Rising every time we fall : Organizational fortitude and response to adversities

Smith, C and Rondi, Emanuela and De Massis, Alfredo and Nordqvist, M (2024) Rising every time we fall : Organizational fortitude and response to adversities. Journal of Management, 50 (5). 1865 - 1910. ISSN 0149-2063

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Abstract

The role of organizational resilience enabling firms to respond to adversity and survive has become ever more critical in the wake of an increasingly unpredictable external environment. Yet, while we understand the importance of resilience in responding to a major adversity, we have little appreciation for how firms are affected and react when facing multiple adversities over time, or how multilevel factors might impose on this process. These are crucial issues given that adversities are not necessarily single, isolated, or infrequent episodes. By studying a long-established family firm in the United Kingdom that experienced four major adversities, we identify the process that enabled it not only to survive but also to thrive. In this qualitative study, we introduce the notion of organizational fortitude to describe the approach that a firm develops to cope with the challenges of multiple unexpected adversities and highlight how multilevel factors combine to foster organizational fortitude. In the early months of this year, we could see this thing [Covid-19 pandemic] coming and the immediate feeling was oh God, here we go again, another crisis, you know . . . it's quite funny because when I tell people about the fire, the flood . . . the compulsory purchase, everyone says, “What about the plague of locusts?” Well, now we have the plague as well! It's just another catastrophic event to deal with. So we felt that we’re quite good at handling these crises and here goes, we know how to deal with it, you’ve just got to be flexible and determined just to do whatever you need to do to make sure that you can survive it as a family firm. —Lance Forman, CEO, H. Forman & Sons This quote illustrates a situation that more and more organizations face today—frequent, diverse, and often unpredictable adversities. To meet increasing and often unanticipated adversities, organizations need to be resilient (Lengnick-Hall & Beck, 2005; Linnenluecke, 2017; Raetze, Duchek, Maynard, & Wohlgemuth, 2022). Scholars define resilience as “the process by which an actor (i.e., individual, organization, or community) builds and uses its capability endowments to interact with the environment in a way that positively adjusts and maintains functioning prior to, during, and following adversity” (Williams, Gruber, Sutcliffe, Shepherd, & Zhao, 2017: 742). Research on resilience has gained momentum (Hillmann & Guenther, 2021; Raetze et al., 2022) in the wake of events such as the 9/11 terrorist attack in 2001 (e.g., Gittell, Cameron, Lim, & Rivas, 2006), the global financial crisis in 2008 (e.g., DesJardine, Bansal, & Yang, 2019), and the COVID-19 pandemic that emerged in 2019 (e.g., Branzei & Fathallah, 2021; Mithani, 2020). Indeed, scholars have noted that when an organization is challenged by such adversity, a fault line can be traced between its past evolution (before) and its future change (after) (Lengnick-Hall, Beck, & Lengnick-Hall, 2011; Roux-Dufort, 2007; Williams et al., 2017). Accordingly, prior research is characterized by a schism between studies focusing on the pre-adversity period (e.g., Almklov & Antonsen, 2010) and those examining the postadversity period (e.g., DesJardine et al., 2019; Shepherd & Williams, 2014), considering the “moment of resilience” (Boin, Comfort, & Demchak, 2010: 7) as the turning point between the two periods. Research on organizational resilience has thus far mostly adopted the single organizational level of analysis and the adverse circumstance as the unit of analysis—for example, earthquake (Salvato, Sargiacomo, Amore, & Minichilli, 2020; Williams & Shepherd, 2016), bushfire (Shepherd & Williams, 2014), global financial crisis (DesJardine et al., 2019; Sajko, Boone, & Buyl, 2021), or pandemic (Mithani, 2020; Rao & Greve, 2018)—but only considering single adversities that organizations need to address. However, adversities are neither episodic nor infrequent, and the same organization, especially long-lasting ones, can often experience more than one adversity in its lifetime. Consequently, we only have limited understanding of the resilient responses that organizations need to employ when facing multiple adversities over time. This limited understanding is particularly regretful, as the event-based or episodic view of resilience advanced in prior research is unlikely to apply in the more realistic and frequent scenario of multiple adversities. In fact, this research falls short in explaining how an organization might build on one adversity to face the next one or, more specifically, how undergoing one adversity might lead to building and deploying resilience when facing the next adversity. Furthermore, overlooking resilience in the context of organizations facing multiple adversities over time hinders our understanding of whether what happens and develops between two adversities is important, and why. Accordingly, we ask the following research questions: How can an organization be resilient over time through multiple adversities? What key mechanisms explain such resilience? As an organizational form, long-lasting family firms are particularly relevant for studying resilience over time (e.g., Salvato et al., 2020), as they are more likely to have been challenged by multiple adversities throughout their journey. The coupling of family and business systems (e.g., Habbershon, Williams, & MacMillan, 2003) places much at stake for family firms compared to other types of organizations. In particular, as they are handed down across generations through intra-family succession (Chua, Chrisman, & Sharma, 1999), their long-term orientation and strong commitment (Le Breton-Miller & Miller, 2006; Lumpkin & Brigham, 2011) incentivize them to overcome adversities—striving and surviving to ensure longevity—and thereby building resilience (Chrisman, Chua, & Steier, 2011). Indeed, under adverse circumstances, their owners face the prospect of losing not just financial wealth but also the emotional and relational aspects that tie the family to the firm (Berrone, Cruz, & Gomez-Mejia, 2012; De Massis & Rondi, 2020). This leads family business owners to place a great deal on the line both socioemotionally and financially in the belief that much more could be lost otherwise (Azouz, Antheaume, & Charles-Pauvers, 2022; Conz, Lamb, & De Massis, 2020; Czakon, Hajdas, & Radomska, 2022). Consequently, family firms work more assiduously than other types of organizations to protect their business when going through adversity (e.g., Lins, Volpin, & Wagner, 2013), making them particularly relevant for our research questions (Neubaum & Payne, 2021). To conduct our study, we first identified a major adversity that was viewed as a threat to survival—in this case, by firms forced to leave their location due to the staging of the London 2012 Olympics on their land. We explored firms threatened by the Games and selected one that played a leading role in the dispute, is more than 100 years old, and has passed through four generations of family ownership. From its base in East London, the firm produced and sold smoked salmon and, as we discovered, had endured other major adversities. This offered an appropriate opportunity to study multiple adversities at multiple levels. Empirically, we integrated interviews, archival data, and observations to generate deep insights from the complex phenomenon investigated (Edmondson & McManus, 2007), including how the adversities unfolded over time—how actors prepared, faced, responded, and coped with these. Drawing on our analysis, we unpack the process through which a family firm manifests resilience throughout multiple adversities. Specifically, we reveal the multilevel mechanisms involving the family, the business, and individual leader (Habbershon et al., 2003) enabling the family firm to be resilient over time. In addition, we introduce a new concept, organizational fortitude, to describe a resilience-building approach to cope with the challenges of multiple unexpected adversities. Our study makes several contributions. First, introducing the notion of organizational fortitude and highlighting the multilevel nature of organizational resilience (Raetze et al., 2022; Stoverink, Kirkman, Mistry, & Rosen, 2020; Williams et al., 2017), we unveil the mechanisms through which the family, the business, and individual leader—acting as a linchpin between the family and business—contributed to developing organizational fortitude allowing the family firm to manifest resilience. Linchpins play a central role, not only by connecting the family and the business but also driving the goals, motivating organizational actors, and bringing family capabilities into the business, thus embodying organizational fortitude. Second, we extend current understanding of organizational resilience through a process approach that encompasses multiple adversities, explaining their reinvigorating effect for an organization. To the best of our knowledge, this is the first study to longitudinally consider resilience across multiple adversities. Our research also offers implications for resilience in other types of organizations positioned at the intersection of multiple systems.