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Fostering firm resilience through
organizational ambidexterity
capability and resource
availability: amid
the COVID-19 outbreak
Salma Gayed and Raghda El Ebrashi
Department of Management and Organization, German University in Cairo,
Cairo, Egypt
Abstract
Purpose –This study aims to study the impact of organizational ambidexterity capability and resource
availability on firm resilience along with perceived environmental uncertainty playing a moderating role.
This study also intends to investigate the interplaying relationship between exploration capability and
exploitation capability as components of organizational ambidexterity with resource availability.
Design/methodology/approach –Quantitative data was collected through self-administered surveys
targeting 202 firms in Egypt. SEM (AMOS-SPSS) was used to test the proposed hypotheses.
Findings –The results indicated that both organizational ambidexterity capability and resource
availability impact firm resilience. Moreover, the relationship between the enablers was found to be
significant, where resource availability has a positive impact on the firm’s exploitation capability, the firm’s
exploitation capability has a positive impact on its exploration capability and finally, the firm’s exploration
capability has a positive impact on resource availability. However, the moderating role of perceived
environmental uncertainty was found to be insignificant.
Research limitations/implications –Nonprobability convenience sampling technique, cross-sectional
design and the relatively small sample size may hinder the ability to generalize this study.
Practical implications –This study identifies the importance of exploration (innovation) and
exploitation (efficiency) capabilities for managers to build responsive organizations.
Originality/value –This study contributes to the understanding of firm resilience in times of
uncertainties, where empirical research has not been enough. In addition, this study contributes to the
identification of possible antecedents of firm resilience, highlighting the importance of certain strategic
features including organizational ambidexterity capability and resource availability. This study also
investigates the relationship between exploitation capabilities, exploration capabilities and resource
availability, which was not empirically tested in the literature.
Keywords Organizational ambidexterity capability, Exploration capability, Exploitation capability,
Resource availability, Perceived environmental uncertainty, Firm resilience
Paper type Research paper
1. Introduction
Black swan events are rare events that occur beyond one’s expectations and usually have
adverse consequences (Taleb, 2007). The outbreak of COVID-19 is considered to be a black
swan event and a global emergency (Taleb, 2007;Papadopoulos et al.,2020), which affected
the supply of capital and disrupted supply chains (Papadopoulos et al.,2020). Consequently,
firms are more inclined toward adopting strategies and practices to combat crisis andfoster
Firm resilience
Received 30 September2021
Revised 26 January2022
27 February 2022
Accepted 17 March2022
International Journal of
Organizational Analysis
© Emerald Publishing Limited
1934-8835
DOI 10.1108/IJOA-09-2021-2977
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1934-8835.htm
resilience (Dhoopar et al., 2021;Conz and Magnani, 2020). Resilience can be explained as the
flexibility acquired by individuals that allows them to survive and bounce back in the wake
of unpleasant events (Conz and Magnani, 2020;Van Der Vegt et al., 2015;Kantur and Iseri-
Say, 2012). In a firm setting, resilience is the ability of organizations to avoid
discontinuation, by adapting with changes and major events (Beech et al.,2020;Clement and
Rivera, 2017), continuously renewing business operations (Stewart and O’Donnell, 2007;
Scott, 2007;Mafabi et al., 2015) and maintaining above average returns (Van der Vegt et al.,
2015;Lampel et al.,2014;de Oliveira Teixeira and Werther, 2013).
Resilience is a dominant concept in some fields like psychology, yet it is considered to be
trending and booming in business and management research (Hillmann and Guenther, 2021;
Duchek, 2020;Linnenluecke, 2017;Van der Vegt et al.,2015). For firms to be resilient, they
have to use their resources and capabilities in a way that would allow them to adapt to the
changing environment (Duchek, 2020;Kantur and Iseri-Say, 2012; Lengnick-Hall and Beck,
2005) and hence attain competitive advantage (Lee and Rha, 2016;Teece, 2007). According
to recent research, organizational ambidexterity capability (OA) and resource availability
(RA) are the main antecedents for fostering firm resilience (FR) (Aslam et al.,2020;Iborra
et al.,2020; Lee and Rha, 2016; Duchek, 2020;Pal et al., 2014;Kantur and Iseri-Say, 2012).
This research focuses on explaining how OA and RA develop FR amid the COVID-19 crisis.
OA is looked at as a dynamic capability that serves in enhancing the competencies and the
resource base of the firms, hence better addressing the uncertain and dynamic environments
(Iborra et al., 2020;Lee and Rha, 2016). For firms to become ambidextrous, it is important to
make sure that both exploration and exploitation capabilities are simultaneously used (Dhir
and Dhir, 2018;Simsek et al.,2009;Katila and Ahuja, 2002). In addition, accessing resources
whenever required is crucial, specifically during times of adversity and uncertainty (Kantur
and Iseri-Say, 2012).
The paper is structured as follows. Section 2 covers a review of the relevant literature.
Section 3 presents the proposed research model andhypotheses. Section 4 provides details of
the methods used. Section 5 discusses the measurement and structural model evaluation.
Section 6 covers the discussion of results, followed by Section 7, which concludes the
research done along with the implications. Finally, Section 8 discusses the limitations and
suggestions for future research.
2. Literature review
2.1 Firm resilience and organizational ambidexterity capability
The term “resilience”originally came from the Latin word “reilire”or “resilio”which means to
bounce back (Alexander, 2013). Extreme changes in the external environment caused
businessesto shift part of their focus from striving to create high profits to building resilience
(Dhoopar et al., 2021;Conz and Magnani, 2020;Williams et al.,2017). Studies that viewed FR
as an outcome are mainly concerned with the sources and factors that foster FR (Duchek,
2020) such as sufficient resources, redundancy, positive relationships and collective
behaviors. Another conceptualization looks at resilience as a process consisting of steps and
tackles what organizations should do to become resilient (Linnenluecke et al., 2012;Bhamra
et al.,2011). Finally, the last conceptualization looks at FR as an organizational capability
(Ortiz-de-Mandojana and Bansal, 2016;Lengnick-Hall et al.,2011;Lengnick-Hall and Beck,
2005). This research uses the conceptualization of FR as a capability used to adapt and
quickly respond to changes brought by environmental uncertainty.
There are several contributing factors to organizational resilience including the
availability of capital, skilled labor, material supplies and managerial talent (Miller and
Friesen, 1982), as well as decentralized and flexible organizational design (Duchek, 2020),
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and organization learning and leadership (Salwan and Gada, 2018). In line with the resource-
based view, firm resources andcapabilities lead to competitive advantage (Barney, 1991)for
resilience development (Pal et al.,2014). In a nutshell, RA is the accessibility of the firm to
resources and capabilities whenever it is required, specifically during times of adversity and
uncertainty (Kantur and Iseri-Say, 2012). Recent research has shed light on the importance
of OA as a capability that enhances FR (Lee and Rha, 2016;Aslam et al., 2020), allowing
firms to achieve competitive advantage in an uncertain and dynamic environment by
attaining multiple contrasting objectives (Aslam et al., 2020;Iborra et al., 2020;Koryak et al.,
2018;O’Reilly and Tushman, 2013;Gibson and Birkinshaw, 2004;He and Wong, 2004;
Tushman and O’Reilly, 1996).
Ambidexterity is a trait that describes the ability of humans to use both hands with equal
dexterity (Simsek, 2009). Similarly, ambidextrous firms are the ones that apply two
opposing and converging strategies at a single time (Simsek et al., 2009). This can be
through focusing on efficiency and flexibility (Adler et al.,1999), alignment and adaptability
(Gibson and Birkinshaw, 2004), search and stability (Rivkin and Siggelkow, 2003), scope and
depth (Katila and Ahuja, 2002), exploitative and explorative learning (Kang and Snell, 2009;
Im and Rai, 2008), incremental and discontinuous innovation (Benner and Tushman, 2003)
or pro-profit and pro-growth strategies (Han, 2005). The most commonly cited meaning for
an ambidextrous organization is coined by March (1991), which is the ability of the firm to
carry out exploration and exploitation at the same time (Anzenbacher and Wagner, 2020;
Panagopoulos, 2016;Zhang et al.,2016;Duncan, 1972).
Accordingly, organization ambidexterity is viewed as a dynamic capability (Teece, 2014;
O’Reilly and Tushman, 2008) that allows firms to use their exploitation and exploration
capabilities to reconfigure their resource base, adjust in a dynamic environment (Ferreira
et al.,2020;Snehvrat et al.,2018;Yalcinkaya et al.,2007;Lubatkin et al., 2006) and achieve
long-term success (Mafabi et al.,2015;Lin, 2014;Kang and Snell, 2009;Levinthal and March,
1993). Exploitation capability, on one hand, is the ability to commit to improve quality and
lower cost continuously, improve the reliability of products and services, increase the levels
of automation, constantly survey existing customers’satisfaction, fine-tune what is offered
to keep customers satisfied and penetrate more deeply into the existing customer base (Liu
et al., 2019; Lubatkin et al.,2006). On the other hand, exploration capability is the firm’s
ability to look for novel technological ideas, create innovative products or services, look for
creative ways to satisfy customers’needs, aggressively venture into new market segments
and actively target new customer groups (Liu et al., 2019; Lubatkin et al.,2006).
According to the literature mentioned above, this research proposes that OA and RA
play the role of two antecedents fostering FR, supporting the following two hypotheses:
H1. Organizational ambidexterity capability has a positive impact on firm resilience.
H2. Resource availability has a positive impact on firm resilience.
Both exploration and exploitation are considered to be self-reinforcing; focusing too much on
exploitation would result in “success traps,”where successful exploitation of a firm’s
resources might prevent it from further exploring new resources in a dynamic environment,
while focusing too much on exploration would result in “failure traps,”where the uncertain
results of exploration would eventually result infailure and minimize the levels of efficiency
(Kafetzopoulos, 2020;Tian et al.,2020;Anzenbacher and Wagner, 2020;Gupta et al.,2006).
Therefore, March (1991) explained that achieving both exploration and exploitation is
important for the firm to achieve long-term performance.
Firm resilience
2.2 Interplay between exploration capability, exploitation capability and resource availability
With the organization being the unit of analysis, there are two streams of literature that
view ambidexterity in different ways –continuity vs orthogonality. Starting first with the
former and referring to the perspective of resource scarcity, this stream of literature looks at
exploration and exploitation as two incompatible capabilities because of the fact that both
capabilities compete for scarce organizational resources (March, 1991); hence, the interplay
between both capabilities occurs in the form of a zero-sum game (Gupta et al.,2006).
Moreover, both capabilities call for different processes, structures, affiliations and cognitive
orientations (Kang and Snell, 200; Shi et al.,2020). Hence, exploration and exploitation in this
sense are viewed as two ends of a continuum and successful firms are the ones that balance
between both, finding an optimal point along this continuum (Gupta et al.,2006).
Moving to orthogonality and from the perspective of absorptive capacity and the
absorptive ability theory coined back to Cohen and Levinthal (1990), this stream of literature
looks at exploitation and exploration capabilities as two capabilities that complement each
other rather than compete against each other. This stream explains that successful firms are
the ones that achieve higher combined levels of both exploration and exploitation, through
forming a dynamic learning cycle (Gupta et al.,2006). To further explain this, exploitation
activities result in the cash flows needed for exploratory activities and such exploratory
activities provide the needed resources and capabilities for long-term performance of the
firm (Dhir and Dhir, 2018). Therefore, just as mentioned by Shi et al. (2020), the firm’s
explorative capabilities would be maximized only when the firm acquires strong
exploitative capabilities.
Looking at exploration and exploitation as two dynamic capabilities, this research
hypothesizes that RA plays a role in the relationship between both capabilities. A debate has
been ongoing regarding whether organizational resources foster exploration or exploitation
(Voss et al., 2008). On one hand, there seems to be a positive relationship between slack
resources and exploration activities like innovation, risk taking and adaptation. In other
words, when firms acquire more resources, they would be encouraged to explore (Nohria
and Gulati, 1996). On the other hand, slack resources would cause firms to become more
cautious during decision-making and avoid taking risks, hence exploiting more than
exploring (Katila and Shane, 2005;Levinthal and March, 1993). Referring to the
organizational inertia theory coined by Singh and Lumsden (1990), when firms enjoy current
resources, they are more reluctant to explore, to avoid putting their current resources in
jeopardy. Having said this, firms that acquire sufficient resources might focus more on the
benefits of exploiting existing markets, products, technologies, customers and processes
rather than exploring new markets, products, technologies, customers and processes (Shi
et al.,2020). Therefore, this research hypothesizes the following:
H3. Resource availability has a positive impact onthe firm’s exploitation capability.
H4. Exploitation capability has a positive impact on exploration capability.
According to the literature, the other way round is also true where a firm’s exploration
capabilities would enhance its exploitation capabilities. To further explain this point, the
exploration activities would enhance the firm’s effectiveness, upgrading the assets,
resources and capabilities that would lead to the renewal of exploitation capabilities and
hence long-term profits (Shi et al., 2020;Yalcinkaya et al.,2007). Having said this, to ensure
optimum outcomes of those two dynamic capabilities, it is important to ensure the continual
renewal of such capabilities (Yalcinkaya et al.,2007), which is triggered by the availability of
resources. Thus, the following hypothesis is proposed in the research:
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H5. Exploration capability has a positive impact on resource availability.
2.3 The moderating role of perceived environmental uncertainty
Crises have already been occurring during the past century, like global economies facing
recession due to sudden changes in policies, oil prices or financial factors. However, scholars
and researchers have described the threat posed by COVID-19 as a “global society shock”
(Papadopoulos et al.,2020). The uncertainty tackled in the current research is the one caused
by the COVID-19 outbreak. As of late December 2019, it all started when the China County
Office of the World Health Organization got notified about cases of pneumonia (of an
unspecified cause). After investigations, it appeared that the cause of this pneumonia is an
unusual virus (SARS-CoV-2), which resulted in coronavirus disease 2019, known as COVID-
19 nowadays (Gaye et al.,2021). COVID-19 has quickly spread all over the world leading to
severe financial and human losses (Haidar, 2021). A study done by Rezk et al. (2020)
recommended that governments, businesses, NGOs and citizens should recognize and
capitalize on the new opportunities created by this pandemic to become resilient. Hence, the
pandemic occurred to be a triggering event leading firms to reassess their operations and try
to grasp opportunities following the new changes in the rules and constraints (Rezk et al.,
2020).
According to the contingency theory (Fiedler, 1978), for organizations to be effective, it is
important to make sure that there is a fit between their organizational design and practices
as well as the external environment, especially when the external environment is
characterized by high levels of environmental turbulence and uncertainty (Kafetzopoulos,
2020;Abu-Rahma and Jaleel, 2019) just as during COVID-19. Perceived environmental
uncertainty is an individual’s perceived inability to comprehend the changes in the
environment, the possible effect of such changes on the organization as well as the possible
successful outcome of certain responses (Freel, 2005;Waldman et al., 2001). Environmental
uncertainty has been viewed as a subjective perception –where top managers could
perceive the same objective environment as being uncertain while other top managers could
perceive it with no uncertainty. Having said this, the actions that firms take in response to
the external environment are more consistent with subjective rather than objective
interpretations (Sund, 2015;Waldman et al.,2001;Gordon and Narayanan, 1984;Duncan,
1972).
According to the literature, the relationship between dynamic capabilities and firm
performance could be moderated by several variables like environmental dynamism,
environmental turbulence and market turbulence. In fact, the moderating role of the
environment is the core of dynamic capabilities literature (Hern
andez-Linares et al., 2020;
Teece, 2007). Consequently, when faced with a dynamic environment, firms use their
dynamic capabilities (such as OA) to adapt (Kafetzopoulos, 2020). Therefore, just as
proposed by Aslam et al. (2020), the effect of ambidexterity on resilience will be higher given
a greater uncertain environment and vice versa. Having said this, the following hypothesis
is put forward:
H6. Perceived environmental uncertainty positively moderates the relationship between
organizational ambidexterity capability and firm resilience.
Traditionally, the RBV has been focusing on the ability of internal organizational resources
and capabilities to create a competitive advantage –however, more importance needs to be
Firm resilience
placed on the general business environment. The contingency theory explains that a firm
could gain its competitive advantage through aligning its endogenous variables (such as
organizational resources) with the exogenous context variables (such as the COVID-19
pandemic). As mentioned in the literature, perceived environmental uncertainty increases
the likelihood that businesses will utilize their resources and capabilities to create a
proactive environmental state or, in other words, become more resilient (Arag
on-Correa and
Sharma, 2003). Consequently, this research proposed the following hypothesis:
H7. Perceived environmental uncertainty positively moderates the relationship between
resource availability and firm resilience.
3. Proposed research model and hypotheses
Following the literature review, it appears that certain areas in the literature need to be
further examined. More empirical research on dynamic capabilities is required as research
done on dynamic capabilities has been mainly conceptual (Hern
andez-Linares et al.,2020).
Additionally, more research is needed regarding the potential moderators or mediators of
OA so that practitioners could have better guidance for their ambidextrous efforts (Claudia
and Mihaela, 2019).
Even though the term “resilience”has been widely used in several fields, empirical
research on organizational resilience is not sufficient and its application in the management
field seems to be fragmented (Williams et al., 2017;Van Der Vegt et al.,2015). Additionally,
Iborra et al. (2020) and DesJardine et al. (2019) stated that there is little management research
on organizational resilience at a strategic level of analysis in comparison with management
research on resilience from positive psychology at an individual level of analysis. Moreover,
it appears that more research is needed to identify the antecedents of organizational
resilience (Linnenluecke, 2017;Williams et al.,2017;Rodríguez-S
anchez et al.,2019) focusing
on the underlying mechanisms that promote the enablement/development of FR (Duchek,
2020).
In addition to what has been mentioned above, Aslam et al. (2020) claimed that previous
research tackled the impact of ambidexterity on firm performance. However, very little
research has been conducted to shed light on how OA could foster FR. Finally, although the
world witnessed several pandemics in the past, very little research has focused on the long-
term economic, behavioral or societal consequences of such outbreaks (Donthu and
Gustafsson, 2020). Building on this, Haidar (2021) stated that more research is needed to
understand how firms can adapt in light of this pandemic.
Therefore, based on the research gap and literature mentioned earlier, this research
presents the proposed research model in Figure 1 below.
4. Method
4.1 Research design and sampling
A cross-sectional research design was adopted, and a descriptive quantitative research
using self-administered surveys was conducted. A nonprobability sampling technique was
applied, specifically through convenience sampling (Cooper et al., 2006). Following Hair et al.
(2006) 1:5 item-to-response ratio, the current research originally aimed at targeting 120
firms. However as structural equation modeling (SEM) was to be used, the researchers opted
for a larger sample size as it would yield better rigorous data analysis and reliable results
(Kline, 2015). Therefore, 250 firms were targeted and 202 responses were finally gathered.
Regarding the sample frame, the researchers were aiming to reach managers and executives
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rather than employees. It has been widely known in management research that top
managers and executives serve as prominent sources of firm-level information required to
understand the organization. Moreover, they can function as key informants with respect to
the decision-making process as well as strategy implementation (Cycyota and Harrison,
2006;Boyd and Fulk, 1996). As the current research aims to look more into the utilization of
the firm resources and capabilities at an organization-wide level, the organization’s upper
echelons have been targeted. A large sample was reached through the MBA program at the
German University in Cairo because this program enrolls a great deal of managers and
executives working in multinational and local companies in Egypt. Moreover, to fulfill the
required sample size, the researchers sent out the survey to professionals working in
organizations through direct messaging on LinkedIn. Firms were categorized by size
according to Central Agency for Public Mobilization and Statistics, as explained by Amer
and Selwaness (2021).Table 1 provides more information regarding the sample profile.
4.2 Measurement [1]
4.2.1 Organizational ambidexterity capability (exploitation capability and exploration
capability). The current study refers to the measures of exploration capabilities (EXPR) and
exploitation capabilities (EXPT) as conceptualized by Lubatkin et al. (2006) where both
capabilities are viewed as dynamic capabilities. Exploration capability and exploitation
capability were both measured as first-order constructs, each using six items.
Organizational ambidexterity capability (OA) construct was measured as a second-order
construct by using exploration capability and exploitation capability as its first-order
indicators. Respondents were asked to assess their firms’exploration and exploitation
capabilities during the past three years on a seven-point scale. The Cronbach’s alpha
Figure 1.
Research model
Firm resilience
coefficient value was 0.852 for the exploitation capability scale, 0.872 for the exploration
capability scale and 0.915 for the organizational ambidexterity capability scale as a whole.
All Cronbach’s alpha coefficient values exceeded the cutoff point of 0.7, hence indicating
internal consistency and reliability of the scales (Pallant, 2011).
4.2.2 Resource availability. Resource availability (RA) was measured using four items
extracted from Miller and Friesen (1982) where firms were asked to rate their abundance/
availability of resources. The items were measured on a seven-point scale, where 1 indicates
that the resource is very scarce and/or prohibitively expensive and 7 indicates that the
resource is quite plentiful.
Social science literature recommends a small sample size (10–30 participants) when
conducting pilot studies. The choice of 30 participants is a reasonable minimum
recommendation to allow for easy calculations and hypothesis testing (Johanson and
Brooks, 2010;Isaac and Michael, 1995). Hence, a sample of 30 firms was chosen for the pilot
study before fully launching the survey. Results indicated that only “Resource Availability”
had a relatively low reliability, 0.662. Therefore the questions tackling this variable were
amended to be clearer. Originally, the question was: “Kindly rate the abundance of the
following resources for your firm (1: This resource is very scarce and/or prohibitively
expensive. 7: This resource is quite plentiful). The underlying items originally were
“Capital,”“Skilled labor,”“Material Supplies”and “Managerial Talent.”After amendments,
“Capital”was clarified as “Financial Resources,”and “Material Supplies”was clarified as
Table 1.
Sample profile
Variable Sample (N= 202) (%)
Firm size
Large enterprise (>100 employees) 143 70.8
Medium enterprise 24 11.9
Small enterprise 35 17.3
Industry
Manufacturing 32 15.8
Pharmaceuticals 26 12.9
IT and software 25 12.4
Education 15 7.4
Energy management 13 6.4
Food items 11 5.4
Construction 9 4.5
Health services 9 4.5
Oil and gas 9 4.5
Telecommunications 8 4
Banking 6 3
Consultancy services 5 2.5
Agriculture 5 2.5
Real estate 5 2.5
Automotive 4 2
E-commerce 4 2
Other (hospitality, fashion, export support and distribution) 4 2
Transportation 4 2
Financial services 2 1
Insurance 2 1
Publishing 2 1
Tourism 2 1
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“Raw Materials.”After the amendments, results of the pilot study were favorable, showing
internal consistency for the resource availability scale at 0.737.
4.2.3 Firm resilience. The conceptualization of firm resilience (FR) in this research has
been borrowed from Ambulkar et al. (2015) who viewed resilience as a first-order construct.
The scale was tailored to the context of the study, where “supply chain disruption”was
replaced by “environmental uncertainty.”Firm resilience was measured using four items on
a seven-point Likert scale. The Cronbach’s alpha coefficient value was 0.891 for the firm
resilience scale; indicating internal consistency of the scale.
4.2.4 Perceived environmental uncertainty. Perceived environmental uncertainty (PEU)
was measured using four items derived from Waldman et al. (2001). The items were
measured on a five-point Likert scale. The Cronbach’s alpha coefficient value was 0.645 for
the perceived environmental uncertainty scale. However, further analysis was done and the
results indicated that Cronbach’s alpha would be enhanced to 0.699 for this scale if the
fourth item was deleted. Therefore, this item was removed to ensure better internal
consistency of the scale. Moreover, it is worthyto mention that scalesthat have less than ten
items are prone to have lower Cronbach alpha coefficient values starting from 0.5 (Pallant,
2011). Therefore, a Cronbach’s alpha of 0.699 for this scale is acceptable.
5. Data analysis and results
Confirmatory factor analysis (CFA) and SEM were performed to validate the model and
test the seven hypotheses. Once the measurement scales showed satisfactory levels
regarding the parameters of goodness-of-fit indices, the seven hypotheses were tested
through SEM. The measurement validation and assessment of the structural model are
explained and presented below. Moreover, it is worthy to mention that SEM applies
standardized regression weights (Zainudin, 2012), causing differences in scale
measurements to be diminished.
5.1 Measurement validation
CFA was performed for both the first- and second-order constructs. Fornell–Larcker
criterion was applied to test for convergent validity (Fornell and Larcker, 1981). Following
the CFA done for the first-order constructs, it appeared that three items (RA3, RA1 and
EXPT1) had factor loadings less than 0.5. Therefore, those items had to be deleted
(Zainudin, 2012). However, the outer loadings of all other items were within the acceptable
range; stretching from 0.529 to 0.888. Regarding the CFA results of the second-order
construct, factor loadings ranged from 0.599 to 0.863, which is also accepted. The composite
reliability score for the constructs were between 0.71 and 0.92, which in accordance to
Zainudin (2012) exceeds the cutoff point of 0.6. Moreover, the constructs had average
variance extracted (AVE) ranging from 0.46 to 0.67. Referring to Fornell and Larcker (1981),
AVE should be greater than 0.5, but 0.4 is also acceptable. It has been stated that if AVE is
less than 0.5 but composite reliability is greater than 0.6, then convergent validity of the
construct is still adequate (Fornell and Larcker, 1981). Therefore, following these results,
convergent validity was supported. After removing three items post CFA, internal
consistency was reassessed again using Cronbach’s alpha, and it appeared that the affected
variables showed better internal consistency. Table 2 provides information about the
adjusted Cronbach’s alpha, composite reliability, factor loadings and AVEs. In accordance
with Zainudin (2012), the results showed a satisfactory fit of the first- and second-order
construct CFA. Therefore, construct validity has been supported as well. Table 3 provides
more information about the model fit indices in terms of absolute fit, incremental fit and
Firm resilience
parsimonious fit. Following Zainudin (2012), the first- and second-order construct models
show good model fit.
5.2 Common method bias
Following the recommendations of Chang et al. (2010), the current research has taken
preemptive measures to avoid CMB. Respondents were informed that their results will be
anonymous and confidential. Moreover, the researchers were careful and concise while
designing the questionnaire to make sure that all items are clear and understandable. Such
Table 2.
Adjusted Cronbach’s
a
, composite
reliability, factor
loadings and AVEs
Variables with Cronbach’s
a
, composite reliability and average variance extracted Outer loadings
Organizational ambidexterity capability (
a
= 0.91, CR = 0.92, AVE = 0.52)
Exploration capability (
a
= 0.87, CR = 0.87, AVE = 0.53)
EXPR 1 0.863
EXPR 2 0.835
EXPR 3 0.752
EXPR 4 0.583
EXPR 5 0.529
EXPR 6 0.764
Exploitation capability (
a
= 0.85, CR = 0.83, AVE = 0.50)
EXPT 1 (deleted) –
EXPT 2 0.730
EXPT 3 0.733
EXPT 4 0.694
EXPT 5 0.725
EXPT 6 0.693
Resource availability (
a
= 0.79, CR = 0.80, AVE = 0.67)
RA 1 (deleted) –
RA 2 0.796
RA 3 (deleted) –
RA 4 0.820
Perceived environmental uncertainty (
a
= 0.69, CR = 0.71, AVE = 0.46)
PEU 1 0.545
PEU 2 0.724
PEU 3 0.748
Firm resilience (
a
= 0.89, CR = 0.88, AVE = 0.65)
FR 1 0.777
FR 2 0.759
FR 3 0.888
FR 4 0.799
Table 3.
Model fit indices
Model
Absolute fit Incremental fit Parsimonious fit
RMSEA GFI NFI CFI IFI CMIN/DF
First-order constructs CFA 0.054 0.903 0.906 0.962 0.963 1.595
Second-order construct CFA 0.063 0.947 0.954 0.979 0.979 1.786
Note: p<0.01
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measures would avoid the problems faced regarding the comprehension stage of the data
collection process. Additionally, two statistical measures were taken to detect CMB. First,
using Harman’s single-factor test, all items were loaded on one factor without applying any
rotation. The results showed that the maximum variance explained by one factor as 36.9%,
thus indicating that there is no big amount of common method variance existing in the
current study (Podsakoff et al., 2003). Second, CMB was tested statistically using the
common factor method on AMOS-SPSS. Following Chang et al. (2010), questionnaire items
were loaded on their theoretical constructs and on a latent common factor. The test results
showed that the differences in the regression weights of the items were minor (less than 0.2)
in the presence and absence of the common factor, hence indicating no substantial amount of
common method variance in the current study (Dhoopar et al.,2021).
5.3 Assessment of the structural model
SEM allowed the researchers to identify, estimate, assess and illustrate the model in a causal
path diagram to test the proposed hypotheses (Kline, 2015;Zainudin, 2012). To achieve this,
two structural equation models were run. The first structural model aims to test the impact
of organizational ambidexterity capability (OA) and resource availability (RA) on firm
resilience as well as the moderating role of perceived environmental uncertainty (OA*PEU
and RA*PEU). Therefore, the first structural model aims to tackle H1,H2,H6, and H7. The
second structural model delves deeper into the relationship between exploration capability
(EXPR), exploitation capability (EXPT) and resource availability (RA) and hence answers
H3,H4 and H5.
5.3.1 Findings from structural equation model 1. Starting first with the model fit, the
indices confirm the reference value of
x
2
/df, which should lie between 1 and 3. Moreover, the
goodness of fit index (GFI), normed-fit index (NFI), comparative-fit index (CFI) and
incremental fit index (IFI) are >0.90, and the root mean square of error approximation
(RMSEA) value is #0.08, indicating a good fit(
Zainudin, 2012). Additionally, the results
show that the standardized effect of organizational ambidexterity capability on firm
resilience is significantly positive (
b
= 0.496, p<0.05). Hence, H1 as derived from the
literature review and proposed above is supported and accepted. Similarly, the standardized
effect of resource availability on firm resilience is significantly positive (
b
= 0.256, p<
0.05). Therefore, H2 is supported and accepted as well. Moreover, while testing the
moderation effect hypothesized in H6 and H7, the results show that the interaction of
perceived environmental uncertainty with resilience was not significant regarding
organizational ambidexterity capability (
b
=0.033, p>0.05) and resource availability
(
b
= 0.002, p>0.05). Hence, H6 and H7 were not supported.
5.3.2 Findings from structural equation model 2. Following Zainudin (2012), the indices
similarly show good model fit with reference to
x
2
/df, GFI, NFI, CFI, IFI and RMSEA.
Additionally, the results show that the standardized effect of resource availability on
exploitation capability is significantly positive (
b
= 0.195, p<0.05). Hence, H3 is supported
and accepted. Similarly, the standardized effect of exploitation capability on exploration
capability is significantly positive (
b
= 1.017, p<0.05). Therefore, H4 is supported as well.
Finally, the results show a significant positive standardized effect of exploration capability
on resource availability (
b
= 0.513, p>0.05), thus accepting H5.Table 4 provides more
information on the goodness-of-fit results for both structural equation models. Figures 2 and
3present both structural models.
OA: Organizational ambidexterity capability; RA: resource availability; PUE: perceived
environmental uncertainty; FR: firm resilience; OA*PEU: interaction variable of
organizational ambidexterity capability and perceived environmental uncertainty;
Firm resilience
RA*PEU: interaction variable of resource availability and perceived environmental
uncertainty; EXPR: exploration capability; EXPT: exploitation capability; RA: resource
availability.
6. Findings and discussion
Starting first with H1, the findings of this hypothesis complies with the current literature
and theories supporting the positive impact of OA on FR from the view of the theory of
ambidexterity (Aslam et al., 2020) and dynamic capability perspective (Iborra et al.,2020;
Lee and Rha, 2016) explained previously. This also falls in line with previous literature,
which indicated that regardless of firm size, using both exploration capabilities and
Figure 2.
Structural model 1
Table 4.
Goodness-of-fit
results for structural
models 1 and 2
Model
Absolute fit Incremental fit Parsimonious fit
RMSEA GFI NFI CFI IFI CMIN/DF
Structural equation model 1 0.067 0.951 0.942 0.971 0.972 1.892
Structural equation model 2 0.08 0.907 0.915 0.950 0.950 2.279
Note: p<0.01
IJOA
exploitation capabilities results in favorable returns during crises, where each of these
capabilities complement each other rather than compete against each other (Iborra et al.,
2020).
The findings of H2 comply with the resource-based view and with previous literature
regarding the positive impact of RA on FR (Duchek, 2020; Kantur and Iseri-Say, 2012).
However, it is worthy to mention first that after conducting CFA, two items (skilled labor
and managerial talent) remained. Therefore, it is important to take into consideration that
the resources referred to in the findings of this research pertain to human capital. Over the
past two decades, human resource management started having a more strategic role that
viewed employees as assets contributing to the business survival and resilience, especially
during times of uncertainty. Therefore, human capital is considered to be among the most
prominent antecedents for building FR (Ngoc Su et al., 2021;Douglas, 2021;Duchek, 2020;
Daou et al.,2019;Kantur and Iseri-Say, 2012;Pal et al., 2014;Lengnick-Hall et al.,2011).
Moreover, it is worthy to mention that this finding complies with the human capital theory
in the sense that business performance (tackled in terms of resilience in this study) is
impacted by the individuals’intellectual capital (Adom and Asare-Yeboa, 2016).
Moving to the relationship between OA and RA, the findings of H3 supports the positive
impact of RA on exploitation capability. This finding falls in line with the organizational
inertia theory explained earlier (Shi et al., 2020) in the sense that when firms enjoy current
resources, they would be more reluctant to explore, to avoid putting their current resources
in jeopardy. Therefore, firms are more likely to enhance their exploitation capability rather
than exploration capability in the presence of resources (Shi et al.,2020). However, human
resources are only tackled in the findings, hence indicating that the skilled labor and the
managerial talent in the organization would be more invested into exploiting existing
markets, products, technologies, customers and processes rather than exploring new
markets, products, technologies, customers and processes. According to Hofstede’sCountry
Figure 3.
Structural model 2
Firm resilience
Comparison (2021) website, Egypt is characterized by high uncertainty avoidance (80),
which has been apparent in organizations as well. Accordingly, labor tend to avoid the
uncertainty of exploring new business opportunities resisting innovation and creativity.
Instead, companies are more inclined toward unorthodox behaviors and ideas to guarantee
security (exploitation), especially because during COVID-19, the external environment was
perceived as being very highly uncertain.
Moving to the findings of H4, the firm’s exploitation capability has a positive impact on
its exploration capability. Reflecting back on the literature, the relationship between
exploitation capability and exploration capability is orthogonal. In other words and from the
perspective of absorptive capacity and the absorptive ability theory, exploitation and
exploration capabilities complement each other rather than compete against each other.
Therefore, the firm’s explorative capabilities would be impacted positively when the firm
acquires strong exploitative capabilities (Shi et al., 2020).
To complete the dynamic cycle, the findings of H5 indicate that exploration capability
has a positive impact on RA. This finding falls in line with Shi et al. (2020) and Yalcinkaya
et al. (2007) where the exploration activities of a firm would enhance effectiveness,
upgrading the assets, resource, and capabilities. With reference to the specific type of
resource tackled in the findings, it is considered that the firm’s exploration capability would
enhance its level of managerial talent and skilled labor (human capital). According to Wei
et al. (2013), innovation (being a proxy for exploration in this research) plays a great role in
empowering employees, allowing them to acquire further skills and reach their full potential.
Additionally, Mom et al. (2007) have mentioned that a major consequence of exploration
activities includes the acquisition of knowledge. This knowledge is embedded in the
organizational routines as well as the capabilities and skills of employees and managers.
Reflecting on human capital, the firm’s exploration capability would cause employees and
managers to acquire new knowledge, hence enhancing the overall level of labor’s skills and
managerial talent.
Finally, the moderating role of perceived environmental uncertainty was found to be
insignificant, hence not supporting both H6 and H7. This finding goes with the view that
the external environment does not always play a moderating role. In fact, the planet that we
have already landed on is not the same where we have been living up to now, and
uncertainty exists most of the time. Therefore, it could be argued that regardless of the
source of change, organizations have always been striving to adapt to the external
environment through altering their resources, competencies and business models to remain
resilient (Pessina, 2021). Accordingly, COVID-19 was viewed like any other existing external
factor showing uncertainty. So its emergence did not affect the impact of OA and RA on FR
because these two antecedents have been already preserved, secured and utilized pre-
COVID-19 to deal with the environmental uncertainty, falling in line with the perspectives of
Rai et al. (2021) and Ferreira et al. (2020).
7. Conclusion and implications
To conclude, this research aims to identify two antecedents that would foster firms’
resilience during times of uncertainty, namely, OA and RA. Not only that, this research also
looks at the underlying relationships between these two antecedents along with the
moderating role of perceived environmental uncertainty. According to the results, five
hypotheses were supported. The results indicated that both OA and RA, measured in terms
of human capital as per theCFA results, foster FR (complying with the resource-based view,
dynamic capabilities perspective and the human capital theory). Moreover, the findings of
this research contribute to identifying the relationship between the antecedents of FR, where
IJOA
RA has a positive impact on the firm’s exploitation capability (complying with the
organizational inertia theory). Also, the firm’s exploitation capability has a positive impact
on its exploration capability (complying with the absorptive capacity theory). Finally, the
cycle completes with the firm’s exploration capability having an impact on RA. However,
the last two hypotheses have not been supported. It appears that perceived environmental
uncertainty does not always moderate especially given the uncertain and complex
environment that is being continuously facedby firms in Egypt.
This research contributes to the field of strategic management through tackling FR from
a strategic level of analysis, where empirical research on FR has not been enough (Williams
et al.,2017;Van Der Vegt et al.,2015).This research also contributes to the field of strategic
management and crisis management through validating and empirically using a scale that
has been previously used to test for resilience in the supply chain context (Ambulkar et al.,
2015). In addition to that, the current research contributes to the field of strategic
management and crisis management in terms of identifying possible antecedents of FR,
highlighting the importance of certain strategic features including OA and RA
(Linnenluecke, 2017;Williams et al.,2017;Rodríguez-S
anchez et al., 2019). After conducting
CFA, it appeared that the resources tackled in this research are mainly human capital.
Therefore, this research contributes to the field of human resource management in the sense
of viewing employees/managers as acquiring a strategic role in attaining business survival
and resilience (Douglas, 2021;Duchek, 2020;Kantur and Iseri-Say, 2012;Pal et al., 2014;
Lengnick-Hall et al., 2011).
Moreover, this study contributes to the current literature in terms of identifying the
interplay between the two prominent antecedents of FR: OA and RA. To further explain,
this study contributesto the literature on OA through proposing and investigating a type of
relationship between exploitation capabilities, exploration capabilitiesand RA. Finally, even
though the results regarding the moderating role of perceived environmental uncertainty
were surprising, such results in themselves are considered to be a good contribution to the
literature claiming that perceived environmental uncertainty does not always play a
moderating role.
Organizational resilience is becoming an important goal for firms nowadays because of
the fact that the speed of unanticipated events turning into disasters is more common. In the
past, the outbreak of Ebola, Zika and SARS caught the world’s attention, yet organizations
have missed the opportunity to learn from the crises. However, as a consequence of COVID-
19, firms started shifting their attention to crisis management and organizational learning
(Dhoopar et al.,2021). Moreover, it has been observed that organizations took actions to
reconfigure their business models in the face of unforeseen events. For instance, the digital
technology adoption strategy has been applied by several organizations to achieve business
sustainability as well as guarantee consumer safety and convenience. On top of that, several
management practices are being applied nowadays to ensure workforce agility and
resilience, including organizational learning, cross-training, reward systems, employee
involvement and psychological empowerment. Additionally, firms are capitalizing on
resilience, agility and ambidextrous capabilities as strategic capabilities required nowadays
to survive in the contemporary marketplace (Ajgaonkar et al.,2021;Gölgeci et al.,2019;
Abed, 2021). For instance, Tata Motors focused on using their ambidexterity capability
through maximizing the exploitation aspect of their current offerings while exploring new
customer segments though their exploration capabilities (Dutta and Snehvrat, 2021).
Zongteng (one of the leading Chinese companies inthe cross-border e-commerce industry) is
another practical example of a company that was able to use its ambidexterity capability to
achieve resilience amid COVID-19. On one hand, through its exploitation capability,
Firm resilience
Zongteng was able to meet its customers’needs quickly through optimizing its current
business. On the other hand, through its exploration capability, Zongteng was successful in
achieving flexibility by offering new products and services (Wang et al.,2021).
Therefore, the findings of this research have several useful managerial implications as
well. This study proposes that the two antecedents OA and RA prove to be two ways of
fostering levels of resilience. Moreover, the current study highlighted the importance of
making sure that both exploration capabilities and exploitation capabilities are being
effectively used to avoid falling into the “success traps”or “failure traps.”Therefore, this
research clearly explains the importance of OA for managers. In addition to that, as the
findings of this research are concerned with human capital as a prominent resource for
resilience development, it is important for managers to make sure that employees are getting
the required training and competency development plans to make sure that human capital is
strong. Having said all of the abovementioned managerial implications, managers can
integrate the outcomes of this research into their strategies and management philosophy.
8. Limitations and suggestions for future research
To start with, a nonprobability convenience sampling technique has been used in this
research; therefore, the findings cannot be generalized. Hence, it is recommended that future
researchers wishing to duplicate this study opt for probability sampling techniques.
Moreover, the problem of generalizing the results is also attributed to the research design,
which is cross-sectional. Results were collected at a single point in time (amid COVID-19);
therefore, to be able to better generalize the results, a longitudinal research design should be
considered. Concerning the sample size, for convenience, the researchers were able to reach
202 firms. However, it is claimed that the higher the sample size the better; therefore, future
researchers could target a larger sample.
Just as the findings showed, culture played a reasonable role behind the rationale of the
results. Having said this, the results cannot be generalized because of its restriction to the
Egyptian context. Therefore, it is recommended for future researchers to apply this study to
another country scoring high on uncertainty avoidance. Moreover, CFA suggested that
human capital (skilled labor and managerial talent) should only be considered when
analyzing the model. Even though the results were reasonable, it is claimed that other
resources could as well serve as enablers for FR. Therefore, future researchers wishing to
duplicate this study should consider this scale along with other scales tackling more
resources to be able to effectively measure RA. Additionally, future researchers could
consider adding OA as a mediator in the relationship between RA and FR. Finally, it has
been shown that human capital has a positive impact on FR. However, it would be
interesting to look more into the specific HR practices or human capital management
strategies that could enhance the firm’s human capital and hence develop organizational
resilience.
Note
1. Refer to the Appendix for the complete research instrument.
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Corresponding author
Salma Gayed can be contacted at: salma.abdelgayed@guc.edu.eg
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Appendix. Organizational ambidexterity capability
Exploration
EXPR1: Our firm looks for novel technological ideas by thinking “outside the box.”
EXPR2: Our firm bases its success on its ability to explore new technologies.
EXPR3: Our firm creates products or services that are innovative to the firm.
EXPR4: Our firm aggressively ventures into new market segments.
EXPR5: Our firm actively targets new customer groups.
EXPR6: Our firm looks for creative ways to satisfy its customers’needs.
Exploitation
EXPT1: Our firm commits to improve quality and lower cost. (deleted)
EXPT2: Our firm continuously improves the reliability of its products and services.
EXPT3: Our firm increases the levels of automation in its operations.
EXPT4: Our firm constantly surveys existing customers’satisfaction.
EXPT5: Our firm fine-tunes what it offers to keep its current customers satisfied
EXPT6: Our firm penetrates more deeply into its existing customer base.
Resource Availability
RA1: Capital (Financial Resources) (deleted)
RA2: Skilled Labor
RA3: Material Supplies (Raw Materials) (deleted)
RA4: Managerial Talent
Perceived Environmental Uncertainty
PEU1: During COVID-19 the external environment seems to be very dynamic and
changing rapidly.
PEU2: During COVID-19 the external environment seems to be very risky; one false step
can mean the firm’s undoing.
PEU3: During COVID-19 the external environment seems to be very stressful, exacting,
hostile and hard to keep afloat.
PEU4: During COVID-19 the external environment seems to be very rapidly expanding
through the expansion of old markets and the emergence of new ones. (deleted)
Firm Resilience
FR1: We are able to cope with changes brought by the external environmental
disruption.
FR2: We are able to adapt to the external environmental disruption easily.
FR3: We are able to provide a quick response to the external environmental disruption.
FR4: We are able to maintain high situational awareness at all times.
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Firm resilience