Organizational resilience through crisis strategic planning

174 Pages·2013·4.11 MB·English

Tampereen teknillinen yliopisto. Julkaisu 1153
Tampere University of Technology. Publication 1153

Rudrajeet Pal

Organizational Resilience through Crisis Strategic
Planning

Thesis for the degree of Doctor of Science in Technology to be presented with due
permission for public examination and criticism in Festia Building, Auditorium Pieni Sali 1,
at Tampere University of Technology, on the 11th of October 2013, at 12 noon.

Tampereen teknillinen yliopisto - Tampere University of Technology
Tampere 2013
ISBN 978-952-15-3126-2 (printed)
ISBN 978-952-15-3152-1 (PDF)
ISSN 1459-2045
This Ph.D. thesis is dedicated to all resilient things of our planet,
Earth!

ABSTRACT
Resilience, in an organizational sense meaning the ability to withstand crises and disturbances, has become a
keyword during the last ten years. It is associated with established activities like risk and crisis management and
business continuity planning or with strategic management, but it allows for new perspectives and insights into
the conditions for doing business. Applied to the whole supply chain it also provides tools for managing and
aligning the logistics flows in an appropriate way. But why is resilience essential for success or survival?
In context to the Swedish textile and clothing (T&C) industry, the average number of firms that went bankrupt
during the recent crisis (2007-09) escalated twofold compared to the average over 2000-10 due to tremendous
pressure on the Swedish credit system. The structural industrial statistics also plummeted in these crisis years
aggravating other inherent or internal problems as a ’ripple effect’. The small and medium sized enterprises
(SMEs) were the most affected of all, facing major threats to their financial performance and ultimately to their
survival, at times of economic crises. In such a context, study of organizational resilience (ORes), to survive and
thrive becomes increasingly significant.
To address this issue the thesis concentrates on understanding the resilience development process through
crisis strategic planning in context to Swedish textile-related SMEs amidst economic crises. It investigates and
answers how resilience development can be considered as a precursor for business success, how to develop
and monitor resilience, and identifies its antecedents and key strategic initiatives and their differential degrees of
influence. No prior studies describing organizational resilience and crisis strategic planning in an integrated
processual approach using both short-term and long-term strategies through planning and adaptation were found
in the literature.
The thesis adopts a critical realist-grounded theory (CR-GT) approach along the metaphysical level as the
structure for the resilience development process follows a causal relationship between the object (the
organization), its structure (competences and strategies), the causal power (crisis strategic planning) for attaining
an event/outcome (resilience) in a particular context (economic crisis).
For addressing this issue of devising an outcome-based processual approach, a multivariate financial indicator
called the Altman’s Z-score (used basically for calculating bankruptcy potential in firms) was used for quantifying
resilience. For investigating the causal mechanism epistemological relativism along the grounded theory
approach was chosen for theory generation. A mixed methodology was adopted based on quantitative statistical
analyses, at first, followed by a detailed qualitative work based on surveys, interviews, case studies and
secondary data for data triangulation.
Analysis of data was conducted through certain thematic coding principles. A four-step hermeneutic spiral was
followed by systematically combining the pre-understanding, empirics and extant literature to develop a
theoretical framework through constant modification. Overall, the resilience development was highlighted along a
processual framework adopted along the CR-GT view of causation.
The findings are manifold. Firstly there is a need to develop economic resilience in SMEs to shift from just
component-view to a more holistic systemic view of organizations, upheld by an integrated crisis strategic
planning (CSP) approach, for facing dynamic environments. Secondly, the CSP process prescribed in the thesis
is quite integrated and holistic, taking a view from all angles, viz. organizational structure (capabilities and
strategies), processual approach etc. Such a resilience development process through CSP is based on a six-step
process: (i) identification of environmental context, (ii) impact analysis, (iii) leadership analysis, (iv) capability
analysis, (v) formulation/selection and implementation of strategies, and (vi) evaluation and review of strategic
options, utilizing a suite of strategic tools and techniques and is particularly simple for application in an SME
setting. Third, operationalization of such a causal mechanism based upon implementation of strategic tools is
based upon using a multivariate financial indicator like Altman’s Z-score to outline the relation between ORes and
business ‘health’, thus quantifying it. Finally, in order to develop a resilient organization it is important to engage
and utilize effectively the key resources and assets (financial, material, social, networks) by developing dynamic
capabilities (strategic and operational flexibilities, redundancy, robustness) and organizational learning (culture,
employee wellbeing, attentive leadership and decision-making). These competences must be employed for the
appropriate strategy development (selection, implementation, and evaluation) framed on both growth and
continuity strategies, both planned and adaptive in nature. The research develops a holistic analytical framework
of organizational structure for resilience development based on these two criteria. It also tests this framework for
Swedish textile-related SMEs amidst economic crises. The findings in this contextual delimitation suggest that the
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resilient SMEs possess better financial resources, relational networks, operational & strategic flexibilities. The
economically resilient firms mostly showed planned resilience in economic crises based on long-term strategies
through business continuity planning (BCP) and in terms of growth strategies through market penetration,
diversification and transformational initiatives. These firms also showed better short-term crisis management
(CM) through higher operational flexibility while the less resilient ones lacked in strategic readiness due to
resource scarcity. This is beneficial for firms to understand the key areas in which to invest and develop a multi-
strategic CSP model, categorizing firms along different resilience types – planned or adaptive.

Keywords: Organizational resilience, crisis strategic planning, economic crisis, Sweden, textile and clothing,
small and medium -sized enterprise

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ACKNOWLEDGEMENT

The work presented in the thesis was carried out at the University of Borås, Swedish School of
Textiles (THS), and the Tampere University of Technology (TUT), Department of Materials Science.
The Swedish School of Textiles has generously provided me with financial support for the preparation
and completion of the thesis, without which it might never have been done. My special thanks to Erik
Bresky, The Head of THS for employing me for this Ph.D. endeavour.
Next, I wish to thank my supervisors. Professor Heikki Mattila has contributed immensely in making it
possible for me to undertake research studies at TUT along with his open-minded and knowledge-
laden guidance and support from the beginning to end. I also wish to express appreciation to my
supervisor at The Swedish School of Textiles, Professor Håkan Torstensson for his oversight and
assistance during the whole Ph.D. process. He has always been motivating, inspiring and essential
through his supervision and critical reflections at all stages of the research endeavour. Thanks for
being an indispensable co-author in all my thesis publications!
Next, I would like to thank the other academicians and practitioners I have worked with in these past
years. Dr. Roy Andersson, thank you very much for co-authoring paper 4. Working with you was a
pleasure, especially the joint interviewing sessions. I am looking forward to continuing our work
together in future. I would also like to thank all the interviewees and survey respondents along the
entire research process. These interviewees and respondents were CEOs and/or owner managers of
Swedish textile-related firms. My special thanks to all of them who has contributed in various ways
and degrees in this journey. However, in particular, I would like to express my gratitude to Reimar
Westerlind, owner of ACG Group, whose association with this research has been immense. A lot of
data for this thesis was collected from the company.
My gratitude goes to the official external examiners of this thesis, Professor Lauri Ojala and Professor
Gyöngyi Kovacs, and I gratefully acknowledge them for their useful comments and suggestions. I
would also like to take the opportunity to thank my soon-to-be opponents in the Ph.D. defence,
Professor Lauri Ojala and Dr. Helen Peck.
I am also thankful for the guidance, encouragement, and support of a number of people who
encouraged me to bring this work to a conclusion. Dr. Arun Aneja of Noeton Policy of Innovation has
been very inspirational in the later stage of this Ph.D. process through his reflections over the topic of
the research and futuristic ideas about further collaborative works. My special thanks to all my
colleagues at The Swedish School of Textiles for the support and inspiration and for offering a cosy
and loving working environment every day I have worked here at THS! They have made my research
and teaching such a stimulating experience. Association with Dr. Joel Peterson, Jan Carlsson and
many others at THS have been particularly cherishable and thought-provoking. Also I would like to
take the opportunity to thank my roommates at THS: Dr. Jonas Larsson, Emmanuel Gunnarsson and
Mansur Abylaev for all the discussion we had on various topics almost every day at work, what I could
term as ‘wisdom sessions’!
Finally I would like to thank all my friends and family for all the support and inspirations over the
years. I wish to thank my wonderful parents, Ranen and Tilottama, for their love, support and
inspiration as always and ever. They have always believed in me that ‘I can do it’! Finally, I would like
to thank my wife Madeline for her love, encouragement, and patience throughout this process.
Without her constant support this journey would have never been accomplished. Thanks for practicing
resilience with me!
Borås, August 2013
Rudrajeet Pal
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CONTENTS
ABSTRACT ................................................................................................................ I
ACKNOWLEDGEMENT ........................................................................................... III
CONTENTS .............................................................................................................. IV
LIST OF APPENDED PAPERS .............................................................................. VIII
AUTHOR’S CONTRIBUTION ................................................................................... IX
LIST OF TABLES AND FIGURES............................................................................. X
GLOSSARY AND ABBREVIATIONS ...................................................................... XII
DEFINITIONS ........................................................................................................ XIV
1. INTRODUCTION ................................................................................................. 1
1.1. Background.......................................................................................................................................... 1
1.2. Problem Area and Research Gap ...................................................................................................... 2
1.3. Research Purpose ................................................................................................................................ 4
1.4. Research Questions ............................................................................................................................. 5
1.5. Scope of Research: Focus and Studied Context................................................................................ 7
1.6. Research delimitations and limitations ........................................................................................... 11
1.7. Thesis Outline .................................................................................................................................... 13
2. FRAME OF REFERENCE ................................................................................ 14
2.1. Organizational Resilience ................................................................................................................. 16
2.1.1. Organizational Resilience in an SME context........................................................................................ 19
2.1.2. Measuring Organizational Resilience .................................................................................................... 22
2.2. Crisis Strategic Planning .................................................................................................................. 26
2.2.1. Turbulence analysis ............................................................................................................................... 29
2.2.2. Impact analysis ...................................................................................................................................... 29
2.2.3. Leadership analysis ................................................................................................................................ 29
2.2.4. Capability analysis ................................................................................................................................. 31
2.2.4.1. Resource based view, dynamic capabilities and organizational resilience ..................................... 31
2.2.4.2. Organizational learning and organizational resilience ................................................................... 33
2.2.5. Strategies for Organizational Resilience ................................................................................................ 35
2.2.5.1. Growth strategies ........................................................................................................................... 36
2.2.5.2. Business Continuity Management .................................................................................................. 37
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2.3. Other approaches and theories ........................................................................................................ 38
3. RESEARCH METHODOLOGY ......................................................................... 41
3.1. Introduction ................................................................................................................................................. 41
3.2. Research approach and procedure ............................................................................................................ 41
3.2.1. From Metaphysical Levels ..................................................................................................................... 41
3.2.2. At Operational Levels ............................................................................................................................ 44
3.2.3. Organizational resilience (ORes) processual framework ....................................................................... 44
3.3. Scientific reasoning ...................................................................................................................................... 45
3.4. Research Strategy ........................................................................................................................................ 47
3.5. Research Design ........................................................................................................................................... 48
3.5.1. Unit of analysis and observation ............................................................................................................ 48
3.5.2. Methods of Data Collection ................................................................................................................... 49
3.5.2.1. Methods of data collection in the appended papers ........................................................................ 49
3.5.2.2. Sampling designs ........................................................................................................................... 50
3.5.2.3. Survey ............................................................................................................................................ 51
3.5.2.4. Interview ........................................................................................................................................ 52
3.5.2.5. Case study ...................................................................................................................................... 52
3.5.2.6. Secondary data ............................................................................................................................... 53
3.5.3. Methods of Data Analysis ...................................................................................................................... 54
3.5.3.1. Statistical analyses ......................................................................................................................... 54
3.5.3.2. Thematic coding ............................................................................................................................. 55
3.5.3.3. Processual analysis ......................................................................................................................... 56
3.6. Research process and chronology .............................................................................................................. 57
3.7. Research Quality .......................................................................................................................................... 62
3.7.1. Internal validity/ credibility ................................................................................................................... 63
3.7.2. External validity/ transferability ............................................................................................................ 64
3.7.3. Construct validity/ dependability ........................................................................................................... 65
3.7.4. Reliability/ confirmability ...................................................................................................................... 65
4. SUMMARY OF THE APPENDED PAPERS ..................................................... 67
4.1. Framework diagram .................................................................................................................................... 67
4.2. Relationship between the papers and RQs ................................................................................................ 67
4.3. Paper 1 .......................................................................................................................................................... 68
4.3.1. Purpose and Overview ........................................................................................................................... 68
4.3.2. RQs ........................................................................................................................................................ 68
4.3.3. Related concepts and theories ................................................................................................................ 68
4.3.4. Methods ................................................................................................................................................. 69
4.3.5. Principal findings ................................................................................................................................... 70
4.4. Paper 2 .......................................................................................................................................................... 70
4.4.1. Purpose and Overview ........................................................................................................................... 70
4.4.2. RQs ........................................................................................................................................................ 71
4.4.3. Related concepts and theories ................................................................................................................ 71
4.4.4. Methods ................................................................................................................................................. 72
4.4.5. Principal findings ................................................................................................................................... 73
4.5. Paper 3 .......................................................................................................................................................... 74
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