15 Jan 2025
Recently, a paper titled "Nexus of Sustainability and Organizational Resilience: The Role of Operational Slack" co-authored by Professor Lujie Chen, doctoral student Fangxu Yan, Fu Jia from College of Business Administration of Capital University of Economics and Business, and Asif Nazrul from Cambridge Judge Business School of University of Cambridge has been accepted and published in the Technovation, a Tier 1* and CAS Q1 journal. This article delves into the practical implications of sustainability and organizational resilience (OR), drawing on insights from recent empirical research focused on Chinese manufacturing firms. The findings not only highlight the potential of environmental, social, and governance (ESG) practices to enhance resilience but also offer actionable strategies for businesses.
The COVID-19 pandemic has underscored the fragility of global supply chains, particularly in manufacturing. Yet, amidst these disruptions, some firms have demonstrated remarkable resilience. The study finds that firms with higher ESG performance demonstrate stronger organizational resilience, particularly during disruptions like the COVID-19 pandemic. This study also finds that operational slack amplifies the positive impact of ESG practices on resilience. Firms with sufficient slack resources—such as extra inventory, labor capacity, or production flexibility—are better positioned to leverage their ESG initiatives effectively during disruptions.
This study not only contributes to academic knowledge but also offers practical guidance for managers and practitioners.
First, a high level of sustainability practice can improve relationships with suppliers, customers, and other stakeholders, and help companies better manage challenges and gaps in their supply chains. Specifically, our main conclusion emphasizes that firms’ sustainability actions may serve as an important OR strategy and may have created a shield against the adverse effects of the COVID-19 pandemic. While sustainability initiatives, such as carbon tracking or waste reduction, can strain resources in the short term, they ultimately contribute to long-term resilience. Professionals must prioritize investments in sustainability that align with their resilience goals, leveraging tools like ESG metrics to measure and balance these objectives effectively.
Second, our research urges firms to pay more attention to the deployment of resources and consider them as strategies to improve the effectiveness of their sustainability activities and OR. The challenge lies in managing the balance between maintaining operational slack and lean production. Managers must consider the cost implications of maintaining excess resources versus the potential gains in flexibility and adaptability. Overcoming this barrier involves careful planning and monitoring of market dynamics to ensure that operational slack is used efficiently. Notably, labor slack is more effective due to its inherent flexibility. Unlike inventory slack, which is static and limited to pre-existing stock, labor slack represents a dynamic resource that can be reallocated or adjusted to address various operational challenges. This adaptability enables firms to respond swiftly to disruptions, implement ESG-related initiatives, and maintain operational continuity.
Third, given the potential for public policies to shape the business environment and influence firms’ strategic decisions, it is essential to consider how policy and regulatory frameworks can incentivize the adoption of sustainability practices. For example, governments and regulatory bodies should offer incentives for firms that integrate sustainability into their operations. This can include tax breaks, grants for sustainability technology investments, and recognition programs for firms that excel in sustainability.
Lujie Chen is a full Professor of Management at Xi’an Jiaotong-Liverpool University. Professor Chen is Elsevier-Stanford University World's Top 2% Scientists 2024 (the only one in IBSS). She is a Fellow of the Higher Education Academy in the UK and an expert in the fields of supply chain management and business analytics. Professor Chen have published over 60 high-quality and impactful papers in top-tier journals such as the Journal of Operations Management (UTD 24), Harvard Business Review (FT50), International Journal of Operations and Production Management (ABS 4), British Journal of Management (ABS 4), and European Journal of Operational Research (ABS 4), among others. She has served as a guest editor for special issues of several respected journals such as International Journal of Operations and Production Management, Industrial Marketing Management, International Journal of Production Economics, and Journal of Business Research. She is currently serving as an Associate Editor for the International Journal of Operations and Production Management (ABS 4).
Technovation is a Tier 1* journal, ranked Q1 by the Chinese Academy of Sciences, with an impact factor of 11.1. This interdisciplinary journal encompasses all facets of technological innovation. Innovation is considered from both the perspectives of process and product, social innovations (regulation and policy as well as creation of non-economic benefit), conceptualization of a new technology-based product or process through commercial utilization. Topics include technological trends and breakthroughs; capital for new product development and commercialization; displacement of existing products, management of technology-intense entrepreneurial ventures; management of technological innovation in medium-sized and large organizations; appropriate organizational structures and practices; investment strategies related to new science-based or technology-based enterprises; the technological innovator as an entrepreneur, team-member, manager or employee; technology transfer to, from and between developing countries; technological innovation in all forms of: enterprise, political and economic systems.
15 Jan 2025