Effective Crisis Management during Adversity: Organizing Resilience Capabilities of Firms and Sustainable Performance during COVID-19

Abstract

Drawing on crisis management and organizational resilience literature, this study adopts a firm’s capability-based perspective of organizational resilience to examine how different sets of firm-based resilient capabilities a firm has developed can help a firm achieve sustainable firm performance during a crisis. We took a configurational approach and applied the fsQCA method to examine how various combinations of a firm’s financial, cognitive, and behavioral capabilities as causal conditions can affect firm financial performance. For the empirical analysis, 21 listed Chinese film and television firms were selected. We collected information on financial capability from 2018 to 2020, and on cognitive and behavioral capabilities and firm size in 2020. This study obtains six configurations or paths that lead to the improved performance. Overall, the findings indicate that if a large firm has a low level of financial capability, it needs to leverage its cognitive capability instead of behavioral capability. A small firm with high financial capability needs to quickly leverage its cognitive capability but can use less behavioral capability. On the other hand, small firms with low financial capability need to utilize its behavioral capability to take quicker actions. With comprehensive analysis and multiple-perspective comparison of configurations, the study proposes various response strategic suggestions for firms with different sizes during the COVID-19 epidemic in China.

1. Introduction

For the sustainable firm performance and survival, firms must manage crises that arise from diverse unpredictable and abnormal external events such as financial crisis, natural disaster, terrors, industrial accident, among others, effectively [1]. Crisis management scholars have investigated how firms respond to risks and uncertainties of such events at several crisis stages, including before, during, and after adversity [2,3,4]. Particularly, it has been largely discussed that during adversity the role of leaders to internally coordinate resources and facilitate communication is critical for firms to deal with the situation [4,5,6]. For example, several attributes related to leaders such as crisis perception as opportunity [6,7], the effect of executives’ emotion [8], and intuition [8,9] on their decision makings, and leaders’ communication skill with internal members [10] have been widely examined as determinants of organizational recovery.

Although the relationship between the role of crisis leaders and organizational responses to risks and uncertainty during adversity has received scholarly attention, it has not sufficiently discussed which organizational capabilities and which arrangements of particular sets of them [1,2,4,5,11,12] leaders need to coordinate and utilize for sustainable firm performance. Previous studies mostly investigated the role of organizational capabilities in isolation; however, they underestimated that different resilience capabilities might have a substituting, conflicting, and complementary effect on firm performance during crisis. It has been acknowledged that diverse dimensions of organizational capabilities can be interwoven and enable a firm to adjust to adversity, resulting in recovery and sustainable firm performance during adversity [13]. Moreover, there are few studies that discussed how the relationship between configurations of organizational capabilities and firm performance might be contingent on and reinforced by contextual factors such as firm structure [4,12]. Thus, in this study, we aim to explore following research questions: (1) what dimensions of organizational resilience capabilities crisis leaders need to consider for organizational recovery during crisis?; and (2) which combinations of organizational resilience capabilities lead to firm sustainable performance and which contextual factor needs to be considered?

To seek an answer for these research questions, we integrated crisis management and organizational resilience literature in this study. Crisis management explores how organizations can effectively manage a highly salient, unexpected, and disruptive event [5]. Organizational resilience is a firm’s fundamental ability to manage risks and uncertainties arising from crisis [2,4]. Crisis management and organizational resilience are two aspects that can hardly be detached and are complementary to each other [4]; they can collaboratively identify dimensions of organizational resilience capabilities and provide insight on how they interact with each other to predict organizational performance during crisis [1,12].

Particularly, drawing on a firm’s capability-based perspective of organizational resilience [2,4,13,14,15], we try to identify firm-based resilient capabilities that might be required for firms to effectively adapt to abnormal and emergent situations during a crisis caused by an external disruptive event. They include three dimensions of resilience capabilities: financial [4], cognitive [4,11,14,16,17,18], and behavioral capabilities [4,17,19,20]. These dimensions of capabilities are related to a firm’s capabilities that enable it to sustain, adapt, and change, leading to sustainable firm performance while the catastrophic external event occurs [4,11]. We also propose that these capabilities can be taken into effect and amplified under a certain organizational contextual factor, firm size [4,14]. In addition, we extend the literature on crisis management and organizational resilience by detaching from the prior work of studying particular organizational resilience capabilities in isolation and concentrate instead on the complex interactions within a portfolio of capabilities. To empirically demonstrate our theory, we take into account adversity created by a novel coronavirus pneumonia epidemic, COVID-19, which has been spreading across the globe and has severely affected the world economic order and the security of the human living environment [21,22]. Under the premise of complex and unpredictable market conditions, enterprises have also faced the dual pressure of epidemic prevention and control [23]. Scholars have observed that firms in global entertainment industries such as live entertainment and tourism have severely suffered from the outbreak due to unavoidable reasons such as mandatory shutdown, public aversion for crowds, and competition with online services [24,25]. Particularly in China, the film and television industry, as an important component of the cultural industry, has suffered a suspension due to strict requirements of epidemic control and the particularity of the industry itself. This is an unprecedented and more difficult challenge for the film and television industry compared with other industries. Data show that as early as the severe acute respiratory syndrome (SARS) period in 2003, as one of the first echelon industries affected by the epidemic, the loss of the entertainment industry was significantly greater than that of other industries [26]. In the first quarter of 2020, more than 5328 film and television firms closed down and more than 2200 cinemas closed [27], and the industry’s year-on-year output value was less than 10% of the same period last year. Several film and television bases such as Hengdian, Wuxi, and Oriental were temporarily closed, and film and television production teams stopped filming one after another, resulting in multiple butterfly effects such as capital loss, project stagnation, schedule conflict, and small- and medium-sized firms closing down. The cinemas across the country have been closed with films collectively canceled even at Spring Festival, Valentine’s Day, and other important festivals. The annual box office is expected to drop by 80% year-on-year [28]. In the whole industry, the upstream and downstream supply chain suffered a heavy loss. There was a cliff decline from the shooting, production, and marketing publicity to cinema screening. Although the whole industry has entered a cold winter, in the face of COVID-19, different firms have different choices in terms of a bundle of organizational resilience capabilities they have developed, such as financial, cognitive, and behavioral capabilities. After the film and television industry returned to work, the effects of strategies selected by different firms to deal with the crisis showed.

To explore our research questions utilizing this research context, we applied fuzzy-set Qualitative Comparative Analysis (fsQCA) that provides an ideal empirical method. Empirical research on organizational resilience in crisis situations are not sufficient enough [1,14], mostly applied case studies or derived from unsubstantiated evidence [29], and criticized for their lack of rigor [5]. It might be because firms face disruptive external crisis infrequently and it is difficult to empirically capture a firm’s crisis management [5]. Indeed, Bundy et al. [5] suggested to apply a configurational approach to examine how different dimensions of organizational resilience and their configurations affect organizational resilience differently. fsQCA is such an approach based on a set-theoretic method which can systematically identify several paths to an outcome [29]. For instance, Vis [30] clearly demonstrated the value of the fsQCA method as this study compared regression analysis and fsQCA analysis and showed that fsQCA can provide a fuller understanding of how multiple conditions affect the outcome. Skarmeas, Leonidou, and Saridakis [31] also argued that comparing to structural equation modeling or regression analysis, fsQCA can provide unique information as it offers a holistic and alternative understanding about the effects of combinations of antecedents on the outcome. Following these studies, through the fsQCA method, we intend to explore the systematic effect of combinations of various factors at the organizational level on corporate performance during crisis, which can make up for the gap of previous related research only using regression analysis and other methods.

Overall, this study is designed to provide practical implications to crisis leaders of different firm sizes about how they need to combine diverse dimensions of organizational resilience capabilities such as financial, cognitive, and behavioral capabilities and take different actions during the crisis. To this end, we applied the fsQCA method that enables us to analyze the impacts of different firm size and sets of organizational resilience capabilities on organizational recovery and firm performance. We expect that this study can contribute to the crisis management and organizational resilience capabilities as we empirically demonstrate effects of organizational resilience capabilities combinations on firm performance instead of showing the net effect of individual organizational resilience capability on firm performance.

In the following sections we discuss (1) a literature review on crisis management and organizational resilience capabilities and theory on the diverse dimensions of organizational resilience capabilities; (2) methods to measure outcome and causal conditions variables and the contextual factor and to collect data; (3) procedures of fsQCA method; (4) analysis of the data and findings; (5) contributions, practical implications, limitations, and future research; and (6) the conclusion.

2. Literature Review and Theory

2.1. Crisis Management

Organizational crisis can be defined as “an event perceived by managers and stakeholders as highly salient, unexpected, and potentially disruptive.” [5]. Crisis can bring uncertainty and disruption to an organization and threaten organizational survival and sustainable performance [6]. Scholars have been investigating how organizations can effectively manage and reduce the damages from such a crisis and recover [32,33]. In order to cope with adversity, organizations internally attempt to coordinate relational and technical systems of organizations and employ organizational responses and externally try to coordinate social interactions among organizations and external stakeholders [5]. Particularly, from the internal perspective, it is mainly suggested that the role of leaders such as firms’ executives is critical for effective crisis management [4,5,6] before, during, and after adversity [2,3,4]. Executives’ crisis perception and framing crisis as threat or opportunities [4,6], the effect of emotion of executives on their decision making [8], the role of managers’ intuition for decision making [9], and communication with internal stakeholders [10] are examples that are discussed as the essential factors of crisis leadership.

Among others, it has been studied that leaders who see crisis events as a source of an opportunity and take immediate action can significantly contribute to resolving crisis [6,7]. For instance, at an individual level, when executives are learning-oriented, are promotion or prevention focused, and believe in the attainability of the opportunity, they are more likely to see opportunity in crises [7]. At the organizational level, when an organization allows risks and organizational failure, executives are highly likely to perceive crisis as an opportunity [7]. As for emotion, regardless whether managers perceive a crisis situation as a threat or an opportunity, when an organization faces with a crisis situation, managers’ appropriate or inappropriate emotional responses can affect their decision making. More specifically, König, Graf-Vlachy, Bundy, and Little [34] discussed that highly empathic CEOs can recognize the crisis situation early, obtain more crisis-related information and process it in an unbiased way, show more compassion and understand stakeholders’ difficulties, and be less likely to avoid the responsibility for organizational recovery. However, they also argued that too much CEO empathy may make CEOs overact to adversity, resulting in a negative outcome. Meisier, Vigoda-Gadot, and Drony [35] argued that a high level of emotional intelligence of leaders allows them to perceive and regulate their positive and negative emotion, understand other organizational member’s emotion, and affect work outcomes such as task performance and job satisfaction during crisis. Regarding intuition, when leaders are faced with ambiguous and risky crisis events, they tend to use their tacit knowledge developed by their experience in decision making [8]. Such tacit knowledge is highly associated with leaders’ intuition [8]. Similarly, Patton [36] discussed that intuition of people, which is nurtured by repeated experience and learning, enables decisionmakers to instantly react to crises. Regarding a leader’s communication skills with internal stakeholders [10], managers’ continuous efforts to build internal communication channels and consequential positive communication with employees during a crisis can help achieve organizational performance [37].

Although the crisis leadership and its influence on crisis management during adversity through facilitation of organizational reaction to adversity are critical, we have little understanding of which specific organizational capabilities a firm has developed and which ones leaders might need to orchestrate and facilitate for the recovery and sustainable performance of firms [1,2,4,5,11,12]. During a crisis, leaders’ adjustments and decisions on the facilitation of sets of organizations’ capabilities that are developed and embedded in organizational practices, routines, and systems are essential for recovery [38]. Moreover, it must be explored under which condition a particular configuration of organizational capabilities can be reinforced and lead to sustainable performance [12]. To fill these research gaps, we bring organizational resilience literature into crisis management [4]. Researchers in organizational resilience have explored how organizations can fundamentally resist adversity but it has been less discussed in and integrated into crisis management literature [4,39]. Indeed, crisis management and organizational resilience are two factors to deal with uncertainty and risk from adversity and are complementary to each other [4]. Next, we briefly review organizational resilience literature and discuss how the capability-based view of it can broaden our understanding on effective crisis management at the organizational level during adversity.

2.2. Organizational Resilience Capabilities

Organizational resilience is a necessary factor for organizations to withstand an unanticipated and disruptive crisis [4,13]. In the literature, organizational resilience has been defined in several ways [14]. In this research, among several attributes that can make firms withstand adversity, we take into account firms’ capabilities drawing on the capability-based view of organizational resilience [2,4,13,14,15]. We define organizational resilience as “a set of specific organizational capabilities, routines, practices, and processes by which a firm conceptually orients itself, acts to move forward, and creates a setting of diversity and adjustable integration” [13], p. 245.

According to the capability-based view of organizational resilience, to what extent a firm can be resilient during crisis largely depends on capabilities a firm has cultivated [14]. To deal with adversity during crisis, firms can transform their capacity for resilience they have nurtured and developed over time to their capabilities [4,13,17,40] that are embedded in the firms’ routines (e.g., knowledge, processes, and practices) [2,41]. Thus, organizational resilience capability can be defined as “a collection of organizational routines that enables an organization to respond to situations in an effective manner” [13], p. 251. Firms can perform better during crisis not merely because of their routines but because of their resilience capabilities [4].

Indeed, the capability-based view of organizational resilience can allow us understand what firms do and which firms perform better than others during crisis caused by unexpected and disruptive events [2]. Resilience capabilities at the organizational level must be understood as a multidimensional concept [14]. According to Lengnick-Hall and Beck [17] and Lengnick-Hall et al. [13], organizational resilience capacity can be understood as a unique set of cognitive, behavioral, and contextual elements, which interactively produce resilience during crisis. When these elements are transformed into actions during a crisis they become organizational resilience capabilities [13]. These capabilities are related to how organizations interpret adversity, accept problems, and develop solutions (cognitive capability) and implement these solutions (behavioral capability) and under which conditions (contextual factors) these capabilities are effectively integrated and take effect [2,4,13,42,43].

This configurational approach of organizational resilience capabilities can allow us find unique paths that lead to sustainable performance through the effective crisis management during adversity. Adding to cognitive, behavioral, and contextual dimensions that compose of organizational resilience capability, following Williams et al. [4], we suggest that a firms’ financial capability that it developed also must be taken into account for the configurations of organizational resilience capabilities particularly during adversity among several crisis stages.

2.2.1. Financial Capability

According to the process-based view of crisis management and organizational resilience [2,4], we must take account of the time dimension such as before, during, and after a crisis. Among those stages, particularly during a crisis, financial capability that a firm has built up must be considered as one of the essential components of organizational resilience capabilities as a collection of organizational resilience capabilities [4]. In the literature, it has been suggested that financial capability of firms is not a direct measure to cope with adversity but can play a role of buffering for firms to absorb shock from an external event [41], gain time to observe a situation, and create affordable time to utilize cognitive and behavioral capabilities to some extent [2,11,44]. Indeed, when an unexpected and disruptive event occurs, employees can be mired in chaos and it may take time for leaders to reconfigure and recombine extant resources, and implement new routines.

Further, financial resources are representative for slack resource [4,45,46,47]. Even when one of the functions of firms fails due to an unexpected and disruptive event, firms can flexibly and urgently use financial resources in reserve such as cash and liquid assets, minimizing negative performance [48]. For example, firms with slack resources during a crisis can maintain employment, leading to resilience and recovery [41,48]. To sum, financial capability of a firm can be bundled with cognitive and behavioral capabilities, resulting in sustainable firm performance during crisis.

2.2.2. Cognitive Capability

In a normal business environment, firms can achieve positive performance through their competitive advantage based on superior resources and routines [49,50]. For example, a firm’s high distinctive human resource management practices can affect employees’ attribution about situations they need to cope with for firm performance [51]. Such routines as a cognitive map can guide employees’ behaviors to promote a collective response aligned with organizational goals [51]. However, adversity caused by an external disruptive crisis can challenge the fundamental assumption about this kind of cause–effect relationship [52].

In this situation, the cognitive capability of a firm to quickly realize adversity and its risks, accept the current urgent situation, critically evaluate the situation, and formulate timely solutions to modify current routines or structures of a firm can help firms withstand disruption and recover [4,11,13,14,16,18]. For instance, quick new information assimilation [53], timely and accurate information share [20,48], allowing communication between employees and identification of challenges [54], and generating alternative plans [13] can help firms build modified cognitive and casual maps that deviate from old, planned routines [19] and maintain performance during adversity.

2.2.3. Behavioral Capability

To handle a disruptive event and recover, firms need to not only use their cognitive capability to identify issues and develop crisis plans but also take actions for solution implementation [2,4,55,56]. The behavioral capability of a firm in crisis is a natural extension of cognitive capability as crisis plans and solutions must be aligned with behavior of a firm to be accomplished [4,17,19,20]. It is important for firms to align their behaviors with their modified cognitive maps that enable resilience. Behavioral capability of firms means a firm’s ability to implement developed solutions [2]. It can allow firms to move forward when risk arises from adversity [17]. Specific behaviors of a firm can involve structural adjustment, business model reshaping, or strategic transformation.

As a firm’s behavioral routines are embedded in organization design such as organizational structure and activity configurations [57], a firm may need to adjust and transform its structure according to its solution to deal with adversity. During crisis, the old structure would be less efficient to share information on adversity and connect employees [1]. For example, structural formation such as decentralized and team-based style structure [1] during crisis can facilitate the processes of crisis management and urge information share on the urgent situation and newly proposed tactics and strategies [4,58,59].

Second, adversity may challenge the assumption not only about the internal casual-effect relationship between employee’s behaviors and firm performance, but also about the external relationship between transactions with other parties and customers and a focal firm’s value creation. This mechanism is represented by the central role of business models on a firm’s performance [60]. Hence current business models might hardly lead to firm performance and require reshaping of it during a disruptive crisis. For instance, when adversity arises, firms may need to actively consider adopting an e-business model to reduce transaction costs and expand the transactional boundaries [61].

Along with structural formation and business model reshaping, firms may also need to make strategic transformation to achieve sustainable firm performance during crisis. Adversity can change a firm’s competitive landscape and old strategies would lose fit with a firm’s hostile environment, resulting in poor performance [62]. For the recovery, firms may need to refine their strategies. For example, when a disruptive crisis arises, firms can try to cut cost, reduce assets and product lines, restructure debt, work on cost controls, make changes in board of directors, or execute acquisition [63].

2.2.4. Contextual Factor: Firm Size

Effectiveness of the particular configurations of organizational resilience capabilities during crisis might depend on the contextual factor such as firm structure [1]. Context is a foundational setting in which a firm’s resilience capabilities are integrated and create an effect [4,17]. Among several contextual factors of firms, firm size is considered an important aspect [4,14]. Firms with different sizes may experience adversity to a different degree during a surprising event, requiring different combinations of resilient capabilities to successfully manage the crisis and achieve sustainable firm performance. For example, during a time of crisis, smaller-sized firms may feel more threatened about risks than larger firms and try to leverage their resilience capabilities for immediate actions. They tend to quickly use cash or liquid assets, diagnose the situation, share information on it among employees, revise old plans and develop solutions, and take swift actions to implement them [63]. Compared with small-sized firms during crisis, larger ones might be conservative in utilizing their resilience capabilities based on their systematic organizational system and business processes.

3. Method

3.1. fsQCA

We applied the fsQCA method to explore various combinations of factors that achieve the best firm performance as well as different paths that achieve the same outcome. fsQCA is an important set-theoretic method of configuration approach [29]. It can help identify whether the presence or absence of factors and their combinations can lead to a specific outcome. It is especially suitable for explaining the complex social phenomenon of multiple concurrent causality. Here are four main advantages of fsQCA compared with regression analysis and reasons why we use fsQCA:

First, fsQCA is designed for analyzing a small or intermediary number of samples, which are much smaller than the sample size required by regression analysis and are too large for case studies [29]. So the fsQCA method is compatible with our sample size. Second, fsQCA takes the combination of factors as a whole to study the systematic effect of multiple factors, which overcomes the difficulty in explaining the interaction of multiple variables by regression model. So fsQCA is more suitable to identify combinations of effects of multiple strategy factors on the firm’s performance. Third, fsQCA can find different combinations of factors that reach the same outcome, which refers to equifinality [64], while regression analysis fails to identify different paths. So fsQCA helps obtain various strategy pathways with the same performance, which offers great significance and realistic reference value to different types of firms with different situations. Fourth, leaving out a relevant causal condition or smaller number of factors in fsQCA does not result in omitted variable bias as regression analysis does [64]. So there is no need to worry about omitted variable bias in fsQCA study with only a limited number of causal conditions.

Compared with regression analysis, there are several disadvantages of fsQCA. For instance, the results of fsQCA can be affected by the previous knowledge of the researcher as it needs the calibration of data [30]. In addition, fsQCA cannot show the independent variable’s average effect on the dependent variable since it mainly analyzes effects of causal combinations [30,31]. Although there are such limitations of fsQCA, fsQCA is an appropriate empirical method to achieve the purpose of the study, which is to figure out multiple combinational paths of a firm’s organizational resilience capabilities to sustainable firm performance during the COVID-19 epidemic in China [30,31]. fsQCA can account for any asymmetric and nonlinear effect where “variables found to be causally related in one configuration may be unrelated or even inversely related in another” [65], p. 1178. Indeed, in the prior literature, fsQCA has been widely applied in diverse research areas including, but not limited to entrepreneurship and innovation [66,67], consumer behaviors [68], information technology [69], tourism [70], and politics [71].

3.2. Variables and Measurements

3.2.1. Outcome Variables

The outcome variable of our research is the improved firm performance, which is measured by the Economic Value Added (EVA). In previous research, the financial index method was the main tool to determine the corporate performance [72]. Financial indicators evaluate firm performance essentially by calculating accounting indicators, such as return on equity and earnings per share. However, there are some limitations of conventional financial indicators in representing firms’ actual performance compared with EVA.

Therefore, we used EVA as our outcome variable. Economic Value Added (EVA) refers to after-tax net operating profit deducting all total capital costs and is gradually introduced into the performance evaluation system to better measure firm performance. Here are the main advantages of EVA [72] along with the reasons why we used EVA: First, EVA considers all capital costs including equity capital cost, emphasizing the idea of economic profit of opportunity cost. EVA can not only help managers better optimize the capital structure, but also accurately reflect firm’s authentic value creation capability. Considering equity capital cost also makes EVA enhance the comparability of performance of different scales of firms, which is suitable for our sample set containing firms of various sizes. Second, with elimination of the effects of changes in accounting policies, EVA can avoid being manipulated by people to whitewash firm profits and thus provide more objective, accurate, and reliable information.

Since several intermediate values in the EVA formula are not disclosed in a firm’s financial report, we directly collected EVA data from the China Stock Market Accounting Research Database (CSMAR) database. Positive EVA indicates capital appreciation and higher EVA reflects better performance, while negative EVA indicates capital loss [73].

3.2.2. Causal Conditions Variables

Based on the outcome, a set of factors or causal conditions should be identified. We developed six causal conditions and divided them into four dimensions as follows:

• Financial capability

To measure financial capability, we include the degree of reserved redundancy and the asset–liability ratio since these indices can show the solvency of a firm threatened by a sudden adversity [74].

Degree of reserved redundancy (RD): This condition variable can be measured by the current ratio [73]. It refers to current assets divided by current liabilities [75]. Under a crisis situation, a solvency ratio that indicates a firm ability to meet short term debt must be considered. Current ratio is one of the most important financing factors that present a firm’s short-term financial solvency [76]. We collected semiannual current ratio from eastmoney.com and calculated the average semiannual data from 1 January 2018 to 30 June 2020. We selected this sampling window to follow our definition on a firm’s resilience capabilities that a firm has nurtured and developed over time.

Asset–liability ratio (AL): Asset–liability ratio means total liabilities divided by total assets [77]. It is also an important indicator to measure a firm’s solvency [78]. A high asset–liability ratio means that a firm has higher level of debt risk and low level of solvency [77]. We collected semiannual asset–liability ratio from eastmoney.com and calculated average semiannual data from 1 January 2018 to 30 June 2020.

• Cognitive capability

Cognitive capability is composed of timeline of proposing strategies and whether there was a crisis response plan.

Timeliness of proposing strategies (TL): This reflects how timely a firm cognitively responses to crisis. It is measured by the number of days from the outbreak of epidemic (which is set to be 1 February 2020) to the date of proposing response strategies (which is found from firm’s financial report and news articles).

Whether a crisis response plan (RP): This includes resource supply, human resource allocation, cost control, financing strategy, etc. It is formulated in the annual business plan. When the firm has a crisis response plan, the value is 1; otherwise, the value is 0.

Firms tend to reveal their strategies to react to unexpected external incidents in their annual reports [79]. Moreover, a firm’s strategic actions for a turnaround can be observed in newspaper articles [80]. Thus, following these studies, we used news articles and annual reports to identify a firm’s strategic reactions and their speed [81].

• Behavioral capability

To survive from the adversity caused by COVID-19, firms may adjust their structure through state intervention, merger and acquisition, or their ownership and governance structure change [82]. Business model changes also lead to a firm’s new opportunities exploitation [83]. Indeed, business model innovation leads to a firm’s performance enhancement in the hospitality industry during COVID-19 [84]. Reduction in fixed costs and inventories [85] and of labor cost [86] and process innovation for cost savings [87] are also critical for firm performance during crisis.

Accordingly, in this study, behavioral capability includes structural adjustment, business model reshaping, or the degree of structural costs reduction. This asks whether the firm carries on structural adjustment, business model reshaping, or strategic transformation (SBS). When the firm has either one, the value is 1; otherwise, the value is 0.

• Contextual factor

Firm scale (FS): There are several proxies to measure firm scale such as total sales, market capitalization, and total assets [88]. Among them, following several studies, e.g., [89], that used total assets as an estimate of firm scale, we used the absolute value of total assets to measure firm scale. It is measured by total assets on 30 June 2020 collected from eastmoney.com.

Table 1. Descriptions on variables and measurements.

Categories	Name of Variables	Measurements	References
Firm performance	EVA growth rate	Annual growth rate of after-tax net operating profit deducting all total capital costs	[72]
Financial capability	Redundancy degree (RD)	Average of semiannual current ratio (current assets/current liabilities)	[73,75,76]
	Asset–liability ratio (AL)	Average of semiannual asset–liability ratio	[77,78]
Cognitive capability	Timeliness (TL)	The number of days from the outbreak of epidemic to the date of proposing response strategies	[81]
	A crisis response plan (RP)	Whether the firm has a crisis response plan such as resource supply, human resource allocation, cost control, and financing strategy or not	[79,80,81]
Behavioral capability	Structural adjustment, business model reshaping, or strategic transformation (SBS)	Whether the firm carries on structural adjustment, business model reshaping, or strategic transformation or not	[82,83,84,85,87]
Contextual factor	Firm scale (FS)	Total assets	[88,89]

summarizes descriptions on variables and measurements of the study.

3.3. Data Collection and Sample Selection

We used the ranking list of top 100 Chinese film and television companies in 2018 [90] as the initial sample. In order to obtain access to the company’s financial data and strategies information, as well as to conduct meaningful research focusing on the film industry, we set the selection criteria as follows: (1) The firm is a listed company. (2) The annual and quarter reports of the company are published. (3) The company has a clear business segment and the main business is film-related (cinema, film production, film distribution, film marketing and promotion, etc.). (4) The company’s stock market has not been suspended. (5) The company ranks relatively high on the list. (6) The company went public in mainland China (EVA data of US and HK listed firms are unavailable).

Based on the above screening criteria, we obtained 21 listed Chinese film and television firms as the final sample. According to [91], QCA with five causal conditions (after eliminating the variable which is a necessary condition, five condition variables are left eventually) optimally requires a sample of greater than or equal to 15, so our sample size and the number of causal conditions are matched reasonably and reliably.

4. Procedures

4.1. Descriptive Statistics

The descriptive statistics provides an overview of the data set and reflects how the outcome would be categorized [92]. We conducted a statistical analysis of the statistic of variables. From

Table 2. Descriptive statistical analysis results of the variables.

Variables	Mean	S.D.	Min.	Max.
EVA growth rate	9.06	27.61	−9.55	125.90
Redundancy degree	3.06	3.06	0.82	13.92
Asset–liability ratio	35.87	14.70	8.26	67.92
SBS	0.62	0.49	0.00	1.00
Firm scale (hundred million)	76.90	73.78	1.01	249.80

we can obtain: (1) The average EVA year-on-year growth rate of the sample companies is good at 9.06%, but the standard deviation is as high as 27.61% with the minimum of negative 9.55% with the maximum even reaching positive 125.9%, so there is a significant gap between sample firms’ EVA growth. (2) Both the redundancy degree and asset–liability ratio have big standard deviations, indicating there exists a large difference between firms’ debt level and solvency. (3) The average of timeliness is 22 days, and the standard deviation is just 4 days, reflecting that the time spent on reacting to the crisis of these firms is similar. (4) Structural adjustment, business model reshaping, and strategic transformation has an average of 0.62, indicating that more than a half of case firms chose to make structural adjustment, business model reshaping, or strategic transformation. (5) The average firm scale is 76.9 hundred million, showing that most of sample firms are classified as a large enterprise (more than 12 hundred million total asset) according to Chinese enterprise scale classification standard in 2020, but several small-scale firms increase the standard deviation, so we can conduct an analysis on different firm scales, which ensure the outcome diversity.

4.2. Calibration of Sets

fsQCA can convert sample data into a continuous value between 0 and 1 through calibration, which is the process to translate raw data into membership scores according to relevant standards. The calibrated data can better describe the level of sample value in the overall set [93]. We first preset three anchor points including full membership, full non-membership, and crossover point [94]. We set the upper 0.95 percentile, mean, lower 0.05 percentile of data as the anchor points with reference to existing research [95]. The variable SBS is measured by 1 and 0, so it is not involved in calibration. The calibration anchor points of each variable are shown in

Table 3. Calibration anchors for each variable.

Variables	Fully Out (0.05)	Crossover (0.5)	Fully in (0.95)
Redundancy degree	0.85	1.87	9.49
Asset–liability ratio	8.93	35.94	55.97
Timeliness	15.00	23.00	29.00
Firm scale (hundred million)	2.52	35.43	221.80

.

Then we rearranged the sample into the four subsets divided by three anchor points. The sample distribution between different anchor points can be observed in

Table 4. Sample distribution under different calibration anchors.

Variables	Indicators	Below Fully Out	Between Fully Out and Crossover	Between Crossover and Fully In	Over Fully In
Redundancy degree	Sample size	1	10	9	1
	Mean	0.82	1.42	3.93	13.92
Asset–liability ratio	Sample size	1	10	9	1
	Mean	8.26	26.16	46.17	67.92
Timeliness	Sample size	4	7	9	1
	Mean	15	20.57	25.78	30
Firm scale (hundred million)	Sample size	2	9	9	1
	Mean	1.76	24.18	127.10	249.80

. The sample distribution of these four variables is almost similar except 4 firms that have timeliness below fully out point, that is, relatively more firms have made a quick response to the crisis.

Through fsQCA software, we calibrated the data and obtained the descriptive statistics results of data after calibration as shown in

Table 5. Descriptive statistical analysis results of calibrated variables.

Variables	Mean	S.D.	Min.
Redundancy degree	0.45	0.28	0.04
Asset–liability ratio	0.53	0.31	0.04
Timeliness	0.48	0.32	0.05
Firm scale (hundred million)	0.51	0.31	0.04

. The averages of these four variables are closely around 0.5, and standard deviations are around 0.3, indicating that samples are about evenly distributed between 0 and 1 with a certain diversity.

5. Analysis Procedures and Findings

5.1. Analysis on the Necessary Conditions

The necessity test finds out what conditions are necessary to the presence of outcome. Necessary conditions must be included in the outcome configuration and thus not need to involve subsequent analysis. The consistency threshold is an indicator to identify necessary conditions. Condition with a consistency threshold above 0.9 is a necessary condition [93]. However, our original fourth variable ‘whether a crisis response plan is formulated in the daily annual business plan’ is a necessary condition with a consistency of 1 (over 0.9) in the necessity test, indicating all sample firms have a crisis response plan in daily business plan, which is a necessary condition for improved performance in facing the crisis, so we will not discuss this necessary condition in subsequent fsQCA analysis.

From

Table 6. Analysis of necessary conditions.

Condition Variables	Consistency
Redundancy degree	0.598425
~Redundancy degree	0.779527
Asset–Liability ratio	0.733268
~Asset–Liability ratio	0.625000
Timeliness	0.690945
~Timeliness	0.641732
Firm scale (hundred million)	0.627953
~Firm scale (hundred million)	0.702756
SBS	0.667323
~SBS	0.332677

Note: ~ indicates absence of core causal condition.

, all five variables left have consistency lower than 0.9, indicating that the condition variables analyzed in this paper are not necessary conditions that lead to improved performance, so all variables are retained in the subsequent truth table operation.

5.2. Sufficiency Analysis and Interpretation Solutions

We used the sufficiency analysis to test whether the set of configuration is a subset of the outcome set [94] and

Table 7. True table results.

	Configuration	Raw Coverage	Unique Coverage	Consistency
Complex solution	~RD*~TL*~FS*SBS	0.284449	0.0698819	0.883792
	~RD*~AL*~FS*SBS	0.317913	0.0452756	0.889807
	~RD*AL*TL*FS	0.419291	0.13878	0.843564
	RD*AL*~TL*FS*SBS	0.130905	0.0216535	0.801205
	RD*AL*TL*~FS*SBS	0.215551	0.0127953	0.939914
	RD*~AL*TL*FS*SBS	0.202756	0.0226378	0.903509
	Solution coverage	0.74311
	Solution consistency	0.836102
Intermediate solution	~RD*~TL*~FS*SBS	0.284449	0.0698819	0.883792
	~RD*~AL*~FS*SBS	0.317913	0.0452756	0.889807
	~RD*AL*TL*FS	0.419291	0.13878	0.843564
	RD*AL*~TL*FS*~SBS	0.130905	0.0216535	0.801205
	RD*AL*TL*~FS*SBS	0.215551	0.0127953	0.939914
	RD*~AL*TL*FS*SBS	0.202756	0.0226378	0.903509
	Solution coverage	0.74311
	Solution consistency	0.836102
Parsimonious solution	RD*AL	0.452756	0.0344488	0.87619
	TL*FS	0.494094	0.0492126	0.849408
	~RD*~FS	0.593504	0.0383858	0.852899
	~RD*SBS	0.518701	0	0.746459
	Solution coverage	0.820866
	Solution consistency	0.770083

Note: ~ indicates absence of core causal condition; * denotes the meaning of and.

shows the true table results. fsQCA produces three types of solutions including complex solution, intermediate solution, and parsimonious solution [94]. Without simplifying assumptions, complex solution has high complexity that results in difficult analysis [92]. Parsimonious solution obtains the fewest factors, which may be over-simplified, unreasonable, and inconsistent with the reality. Intermediate solution offers more reasonable results with reduced complexity. Therefore, we use the intermediate solution (the same as complex solution in this study), which is primarily recommended as the interpreting reference of QCA study to interpret results [94].

5.3. Configuration Analysis of Different Paths

Table 8. Configurations for improved firm performance.

Condition Variables	Configuration
	1a	1b	2a	2b	1c	2c
RD	○	○	○	●	●	•
AL		○	•	●	●	○
TL	○		●	○	•	●
FS	○	○	●	•	○	●
SBS	●	●		○	•	•
Consistency	0.883792	0.889807	0.843564	0.801205	0.939914	0.903509
Raw coverage	0.284449	0.317913	0.419291	0.130905	0.215551	0.202756
Unique coverage	0.0698819	0.0452756	0.13878	0.0216535	0.0127953	0.0226378
Solution consistency	0.836102
Solution coverage	0.74311
Core condition exists		●
Core condition does not exist		○
Complementary condition exists		•
No effect

shows the results of core-auxiliary condition configurations. ● represents ‘core condition’, • means ‘complementary or contributing condition’, ○ represents ‘core condition does not exist’, and blank means ‘no effect’, respectively. We obtained consistency and coverage as two main parameters of fit to examine how well the samples fit a sufficiency or necessity relation. Consistency measures how necessary or sufficient the relation between factors and the outcome is in this sample [94]. In this study the consistency minimum value is 0.80 and the maximum value is 0.93, reflecting each configuration as a sufficient condition of the outcome variable has certain reliability. Coverage measures the importance of a path, and high coverage indicates the main path to achieve the outcome. The overall solution coverage is 0.74, which means that the six configurations found through fsQCA can explain most of the paths to achieve improved performance. Among them, the raw coverage of 1a, 1b, and 2a are relatively higher than other configurations, showing that they are the main way for sample firms to obtain improved performance.

Based on the configuration table, we conducted a comprehensive analysis of all configurations from three perspectives, including direct explanation of strategy combination represented by each path, comparison between paths for firms in the same size, and comparison between some paths for firms in different sizes.

Configuration 1a (~RD*~TL*~FS*SBS) indicates that for smaller-scale film and television firms with low redundancy degree, the combination of short timeliness and carrying on structural adjustment, business model reshaping, or strategic transformation can lead to improved performance. Configuration 1b (~RD*~AL*~FS*SBS) indicates that for smaller-scale film and television firms with low redundancy degree and low asset–liability ratio, carrying on structural adjustment, business model reshaping, or strategic transformation can improve performance. Configuration 1c (RD*AL*TL*~FS*SBS) indicates that for smaller-scale film and television firms with high redundancy degree and high asset–liability ratio, the combination of long timeliness and carrying on structural adjustment, business model reshaping, or strategic transformation can contribute to improved performance. Configuration 2a (~RD*AL*TL*FS) indicates that for larger-scale film and television firms with low redundancy degree and high asset–liability ratio, taking long timeliness can lead to improved performance. Configuration 2b (RD*AL*~TL*FS*~SBS) indicates that for larger-scale film and television firms with high redundancy degree and high asset–liability ratio, the combination of short timeliness and not carrying on structural adjustment, business model reshaping, or strategic transformation would be better to improve performance. Configuration 2c (RD*~AL*TL*FS*SBS) indicates that for larger-scale film and television firms with high redundancy degree and low asset–liability ratio, the combination of long timeliness and carrying on structural adjustment, business model reshaping, or strategic transformation would help achieve improved performance.

Comparing 2b and 1c, in the case of high redundancy degree and high asset–liability ratio, in order to obtain improved performance, larger-scale film and television firms should take short timeliness and not carry on structural adjustment, business model reshaping, or strategic transformation, while on the contrary, smaller-scale film and television firms should take long timeliness and carry on structural adjustment, business model reshaping, or strategic transformation. Comparison between these two configurations reflects that firms should take different actions according to their firm sizes and practical conditions. Specific strategies, which are generally considered beneficial such as ‘short timeliness’ and ‘carrying on structural adjustment, business model reshaping, or strategic transformation’, are not necessarily appropriate for these firms to improve performance.

For all three configurations 1a, 1b, and 1c of smaller-scale firms, it is necessary to carry on structural adjustment, business model reshaping, or strategic transformation for improving performance. Comparing 1a and 1c we know when a smaller-scale firm has high redundancy degree, it would be better to take longer time to respond; but if its current ratio is low, making a response as quickly as possible would be the wiser choice.

For all three configurations 2a, 2b, and 2c of larger-scale firms, either high redundancy degree with low asset–liability ratio (2c) or low redundancy degree with high asset–liability ratio (2a) is suggested to take long timeliness; however, there exists an exception when both redundancy degree and asset–liability ratio are high (2b), larger firms should better shorten their timeliness without carrying on structural adjustment, business model reshaping, or strategic transformation to obtain higher performance.

6. Discussion

In this study, by integrating crisis management and organizational resilience literature and drawing on the capability-based view of organizational resilience, we mainly propose that firms need to use their resilience capabilities to withstand disruptive and unanticipated adversity during crisis. Prior studies have mainly examined how crisis leaders’ features such as crisis perception as opportunity, emotion, intuition, and communication skills can influence organizational recovery during crisis. However, we note that a multidimensional attribute of a firm’s resilience capability a firm has developed must be taken into account. The dimensions of organizational resilience capabilities include financial, cognitive, and behavioral capabilities. Through these capabilities, firms can absorb shock from external crisis and use slack resources to withstand, diagnose the urgent situation and develop timely solutions, and implement these solutions. These capabilities are bundled together, creating unique paths to collectively lead to a firm’s sustainable performance during crisis. Further, we highlight that the effectiveness of configurations of organizational resilience capabilities during crisis depends on a contextual factor, firm size.

6.1. Contributions

Previous studies have explored how organizational resilience capabilities such as financial, cognitive, and behavioral capability individually affect organizational recovery and performance during crisis in many times. For instance, when a hospital has an abundant financial slack resources, it can absorb shock when there is a cash flow problem during adversity [38]. Similarly, U.S. airline companies with financial reserves could effectively overcome the 9/11 crisis and avoid layoff [52]. As for cognitive capability, one of the studies that discussed how important organizational practice that has been developed for an organizational resilient response is Gittell [48]. This study showed that when a relational work system is well-developed, a hospital can support communication among organizational members and integrating tasks to cope with an external adversity well, resulting in organizational resilience. Regarding behavioral capability, Pearce II and Robbins [62] is one of the studies that highlight how critical the strategic transformation such as strategic alliance, acquisition, diversification, and innovation is for a firm’s turnaround. Findings of such studies have significantly expanded our understanding on how each organizational resilience capability can help firms adapt to emergent situation and achieve performance during the crisis.

However, these studies usually account for the independent effect of each capability on firm performance during crisis. They have largely overlooked the potentially complementary, overlapping, and competing effect that organizational resilience capabilities might have on firm performance during crisis. Indeed, this has been continuously mentioned in the studies on the specific ways of arrangements of firms’ resilience capabilities during crisis to achieve sustainable firm performance [1,12]. We mainly contribute to crisis management and organizational resilience literature, as we draw on capability-based view of organizational resilience [2,4,13,14,15] and demonstrate which sets of organizational resilience capabilities and which contextual factor must be considered to examine a firm’s sustainable performance during adversity. In other words, we extend the literature on crisis management and organizational resilience to investigate the bundles of resilience capability portfolios rather than focus on singular isolated ones. Through focusing on a set-theoretic combination of capability indicators, we discuss how they jointly affect the performance during crisis. We show that to successfully recover from adversity and achieve performance during crisis, firms must leverage their financial resources, make sense of, and act against the crisis situation at the same time. These capabilities are labeled financial, cognitive, and behavioral capabilities in this study. These are specific organizational resilience capabilities that leaders need to utilize and coordinate when crisis emerges from an unpredictable, disruptive external event for sustainable firm performance. The findings of our study indicate that a firm with different resource endowments can bundle their capabilities in different manners to cope with the crisis for better performance. Particularly, firms need to take their size into consideration to fully take advantage of their inherent capabilities.

We empirically applied the fsQCA method to overcome the empirical limitations of organizational resilience capability studies [1,4] that mostly used case studies or derived from unsubstantiated evidence [29]. We highlight that fcQCA is an ideal method to systematically examine our theory considering the rare occurrence of disruptive external events and the difference of capturing a firm’s crisis management [5]. As for empirical significance, the result has an overall solution coverage of 0.74, which can reflect most of the paths to achieve improved firm performance, providing universal reference significance for most companies in the Chinese film and television industry; each configuration is composed of the presence or absence of multiple conditions, which reflects the interactive effect of multiple organizational resilience capabilities on corporate performance rather than the isolated effect of a single capability.

6.2. Practical Implications

We put forward the practical and implementable strategy portfolio solutions for Chinese film and television companies with different sizes to improve their performance during adversity caused by the COVID-19 epidemic as follows:

For larger film and television companies to improve performance during adversity, if the firm has low level of financial capability, which has high debt level and poor solvency, it would be better to leverage its cognitive capability, taking more time to make response actions after careful consideration and determination; if the firm has high debt level but strong solvency, it can utilize its cognitive capability, reducing timeliness and taking timely response strategies, meanwhile, it does not need to use its behavioral capability, that is, no more major adjustments on strategy, structure, or business model are suggested.

For smaller film and television firms to recover from crisis, it is necessary to use their behavioral capability, making changes and adjustments on structure, strategy, or business model for better survival. To be specific, if the firm has a high level of financial capability, which owns strong solvency, it is beneficial to spend more time improving and optimizing the response plan and to react more slowly; but if the firm is poor in financial capability, which has weak solvency, utilizing behavioral capability to take quicker actions is conducive to improve firm performance.

In order to improve firm performance as much as possible, with equal levels of financial capability (high redundancy degree and high debt level), larger film and television firms are suggested to utilize cognitive capability (reducing the time of responding to the crisis) without using behavioral capability (remaining major framework of firm structure, strategy, and business model unchanged); whereas smaller film and television companies should better spend more time responding to the crisis to ensure the quality, effect, and feasibility of response actions and use behavioral capability.

The findings of this study can also be relevant to other industries that are affected by the pandemic. For example, the global hotel industry and airline industry also have encountered great challenges due to the devastating impact of COVID-19. Several prior studies have taken a qualitative approaches to investigate how firms might cope with such a situation. Hao, Xiao, and Chon [96] proposed that firms in the hotel industries need to accommodate different strategies such as business and channel diversification, digital transformation, product innovation, and market reorientation. Similarly, Lai and Wong [97] also suggested that firms in hotel industries need to combine different practices to cultivate different types of strategies. On the basis of analysis in the airline industry, Amankwah-Amoah, Khan, and Osabutey [98] articulated a four-stage approach toward business renewal process. Suk and Kim [99] proposed four strategic responses to the pandemic based on the duration and impact of the COVID-19. Many of these studies are qualitative in nature and emphasize on the behavioral aspects of crisis management. Our study adds to this stream of research by emphasizing the role of financial, cognitive, behavioral, and contextual factors. Managers in the entertainment industry such as hotel and airline industries can achieve sustainable firm performance based on the different configurations of their resilience capabilities and firm size. Firms with different financial capability and cognitive capability can manage behavioral strategy in different ways to achieve equally good performance. In addition, firms with a different size can optimize and orchestrate their capability portfolios in distinctive manners.

6.3. Limitations and Future Research

First, our previous data sample size reached 30, and they are all listed companies in the film and television industry. However, when looking up the company’s annual report and some specific data, it was found that some of the companies were listed in Hong Kong and the United States, and belonged to Hong Kong stock companies and U.S. stock companies. We could not obtain their EVA value and asset–liability ratio through databases or company annual reports, which hinders our research. Therefore, we finally chose to exclude these samples. Second, whether the company undertakes strategic transformation, structural adjustment, or business model reshaping is a literal variable and it needs to be judged by the company’s disclosed information and related reports. The actual actions of the company may also be different from the external disclosure of information. The external disclosure of information may be used to stabilize the confidence of shareholders and demonstrate the role of social responsibility, which might bring some noise in our research. Third, as for the limitations of fsQCA, this study focuses on cross-sectional data, and the case sample analyzed in this paper is limited in size and film industry. Although we tried to effectively measure the mechanism of actions and the systematic effects of response strategy combinations of film and television companies in different scales, the dynamic evolution effect of variables cannot be observed directly because of not using time series data. Fourth, we note that it is worth carrying on in-depth exploration on the difference of variable data at various time points in further study based on multi-time point measurement method. Fifth, as we only focused on the film and television industry in China, there is a generalizability issue of our findings. Future studies need to examine whether our findings hold in other industries and countries.

7. Conclusions

This study provides valuable timely instructions for Chinese film and television firms on how to respond to the current COVID-19 epidemic crisis, and what organizational resilience capability combinations are more appropriate for different companies to improve firm performance according to firm size. Our results show that for sustainable firm performance during adversity, it is essential to identify and organize concurrent organizational resilience capabilities and to make sure that the effectiveness of particular capability configurations depends on their firm scale. It is challenging for firms to respond to and recover from a devastating crisis situation, but the findings of the study suggest that crisis leaders’ choices in orchestrating organizational resilience capabilities can reduce damages and achieve sustainable firm performance during the COVID-19 crisis.