008–2009 global credit crunch was in terms of decreasing order volume (apart from that all the firms had some firm-specific problems viz. diminishing customer base, increased low-price competition, etc.)

Observations

Table 3

Resilient firms


Observations derived from respondents’ answers on their response repertoire, evaluated along underlying strategies and other highlighting features in the proposed framework

Less resilient firms

1 out of 6 firms showed crisis-based growth strategy based on focussing on keeping the production running as compared to the 2 resilient firms’ strategy more long-term

4 out of 6 firms focused on opening or acquisition of different business subsidiaries (to increase group turnover, product range and to spread risk)

•

2 out of 6 firms showed crisis-based growth strategy by focussing on product group segmentation and strengthening of brand (BTD strategies) (4 out of 6 firms did not show crisis-based growth strategy)

3 out of 6 firms showed trends similar to resilient firms along transformational strategies [Rest 3 of the firms (still having in-house production) did not show potential transformation in business model either through delocalisation of production or diversifying into different business subsidiaries]

4 out of 6 firms focused on JV or acquisition of production facilities at lowcost bases

•

Long-term Transformational strategy

Crisis-based growth strategy

2 out of 6 firms showed considerable overseas market expansion initiatives (rest 4 out of 6 firms lacked long-term market development strategies like overseas market expansion or strategies to attract more customers)

5 out of 6 firms focused on expansion into overseas market as a potential market development strategy mainly by selling through sales agents and subsidiaries

Long-term Diversification strategy

1 out of 6 firms showed market penetration strategy by concentrating on core product assortment and cutting down the rest [rest 5 out of 6 firms lacked proper market penetration strategy as a long-term potential either due to their on-average falling turnover, order volume and losing customer base (contrary to growth potential)] All the firms (6 out of 6) extended their process capabilities either through ‘additional product ranges’, ‘new products for existing customers – mainly low margin ones’, or complete NPD (This contributed in generating higher turnover in different product segments but not overall turnover)

4 out of 4 textile manufacturers focused more on increasing sales by extending the product ranges through cross selling and add-on products and services

2 out of 2 clothing manufacturers showed long-term brand promotion and development as a market penetration strategy

4 out of 4 textile manufacturers focused on extending the product range through NPD while the 2 out of 2 clothing manufacturers adjusted their product pyramid

Long-term BTD strategy

Pattern in response repertoire along underlying strategies

Table 3

Resilient firms

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In terms of long-term growth strategies, considerable differences were observed in market penetration initiatives between the resilient and less resilient firms. The resilient firms focused on increasing sales by extending their product ranges in varied ways, while one sixth of the less resilient ones could not balance a generic business expansion through product portfolio adjustments to the falling order volume and shrinking customer base. However, in terms of process capability extensions there was no noticeable difference between the two groups. It was evident among the less resilient firms that they extended their product range with low margin products, etc., which contributed to higher turnovers in particular product segments but could not increase the overall turnover of the firm. Two thirds of the less resilient firms also lacked proper overseas market expansion initiatives, compared to only one sixth of the resilient ones. Furthermore, in terms of transformational initiatives, most of the resilient firms showed a business model transition by either focusing on acquisition of different business subsidiaries to diversify risk or by outsourcing production. Finally, most of the firms, irrespective of being classified as resilient or not, lacked crisis-based growth strategies (adaptive growth strategies). Those having executed such initiatives could focus on product segmentation and brand development, etc., particularly during the crisis. Another set of patterns can be derived by analysing the seven textile and accessories firms and five clothing and accessories firms (c.f., Table 1) to identify whether there exists any difference or similarity in resilience and response repertoires and the underlying strategies between these two groups. Four out of seven textile firms were less or lowly resilient. They lacked proper market development strategies (having no proper market expansion plans), while some of them showed lack of transformational initiatives, not responding to the need for changing business model. These firms also showed lack of long-term BCPs, while those who had could not pressurise cost structure. The remaining three textile firms (B, E and G) were categorised as resilient ones and showed sufficient growth plans and CM strategies along all aspects. It seemed that those textile firms, which have delocalised parts of their production facility for cost-effectiveness, were able to control their profitability properly. Among the five clothing and accessories firms, three were categorised as resilient (D, H and L). These firms also showed sufficient growth plans along all the strategic dimensions. Particularly, they showed good transformational initiatives by delocalising their production and diversifying product range. The other two firms (F and J) lacked proper market penetration strategies, market development and diversification initiatives. These firms also lacked proper CM plans. However, no observable difference was noticed in terms of strategic initiatives, neither between the two resilient groups of firms, nor between the less resilient groups.

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Resilience model

7.1 Development Organisational tendencies to devise resilience by strategising, either through strategic planning or through crisis adaptation, result in categorising firms into the type of resilience they exhibit along the framework of CSP. The mechanism used for computing placement of the respondent firms along the strategic classification done along the four quadrant matrices is shown in Table 4. This is done by assigning values as follows: Low = 0, Medium = 1 and High = 2. The classification of each strategy has been made along the two axes, plotting long-term strategic planning along the y-axis and the short-term adaptation strategies along the x-axis. Scores along each axis are summed up (with the maximum score of 8 along each axis). This is because the x-axis covers all the three growth strategies, along with the CM strategy, while the y-axis covers the long-term business continuity, along with the three growth strategies as well. Table 4 shows the relative prioritisation of the strategic initiatives – both short- and long-term – for building the CSP. The long-term strategies are more pro-active, while the short-term strategies are more reactive in nature. The longterm strategies make the organisation more prepared through a certain level of planning (Sheaffer and Mano-Negrin, 2003). This has sufficient effect on business survivability for small businesses, as addressed by Alesch et al. (2001) through BCP, while Berman et al. (1997) showed how this structured planning process affects SME growth and helps in thriving in times of uncertainty. On the other hand, the short-term strategies are reactive approaches that evolve rapidly and are situation-specific. In such cases organisations need to continuously extract information from the emerging changes and be highly sensitive in blocking them (Vargo and Seville, 2011). In such cases firms need to react quickly to the threats, respond effectively and recover by preparing the resources and building the capabilities (Seeger et al., 1998). The firms are, hence, clustered in terms of their ability to ‘find the silver lining’ in devising their crisis strategic response repertoire, as shown in Figure 5. Firms B, D, E, G-H, and L were considerably high in terms of their long-term planning initiatives (6 or above in the aggregate scoring out of 8). These firms showed increased focus on planning processes, through long-term business continuity and growth initiatives, to build resilience response to the crisis. Out of these firms, H, however, showed considerable short-term adaptation as well, being the closest to fall under the dynamic resilience category. Firms A and C also showed higher degrees of adaptation, compared to their peers, they however were medium in pro-active approaches. Firm F showed some levels of planning though lacked adaptation strategies. The rest of the firms (I, J and K) were low, both at planning and adapting to the period of crisis, executing lower levels of resilience or latent resilience. In a nutshell, planned and adaptive strategies in proper balance make the perfect response repertoire in organisations to combat crisis events and be resilient.

2

7

C

4

4

1

Medium

0

Low

1

Medium

1

Medium

1

Medium

2

High

1

Medium

1

Medium

D

6

3

2

High

0

Low

1

Medium

0

Low

2

High

2

High

1

Medium

1

Medium

E

6

2

2

High

0

Low

1

Medium

0

Low

2

High

0

Low

1

Medium

2

High

F

4

1

1

Medium

0

Low

1

Medium

0

Low

1

Medium

0

Low

1

Medium

1

Medium

G

6

2

1

Medium

0

Low

1

Medium

0

Low

2

0

Low

2

High

2

High

H

6

4

2

High

0

Low

0

Low

0

Low

2

High

2

High

2

High

2

High

Note: Total maximum score = 8 for adaptation strategies and 8 for planning strategies (Low = 0, Medium = 1 and High = 2).

5

Long-term planning

2

2

4

2

Short-term adaptation

Long-term

0 High

0

High

Short-term

Low

1

Low

1

Transformational:

0 Medium

0

Medium

Long-term

Low

1

Low

High

0

2

Medium

Low

High

2

1

2 High

Medium

2

B High

A

High

Short-term

Diversification:

Long-term

BTD: Short-term

Growth strategies

Long-term

Business continuity:

Short-term

Crisis planning:

I

1

2

0

Low

0

Low

0

Low

0

Low

1

Medium

0

Low

0

Low

2

High

J

0

2

0

Low

0

Low

0

Low

0

Low

0

Low

1

Medium

0

Low

1

Medium

K

2

2

0

Low

0

Low

1

Medium

0

Low

1

Medium

0

Low

0

Low

2

High

L

7

2

2

High

0

Low

1

Medium

0

Low

2

High

0

Low

2

High

2

High

Table 4

Strategies


Summary of case firms along relative prioritisation of their approach towards building crisis strategic response repertoire

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Figure 5

Type of resilience achieved depending on approach to CSP (see online version for colours)

7.2 Recommendations Two sets of recommendations are evident from the resilience model developed in Figure 5, viz. 1

for the ‘less resilient’ firms

2

for all the case firms.

The lowly resilient firms (I, J and K) showed latent resilience, lacking both long-term planning and short-term adaptation strategies in their response repertoire. For benchmarking these firms to the remaining peers they need to be strategically positioned in one of the remaining quadrants (c.f., Figure 5). For achieving planned resilience through long-term planning these firms need to improve their production efficiency and cost-effectiveness, either by delocalising production to low-cost bases or by adopting lean and CI approaches (Kumar et al., 2011) and stock management, along with certain market development and expansion for innovation and growth. Though the owners/managing directors of these firms considered their firms to have sufficient operational and strategic flexibilities, either through in-house manufacturing flexibility, short delivery times or adequate decision-making, however they were not pronounced to augment the strategic readiness in the financial crises. Such lack of crisis-based adaptation strategies was evident in the firms’ response repertoire and hindered the quest for adaptive resilience.


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In general, it was evident that almost all the SMEs (particularly the resilient ones) prioritised planned resilience development as an organisational response to financial crises with low or insignificant adaptiveness. This can be translated into inherent SME behaviour, where the enterprises are posed with lack of resources, cash and capabilities, hindering the adoption of an agile approach (Ismail et al., 2011) in a restrictive credit market condition and preventing them to transcend into the dynamic resilience zone. Particularly with a focus on more day-to-day operations with informal routines, SMEs tend to neglect the growth initiatives amidst crises (Gray, 2002). SMEs are argued to be relatively better than large firms in terms of flexibility and adaptation with less bureaucracy, rapid decision-making, shorter decision chains, etc., in general (Sullivan-Taylor and Branicki, 2011; Vossen, 1998). However, at times of financial crisis such adaptation and flexibility to stimulate growth is hindered, owing to resource scarcity (Herbane, 2010). Moreover, for the manufacturing SMEs (mostly considered in the study) adaptive growth strategies have been challenged, due to lack of sensible implementation and support from appropriate operational capabilities or due to a large number of informal strategic variations (Ismail et al., 2011). Instead it is recommended that SMEs must concentrate on the possibility of having some crisis-based growth strategies through sensible proliferation of some product and market variants to stimulate growth even in financial market crises. However they need to carefully trade-off the growth requirements with the cost through an appropriate cost-benefit analysis.

8

Conclusions

The paper highlights the CSP initiatives of Swedish SMEs in the context of financial crises of 2007–2011. The key patterns observed in the study were as follows:

8.1 In the turbulence 1

A majority of the case firms identified a decrease in order volume as the major problem during the crises.

8.2 In the key strategic initiatives 1

The resilient SMEs differed from the less resilient ones in terms of short-term CM strategies, by having better operational flexibility in cost-cutting measures (retrenchment, reduced fixed overhead costs and decreasing customer and supplier base) and ability to ramp down production when necessary. The less resilient firms were constrained by resource scarcity, hence lacked strategic readiness.

2

Almost none of the firms could develop a crisis-based growth strategy.

3

The resilient firms differed from the less resilient ones, the most, in terms of long-term strategic initiatives. The resilient firms showed long-term BCP by unique initiatives to improve cost-effectiveness (like delocalisation of manufacturing, CI and lean management).

4

The resilient firms differed considerably from the less resilient ones in terms of the long-term growth strategies as well, viz.

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market penetration by increasing sales and product ranges long-term diversification strategies through market expansion long-term transformational initiatives by focusing more on acquisitions and production outsourcing.

8.3 Along the pathway for strategy development Creation of financial, material, relational and conceptual slack (Chattopadhyay et al., 2001; Nohria and Gulati, 1996; Schulman, 1993; Vogus and Sutcliffe, 2007), through cost minimisation techniques and implementation of growth initiatives, supplied the keys towards the development of an organised response repertoire in resilient organisations, as compared to the less resilient ones. In common, almost all the firms tried to cut running costs as far as possible, so a short-term CM strategy was observable in most of them. Almost all tried to retrench staff and diminish the customer base, but the resilient firms also sought legal union’s support to decrease the salary and working hours, so that they can retain competence even in crises. Delocalising production, adjustment of the product pyramid to invest in extension of product range as well as cost-effective process management was also considered by resilient firms to retain operational excellence. The resilient firms also used more flexible production systems along with value adding products in their range, some of them shifting from high-volume/low-margin products to very specific core products. Furthermore, resilient firms concentrated on increasing sales by extending the product ranges through cross-selling and add-on products and services. This registers as sufficient degrees of innovation in the resilient firms. Thus, co-management of innovation and excellence provides the right dynamic balance for creating slackness for utilisation during strategy formulation. Considering the diversity and inherent complexity in the topic of resilience for success/survival of firms there are some delimitations of the present research. They are related to: 1

contextualisation of resilience development as a strategic initiative, delimited to financial crises (2007–2011) for Swedish textile privately-owned SMEs

2

highlighting the multiple strategic initiatives underlying the response repertoire, predominantly, while the study of the antecedents and pathways for resilience development from the resource-based view (RBV) and dynamic capability perspective have been minimalised

3

the effects of the external inhibitors or facilitators like globalisation or industrial changes and policies are not detailed separately.

Even though the study considers the effect of only one type of crisis (economic in nature), and the response repertoire devised in organisations could vary depending upon the context (environmental turbulence) to alter the strategic positioning along the type of resilience achieved through CSP, the model provides an analytical generalisation of relating the broad repertoire of strategies and ‘when’ and ‘how’ they are developed in context to the crises. The model is thus useful for prioritising strategies for being resilient, necessary to achieve dynamic resilience. Thus, certain future research is left open. This can be related to understanding the CSP process in case of other environmental turbulences, to find a pattern in resilience responses and underlying


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strategies (short-term adaptive or long-term planning) in such crisis events, or extending the study for other type of firms (depending upon the type of ownership, say public; size, say large organisations, or firms in other sectors or industries, say automobile, retail, etc., or in other countries).

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Appendix Interview protocol Aim To find how Swedish ‘Textile and related’ SMEs3 deal with crisis/market turbulences •

What factors are essential for them to deal with these crisis/market turbulences?

•

Explore how resilience is an enabler of dealing with crisis.

General queries about your company 1

Overview and History of your company and its supply chain. ... (Applicable since 2005)

2

Please provide a general business map of your company. •

About your organisational structure/design, leadership, etc.

•

Who and where are your suppliers, customers?

•

Who are your competitors?

•

How strong you are in your assets and resources (like technical systems, financially, etc.)

•

How strong are you in your capabilities (strategic and operational flexibility, redundancy in operations, TQM,4 strategic planning, etc.)

•

How does your supply chain work (M&As;5 alliances)

•

Innovations, projects and R&Ds6

•

capacity to change, learning and culture

Type of turbulence faced What major disruptions did your company face during the credit crunch of 3a 2007–2009? 3b

What are the other major problems/disruptions your company face since 2005?

During the financial crisis – credit crunch (end 2007–2009) How did you deal with it (credit crunch)? (a. Response to the disruption – did 4 not deal with them/could not deal with them/dealt successfully) 5

If your company has dealt with the crisis successfully how did the above factors (in Q. 2) help? Did your company change its strategies, operations, business model during the crisis time? ‘How’ and ‘when’ were they organised?

6

Are there some other factors you want to mention, along with?

7

What was the result/outcome? (In terms of financial, overall firm performance, etc.)

Future financial crises – i.e., European monetary crisis, Greek bankruptcy (recent) 8

If you have similar disruption/situation now, do you think that your company will have different way to deal with it/them? Please state in terms of the above factors highlighted.

9

According to you, have you identified the critical issues that are impacting (or


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likely to impact) your business over the next few years? How do you think that you can deal with them now? Are you doing those, have you prepared contingency plans to handle them? There are lot of disruptions that you cannot foresee. How do you deal with them, if they hit now/in future?

10

Do you recommend somebody else in the company to be interviewed?

Notes 1 2 3 4 5 6

Only two firms with more than 50 employees went bankrupt in 1995 and 2008 and one each in 2000 and 2001. Continuity Central, New to Business Continuity? [online] http://www.continuitycentral.com/newtobusinesscontinuity.htm (accessed 21 March 2012). Small and medium enterprises. Total quality management. Mergers and acquisitions. Research and development.