Resilience and sustainability are multifaceted paradigms that are defined depending on the field of application [1
]. As a general concept, sustainability deals with reducing negative impacts on environment—both business and natural—resilience captures adaptation and recovery from imposed change. Drawing from the literature, the two concepts are related, sharing similar goals and some common approaches, even if the range of the relationship extends to considering them as synonyms, to regarding them as distinct notions [3
]. At a small scale there are trade-offs between sustainability and resilience [4
] that should be analyzed building up a common framework [5
]. In the fields of business management and supply chain management, sustainability is considered a component of resilience, that is, increasing sustainability of the system makes the system more resilient.
We argue that the principles of operational sustainability, should embrace economic, environmental and social impacts of a company’s operations, can improve the resilience of the company, supporting its growth and survival.
This research identifies the sustainable maturity index (SMI), derived from populating an operations sustainability maturity model (OSMM), using data from different industry sectors and countries. The SMI measures the company sustainability intent and progress along a maturity trajectory. Our sustainability model includes a set of common resilience indicators, supporting the hypothesis that sustainability practices result in improved resilience performance [6
The aim of the paper is twofold: it addresses a gap in the literature, and explores the notion that any company that has a strategy to improve its SMI may not necessarily financially benefit from improved resources utilization, such as operating income, return on assets (ROA), return on equity (ROE), and earnings before tax (EBT); although, as frequently proffered, these should be consequences of sustainable [7
]. It also represents a first-level integration of the sustainability and resilience indicators in a common framework, to investigate the relationship between resilience capabilities and firms’ financial performance.
The paper begins by overviewing the relationship among resilience, sustainability practices and firms’ performance in Section 2
; then, Section 3
describes the research methodology, Section 4
presents the research results and Section 5
discusses the results.
2. Resilience, Sustainability, and Firms’ Performance Relationship: An Overview
The concepts of resilience and sustainability are considered strictly correlated [7
]. However, the multidimensionality of the two concepts, the different definitions and fields of applicability bring about a complex relationship that can vary depending on the context [8
Essentially, resilience can be defined as the capacity of a system to absorb disturbances while retaining its structure and function [9
]. However, its definition strongly depends on the domain of application [10
] and there is not a common view on how resilience can be measured [12
] since it is a complex multidimensional socio-technical phenomenon [13
]. Moreover, many definitions overlap with other concepts such as, among others, robustness, fault-tolerance, flexibility, survivability, and agility [2
]. Engineering resilience draws attention to the ability of a resilient system to return to its pre-disturbance state as quickly as possible [14
], implying a focus on efficiency of function [15
]. It contributes to organizational resilience, which focus on the adaptive capacity of the organizations and is a dynamic process that implies the ability of developing capabilities to face new situations [13
] considers resilience as a functional characteristic of a system, referring to a system’s resilient performance rather than a system’s resilience; in this perspective resilience magnitude cannot be measured in a simply way. Conversely, companies willing to invest to become more resilient need to evaluate progress [17
The complexity of defining a metric for analyzing and measuring the resilience of organizations or engineering systems is mainly due to the diversity of domains and objectives [10
]. There is not a widely accepted methodology for organizational or engineering resilience assessment [18
]: different approaches can be found in the literature. Hosseini et al. [2
] provide a classification of the qualitative and quantitative metrics, focusing on engineering systems: qualitative assessment approaches include the definition of a conceptual framework and the aggregation of expert opinion along multiple dimensions into an index; quantitative assessment can involve the comparison of the system’s performance before and after the disrupting event or the analysis through the definition of structural models. Similarly, organizational resilience is assessed in the literature by developing models or by identifying, quantifying, and ranking proper indicators [20
A challenge in defining resilience-related metrics is to ensure that these metrics are relevant to the main goals and objectives of the organization [15
For companies with a strong approach to sustainability, the pursued goals are consistent with resilience goals, so sustainability indicators can be used as guiding indicators accounting for the resilience of the organization [6
]. In the fields of business management and supply chain management, sustainability is commonly considered a contributing factor to resilience, as illustrated in Figure 1
. This means that sustainable-enhanced systems recover quicker in response to disturbances. In this context, the resilience can be viewed as the capacity of maintaining some primary goals or functionalities (e.g., profit, safety, performance) during and after disturbances [8
Sustainability measures can identify in management practices, an intrinsic approach to resilience [21
Moreover, the development of business continuity strategies can be built on a continuous management set of responsibilities, structures and activities [9
], such as operational sustainability. A wide debate is ongoing with regard to sustainability’s definition in the field of operations management [23
]. We define the operational sustainability as a state of operational maintenance and viability that demonstrates the inclusion of a corporation’s economic, social, and environmental performance which then reflects the value created from the optimal use of resources, the responsibility upheld towards the community’s well-being, and the conservation efforts from responsible decision-making [2
]. The concept considers simultaneously economic, environmental and social impacts of a company’s operations, in a triple bottom line approach, as well as the interactions with stakeholders. The principles of operational sustainability are key factors to provide a prompt and dynamic response to frequent and unpredictable changes, and provide support to firms’ growth and survival contributing to organizations’ resilience [19
According to Lee et al. [13
], metrics for measuring and evaluating organizational resilience should contribute to, among others, the need to link improvements in organizational resilience with competitiveness. Prayag et al. [24
] demonstrate that the adaptive component of organizational resilience is a significant predictor of financial performance for tourism firms, while Gunasekaran et al. [25
] observe how the capacity of generating capital influence the resilience of SMEs. On the other hand, the impact analysis of a strategy based on operational sustainability practices can be measured through financial performance [23
A growing interest in investigating the relationship between corporate sustainable practices and financial performance has developed over the last two decades, and a number of recent literature reviews try to summarize the research results on this issue, to draw consistent conclusions. Contradictory results are reported by review papers, highlighting a lack of consensus among research studies [27
Alshehhi et al. [28
] found that 78% of analyzed publications report a positive relationship between corporate sustainability and financial performance. The authors argued that results can be influenced by the sustainability definition, if the environmental or the social dimension is emphasized, by research methodology and the considered variables. In addition, the industry sector, firm size or the examined market seem to impact on the results. A meta-analysis of the correlations between sustainable operations practices (SOP) and firms’ performance has been performed by D’Agostini et al. [14
]. In the study, after a systematic literature review, 15 selected SOP are compared with environmental, economic, operational and organizational performance. On an aggregated basis, a positive relationship has been identified, even if moderating factors influence 12 of the relationships.
Firms’ financial performance is measured both through accounting-based and market-based indexes. Accounting-based measures are considered less noisy than market-based indicators that can be influenced by market perceptions or speculations [29
]. The most used accounting-based variables are return on assets (ROA) and return on equity (ROE) [30
]. Financial performance is also correlated to innovation, a capability supporting firms’ resilience since it enables organizations to renew over time, foresee changes and proactively learn [31
]. A wide selection of quantitative methodologies is adopted in the literature to investigate the relationship between sustainable practices and financial performance, such as partial least square, structural equation modeling, correlation and regression analysis, and analysis of variance [33
]. The methodology approach varies widely among studies; most of the articles use regression analysis [28
Some studies demonstrate how sustainable practices are linked in complex ways to financial performance [34
], since they produce also other performance outcomes such as corporate reputation, customer satisfaction, long-term shareholders, and stakeholders’ value. Thus, a multi-dimensional company performance should be considered [31
], including both financial and non-financial measures. Moreover, research suggests that sustainability and resilience indicators should be combined into a unified framework to provide a more comprehensive understanding of the relevant capabilities [3
] and to align the objectives of sustainability and resilience to gather the benefits of both the practices [35
The research undertaken, aimed at measuring the impact of specific sustainability strategies, as underlying components of resilience, on financial performance of the companies. It can be considered a first level joint assessment of the impact of sustainability practices and resilience capabilities on companies’ financial performance. It can be placed within a research context where some inconsistencies are still found: many of the studies on sustainability assessment issues concern the manufacturing industry, while the service sector, despite its growing impact on global economy, is still under-investigated [27
]; moreover, the analyses mainly refer to developed countries [29
], while only few papers analyze the relationship between sustainability practices and firms’ performance in the developing countries [22
]. Our studied sample includes a wide variety of companies, allowing a broad range analysis even if the current data-set represents early development of the research
The performed analysis shows that our aggregate sustainability index SMI, incorporating five main sustainability domains, correlated to operational resilience capabilities, can be appropriately and effectively used to analyze the correlation between sustainability practices and the range of financial indexes. The regression results suggest that there is no dependence between SMI and economic performance of the companies. Accordingly, we cannot prove any relationship between sustainability practices, resilience and economic performance.
While much of the literature proffers a sustainable strategic imperative results in financial benefits, our empirical research on 53 organizations does not support this view: profitability does not show a significant relationship with sustainability. Interestingly, country of origin, size of the organization, and market focus, likewise, do not have a significant relationship with our sustainability metric.
However, arguably, there might be additional business imperatives to bolster sustainable operations, such as recognizing market sentiment in favor of a socially responsible organization; that may result in increased market share. Sustainability-oriented organizations consider as positive performances both performing the set of sustainable actions and the return of image among their stakeholders [38
]. Berns et al. [39
] survey of 1500 global executives and managers concerning their perspectives on the intersection of sustainability and business strategy identifies two tangible benefits of sustainable developments including cost savings and new sources of revenue. They also list six benefits as follows:
Improved brand image.
Employees’ satisfaction, morale and retention.
Product, service and market innovation.
Business process and model innovation.
Effective risk management.
Enhanced stakeholder relations.
Moreover, according to Hillman and Keim [40
], sustainable strategies can increase demand for products and services, attract more socially responsible consumers and reduce prices. The need for identifying nonfinancial indicators of performance connected to sustainability practices is stressed by some authors [41
This empirical research is based on a data set under-development including, by now, 53 organizations differing by capital size, market focus, financial performance and geographic regions, the selection of organizations and country of origin being arbitrary, and accessible. It identifies a sustainable maturity index, derived from populating an operations sustainability maturity model. The initial testing of the methodology, generalizability and rigor of the OSMM was conducted in financial services organizations, located in developed and developing countries [22
The performed data analysis does not support commonly reported arguments: we show that profitability does not show a significant relationship with sustainable strategic intent. Accordingly, as we showed that our model is consistent with resilience goals, we cannot suppose that resilience capabilities impact on firms’ competitiveness.
The main limit of this study is related to the limited data sample size, representing early development of the research. The long-term goal of the research is to allow a meta-comparative analysis of SMI and its relationship with financial performance in various organizations and countries. The research will continue collecting data in as many countries as possible. The granularity of analysis, by country and industry sector, will test several hypotheses: for example, do particular countries or Industry sectors have better SMIs and improved financial performance?
We also made an attempt of validating a relationship between organizational resilience and firms’ performance. The explored hypothesis will be further investigated for building up a framework unifying sustainability and resilience indicators to be applied to different countries, and sectors, facing different threats.
Lastly, further investigations will explore firms’ nonfinancial indicators of performance that are connected to sustainability practices and which support firms’ resilience.