Building resilience in African firms; COVID and beyond

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Globally, COVID-19 has put several supply chains, businesses, schools, and public services on the brink of collapse. Beyond the disruptions caused by COVID-19, local and international business activities are frequently interrupted by fire outbreaks, floods, earthquakes, tsunamis, terrorism, cyber-attacks, supply and demand market volatility among others.

In the particular case of businesses in sub-Saharan Africa, exchange rate fluctuation, political instability, regulatory changes, strike actions, power failures, transportation failures, and technology downtimes are a few external forces that frequently disrupt the smooth running of business operations.

Internal forces such as talent losses are also noted to disrupt business operations. Documented evidence reveals that these events threaten the survival of businesses. Meanwhile, it is widely noted that operational resilience is crucial for businesses to succeed in disruptive environments.

However, how and conditions under which businesses can build operational resilience has not been clearly communicated to business leaders, perhaps due to a lack of empirical evidence that may inform specific recommendations to businesses.

The empirical evidence reported in this executive brief looks at how business leaders’ attention to threats can foster operational resilience, especially under a condition of strategic mission rigidity (i.e. the extent to which a business accommodates changes to its strategic mission).

Attention to threats reflects the extent to which business leaders lead their companies to invest strategic resources (e.g., money, management time, personnel time and energy) to search and process information on likely disruptive events, and the response mechanisms put in place to counteract threats from disruptive events identified.

Data used in this study was provided by business leaders (e.g., CEOs, Chief Operations Officers) from 259 businesses in Ghana. The study finds that being operationally resilient can take two specific forms: strong disruption absorption capacity and robust disruption recoverability capacity.

Disruption absorption capacity is captured in the ability of an organization’s operations system to maintain its structure and normal functioning in the face of disruptions. Disruption recoverability capacity reflects the ability of an organization’s operations system to quickly restore output levels to normalcy post disruption.

Evidence from our study further shows that attention to threats enhances the operational resilience of businesses. The logic is that attention to threats helps increase disruption-specific knowledge capacity of businesses and permits disruption profiling and development of advanced response protocols, which allow for early detection of impending disruptions. Knowledge of looming disruptions helps facilitate the implementation of quicker and effective response mechanisms to minimize, and recover from, disruption impacts more rapidly.

Additional evidence from the study indicates that attention to threats is less effective in building operational resilience in businesses that have a high degree of strategic mission rigidity. The propensity of business leaders to use rational decision-making processes to search and process information on disruptive events can induce rigid response protocols, which can subsequently inhibit quick responses to disruptions.

Besides, attention to threats can lead to information overload, which might also weaken businesses’ capacity to quickly respond to disruptive events.

These weaknesses associated with attention to threats are compounded when businesses are inflexible about their strategic missions, which if it increases in magnitude can make businesses overly focus on their current domain of operations while discouraging change, learning, and exploratory behaviors.

Thus, under a condition high of strategic mission rigidity, emphasis on attention to threats can become counterproductive, subsequently lowering operational resilience levels.

This finding, therefore, implies that while attention to threats can help build operational resilience, possession of a higher degree of strategic mission nimbleness (as opposed to rigidity) can help businesses to further strengthen their ability to build stronger operational resilience.

In sum, we suggest that business leaders should focus on fostering an organization-wide understanding of the need to continuously pay attention to impending threats of disruption from external environment and internal business-specific sources while at the same time nurturing flexible strategic mission outlook to build operational resilience capability.

 

About the authors:

 Prof. Nathaniel Boso is  a Professor of International Entrepreneurship & Marketing with the Department of Marketing & Corporate Strategy and currently the Dean of the  KNUST School of Business, Kwame Nkrumah University of Science and Technology;

 

Dominic Essuman is a Lecturer in Logistics and Supply Chain Management with the Department of Supply Chain and Information Systems also at the KNUST School of Business, Kwame Nkrumah University of Science and Technology Kumasi,  

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