The link between Organizational Resilience and the Sustainability of Community-based Social Enterprises: Evidence from the Covid-19 Pandemic in Kenya

Keywords: Crisis anticipation; Organizational adaptability; Organizational robustness; Sustainability; Covid-19.

Paper Type: Research Article

Recommended citation: Harrison, J., & Kipkorir, M. (2022). The link between Organizational Resilience and the Sustainability of Community-based Social Enterprises: Evidence from the Covid-19 Pandemic in Kenya. Journal of Economics, Management Sciences and Procurement, 2(1), 27–37.

1. Introduction

In emerging economies, social enterprises are critical for sustainable development because of their ability to fulfil unmet social needs through innovative revenue generation initiatives (Lyne, 2017). They operate similarly to traditional businesses but focus on advancing a social mission, such as addressing unemployment and social deficits (Ogain, 2011). Social enterprises are comparable to charitable organizations in several respects but have a commercial revenue source. Besides, they have the edge over charitable organizations and traditional businesses since their scope of activities revolves around an entrepreneurial strategy.

The outbreak of the coronavirus disease (Covid-19) pandemic was both a tragedy and an opportunity for social enterprises to recognize societal challenges that could be solved and, in so doing, contribute to their sustainability (Weaver, 2020). Social enterprises thrive in a dynamic and unpredictable environment; hence the Covid-19 pandemic presents seamless opportunities for the sector. Consequently, resilient social enterprises will likely be more sustainable and offer practical solutions to the prevailing problems due to the pandemic. Besides, social enterprises' capacity to work with limited resources and their strong networks makes them the ideal rapid responders during the pandemic, especially in hard-to-reach informal settlements (Das, Khan, & Tinsley, 2020). Despite the essence of social enterprises, the influence of their resilience during the Covid-19 pandemic on sustainability is scarcely explored.

Governments across the globe have deployed trillions of dollars to sectors adversely affected by Covid-19. However, only a small portion reaches social enterprises that respond to most of the social problems caused by Covid-19 (Hilde, Diana, Don, & Jeroo, 2020). Despite the potential of social enterprises to alleviate the problems caused by the pandemic, research in this area in Kenya is non-existent. Rai, Rai, and Singh (2021) found evidence of a link between organizational resilience and socio-economic sustainability during the Covid-19 crisis. However, little is known about social enterprises' resilience to Covid-19 and the elements contributing to resilience. Moreover, how organizational resilience in a crisis such as Covid-19 in Kenya influences social enterprises' sustainability has not been explored. Thus, the study addresses this gap.

2. Hypotheses Development (Review of Literature)

Effect of Crisis Anticipation on Sustainability of Social Enterprises

Crisis anticipation is the fundamental capability of a resilient enterprise. It makes it possible for an organization to anticipate a risk that can potentially affect its operations in the future (Rai et al., 2021). The study indicated that the process of crisis anticipation begins with gathering information about the slightest disturbances at the organizational level. It intensifies as information is shared within the organization to anticipate larger disruptions in the future. Information collection and sharing are important in predicting risks, preparing for unexpected events, and maintaining a sustainability framework (Doern, 2016).

Shafi, Liu, and Ren (2020) analyzed the influence of the Covid-19 crisis on the operations of micro, small, and medium-sized enterprises (MSMEs) in Pakistan. The study adopted an explanatory design relying on research articles and reports on how MSMEs survive during the crisis. Also, the research utilized a questionnaire to collect data from 184 MSMEs in Pakistan. The findings revealed that most of the MSMEs were not prepared for the pandemic and did not have a plan to deal with it.

Ghaderi, King, and Hall (2021) investigated how Malaysian hotel managers prepare for crises and how they perceive crisis anticipation. The study employed a qualitative approach of semi-structured interviews targeting twenty-four Malaysian hospitality managers. The results revealed that the hospitality managers neglected crisis preparation. Besides, the hotel management was hesitant to change the corporate structure to improve organizational resilience. Consequently, the research concluded that the hotels were not prepared to handle crises due to the ill-preparedness of the management.

Gerald, Obianuju, and Chukwunonso (2020) looked into the impact of strategic foresight on the performance of Nigerian enterprises. The study utilized a survey research design with a sample of 306 business owners. The data on strategic foresight and SME performance was collected using a questionnaire. The analysis was done using descriptive and inferential statistics. The findings indicated a significant link between strategic foresight and the performance of the targeted enterprises. Evidently, SMEs awareness of what is happening within and outside their business environment was key in enhancing their performance. However, the current study focuses on crisis anticipation among community-based enterprises during the Covid-19 crisis and its impact on sustainability. We, therefore, hypothesize the following:

Covid-19 crisis anticipation has a significant effect on the sustainability of community-based social enterprises in Nairobi County, Kenya

Effect of Organizational Adaptability to Covid-19 on Social Enterprises' Sustainability

Organizational adaptability encompasses implementing a coping strategy during a crisis such as Covid-19 (Weaver, 2020). In the context of the study, adaptability measures how the social enterprises coping mechanisms are anchored on the Covid-19 crisis. In dealing with and containing a crisis, Weaver (2020) argues that effective adaptation builds on the organization's current circumstances rather than relying on borrowed models. In this regard, an organization's model must be compatible with the organization's intellectual resources, facilities, technology, and parameters within its social, political, and economic context.

Obrenovic et al. (2020) looked into the factors that influence business organizational resilience and their ability to overcome a crisis such as the coronavirus. The research was guided by the stakeholder theory and distribution cognition theory. Obrenovic et al. (2020) revealed that sustaining business operations during a pandemic required an adaptive culture and distributive leadership. Further, there is evidence of an informed decision-making process in resilient organizations.

Păunescu and Mátyus (2020) investigated resilience measures by Romanian enterprises in dealing with the Covid-19 pandemic. Data was gathered from the sample enterprises in Romania using a questionnaire. Moreover, an exploratory analysis was utilized to identify variables that explain resilience measures that help SMEs cope with the pandemic. The results from the regression analysis indicated that openness to product innovation and adaptation impacted the enterprises' overcoming the pandemic. The current study expands the scope by focusing on enterprises' organizational adaptability and sustainability.

Fitriasari (2020) investigated how SMEs are surviving the Covid-19 outbreak. The study relied on the Business Canvas approach focusing on SMEs resilience. The study utilized a qualitative method and reviewed literature sources from books, electronic media and published journals. The study argued that digital transformation occurs when new technological skills and approaches are implemented. Adopting the appropriate digitization approach is also crucial for accomplishing corporate goals and producing highly competitive SME products (Fitriasari, 2020). Further, the author argued that adopting the appropriate technology enhances SME resilience. We, therefore, hypothesize the following:

Organizational adaptability to Covid-19 has a significant effect on the sustainability of community-based social enterprises in Nairobi County, Kenya

Effect of Organizational Robustness on the Covid-19 Pandemic on Social Enterprises' Sustainability

Robustness is the organization's ability to withstand a crisis. It is their immunity to disruption such as the Covid-19 pandemic. According to Chowdhury and Quaddus (2017), organizational robustness is an organization's capacity to develop risk management infrastructure and adapt to changes to mitigate the effects of a pandemic. On the other hand, Salter and Tarko (2019) defined robustness as a system's ability to withstand and recover from shocks or negative consequences. Robustness is different from adaptability because it focuses on the system's ability to modify in response to a crisis, while robustness is the immunity against the crisis.

Rai et al. (2021) explored organizational resilience and sustainable development. Among the measures of organizational resilience that the study focused on were predicting the crisis, building robustness and recoverability from the Covid-19 pandemic. The specific focus was on establishing the relationship between crisis anticipation, robustness, recoverability, and sustainability. The research utilized empirical analysis of primary data. The results indicated that foreseeing a crisis and enhancing robustness and recoverability enhances organizational sustainability.

Vidmar, Rosiello, and Golra (2020) analyzed the resilience of the emerging space companies in the United Kingdom (U.K.) during the early phase of the Covid-19 crisis. SMEs' immediate response to the pandemic in Spring 2020 and their strategy to survive during the crisis were the areas of emphasis. The analysis results indicated that organizational robustness among the sampled firms in the U.K. made it possible for the New Space industry to perform well during the pandemic. Remarkably, as the pandemic ravaged the world, the SMEs in the space industry had developed immunity to the pandemic and were on the path toward eventual recovery.

Islam, Jerin, Hafiz, Nimfa, and Wahab (2021) assessed how Malaysian enterprises could survive the Covid-19 pandemic. The research aimed to offer a broader understanding of how organizational robustness can help Malaysian SMEs endure the Covid-19 pandemic. The research adopted a qualitative approach. Data were collected with an online focus group discussion. The unit of analysis was 10 participants from SMEs, NGOs, banking and academia. Also, the study relied on E-libraries, websites and journal sources. The findings revealed that digital adoption, leadership commitment, access and management of finances contribute to organizational robustness. Through robustness development, the authors argued that SMEs are in a position to endure the Covid-19 pandemic.

Sigasa (2014) investigated the elements that determine the long-term viability of social enterprises in South Africa. To assess the link between these variables, a quantitative study was performed. The owners and managers of social enterprises served as the study's unit. The findings indicated that the pursuit of dual missions, organizational robustness and access to financing influences the sustainability of social enterprises. The present study intends to expand the scope of this research by investigating organizational robustness within the context of organizational resilience.

Yin and Chen (2018) explored how social enterprises in China pursue social and business objectives to attain enterprise sustainability. A qualitative multiple-case design facilitated the collection and analysis of data. Yin and Chen (2018) indicated that continuous innovation and access to financing that make up organizational robustness enhance the attainment of social and economic value. The concept of organizational robustness is flimsily conceptualized by Yin and Chen (2018). Consequently, the present study investigates organizational robustness as a measure of organizational resilience. Besides that, the focus is on how community-based social enterprises pursue their dual role in a bid to enhance their sustainability. We therefore hypothesize the following:

Organizational robustness to Covid-19 has a significant effect on the sustainability of community-based social enterprises in Nairobi County, Kenya

3. Material and methods

The study utilized a descriptive research design. The research design is appropriate since a large volume of data can be gathered to give detailed information about the issue under investigation. This design allows the study to generate a lot of new and specific information about the area under study, increasing the study's ability to develop more practical insights that lead to developing more actionable and sustainable recommendations. The study intends to establish the influence of organizational resilience to the Covid-19 pandemic on the sustainability of community-based social enterprises in Nairobi County, Kenya. Consequently, the design was suitable for gathering, recording and reporting matters as they are in the study area. The study was conducted between March 2021 and September 2021.

Target Population

The target population consisted of 104 employees from 26 community-based social enterprises in Nairobi County, Kenya. The study targeted a manager, project coordinator, employee representative, and community coordinator in each targeted community-based enterprise. The study targeted these respondents since they could offer in-depth information on the resilience and sustainability of the enterprises during the Covid-19 crisis.

Study Sample

The sampling frame was representative since it included all the elements from the population. The sampling frame was representative since it included 104 managers, project coordinators, employee representatives and community coordinators from the 26 community-based social enterprises in Nairobi County. The study was a census involving the entire population of 104 respondents in the targeted 26 community-based social enterprises.

Data Collection

Structured questionnaires were used to obtain from the respondents in the community-based social enterprises in Nairobi County. The research variables questions utilized a five-point Likert scale with options ranging from Strongly Agree to Strongly Disagree. Respondents selected one option that best represents their point of view using this scale. The questionnaire was organized into four sections: Section one focused on the influence of Covid-19 crisis anticipation on the sustainability of community-based social enterprises. Section two delved into organization adaptability, section three organizational robustness, and section four on the sustainability of community-based social enterprises in Nairobi County, Kenya.

Reliability

The pilot study was conducted in Rural Agency for Community Development and Assistance (RACIDA) community-based organization in Nairobi County. The pilot study targeted ten respondents on the supervisory level at the organization. The pilot study respondents did not influence the actual study responses. The results indicated that organizational flexibility had the highest reliability (α = 0.795), followed by Covid-19 crisis anticipation (α = 0.763), sustainability of community-based social enterprises (α = 0.751), and finally, organizational robustness (α = 711). Thus, the instruments were reliable and consequently required no amendments.

Data Analysis

The researchers used descriptive statistics to summarize the data on the effect of organizational resilience on the sustainability of the community-based social enterprises. Also, the study adopted a multivariate approach. It used regression analysis to establish the influence of organizational resilience to the Covid-19 pandemic on the sustainability of community-based social enterprises.

Ethical Consideration

The study saw to it that the information obtained from the respondents is protected from unauthorized access. The respondents were assured that their participation was voluntary, they would remain anonymous, and the data would only be used for academic purposes. The information was obtained through informed consent, as a written letter from the university was issued. The researcher remained objective throughout the data collection process and appreciated the divergent views of the respondents.

Results and discussion

Organizational resilience to the Covid-19 pandemic

The findings on Covid-19 crisis anticipation in table 1 indicated that the social enterprises did not have a mechanism to predict the Covid-19 crisis before its onset (mean = 2.09, SD = 1.083). Also, most community-based enterprises could not foresee the impending challenges during the initial phase of the Covid-19 crisis (mean = 3.13, SD = 1.391). Further, some enterprises are likely to be negatively affected by the subsequent Covid-19 waves due to the lack of a crisis anticipation framework to forecast the disruptions from the pandemic (mean = 3.82, SD = 0.747). The enterprises are possibly developing a framework to handle similar pandemics in the future (mean = 4.09, SD = 1.184). In addition, the organizations found a way to manage resources effectively and efficiently during the Covid-19 crisis (mean = 4.43, SD = 0.81). Moreover, the community-based social enterprises have a risk management system for crisis preparedness (mean = 4.16, SD = 0.976).

Regarding organizational adaptability to Covid-19, the majority of the organizations do not use online platforms in selecting and recruiting employees (mean = 2.26, SD = 1.202). However, the organizations had adopted remote working in line with the containment measures of Covid-19 (mean = 4.29, SD = 0.815). In addition, the organizations had trained their employees on the utilization of digital technologies (mean = 3.75, SD = 1.037). Besides, the organizations trained their employees in managing a global pandemic at the workplace (mean = 4.43, SD = 0.721). Also, the organizations improved their hygiene and sanitation standards (mean = 4.69, SD = 0.595). Further, the organizations had redesigned their services according to Covid-19 restrictions (mean = 4.16, SD = 1.137). However, the majority of the organizations are yet to capitalize on online services fully (mean = 2.58, SD = 1.204).

Concerning organizational robustness to the Covid-19, the employees in the targeted organizations denied that the Covid-19 pandemic had not affected their operations very much (mean = 1.7, SD = 0.91). Similarly, the employees denied that the organizations' operations were running as usual during the Covid-19 pandemic (mean = 1.76, SD = 1.077). However, the organizations are using the Covid-19 period as a learning opportunity by developing systems to deal with future pandemics (mean = 4.25, SD = 0.908). Further, the organizations cannot serve the community without disruptions (mean = 2.27, SD = 1.156). Moreover, the majority of the community-based social enterprises have not ventured into developing new products and services (mean = 2.4, SD = 1.268). Additionally, the organizations save on costs by using virtual meetings and conferences (mean = 4.33, SD = 0.85). Finally, the community-based social enterprises are not ready to face future pandemics like Covid-19 (mean = 2.54, SD = 1.289).

Sustainability of Community-Based Enterprises

The findings on the sustainability of community-based social businesses in Nairobi County are highlighted in table 2. Based on the results, the organizations pursue social and profit missions with minimal interruptions (mean = 4.3, SD = 0.831). However, the financial resources in the organization during the Covid-19 pandemic were not sufficient (mean = 1.81, 1.065). Further, the organizations are not earning revenue similar to the period before the coronavirus outbreak (mean = 2.44, SD = 1.348). Additionally, the organizations' revenue had declined due to the disruption in the supply chain (mean = 4.63, SD = 0.551). Further, the organizations had taken advantage of the Covid-19 pandemic to provide essentials such as face masks, soaps and water tanks (mean = 4.46, SD = 0.826). Finally, there were sensitization campaigns on Covid-19 done by the organizations (mean = 4.34, SD = 0.797).

Hypotheses Testing

The regression findings are as presented in Table 3. The independent variables that the study focused on were Covid-19 crisis anticipation, organizational adaptability and organizational robustness. The dependent variable of the study was the sustainability of community-based social enterprises. Table 4.3 illustrates the regression results.

a Dependent Variable: Sustainability

As shown in Table 3, Covid-19 crisis anticipation had a positive and significant influence on the sustainability of community-based social enterprises (β1 = 0.292, p-value = 0.003, which is less than α = 0.05). It can also be observed that the calculated t (3.09) is higher than the critical t (1.96). The implication is that a positive increase in Covid-19 crisis anticipation would enhance the sustainability of the community-based social enterprises. The findings align with that of Gerald et al. (2020), which indicated that strategic foresight by SMEs in Nigeria during the Covid-19 pandemic contributed to the improved performance of the SMEs. Therefore, awareness of what is happening within and outside the business environment during the Covid-19 pandemic contributes to sustaining the operation of enterprises. The same notion was shared by Shafi et al. (2020), who found out that MSMEs that lacked a crisis anticipation plan realized a decline in sales and profits during the Covid-19 pandemic. Further, the study findings concur with Ghaderi et al. (2021), who suggested that the ill-preparedness of the hotel management in handling the Covid-19 crisis made it difficult for the hotels to manage the pandemic.

Also, organizational adaptability had coefficients of the estimate, which was significant based on β2 = 0.282 (p-value = 0.006, which is less than α = 0.05). Thus, organizational adaptability has a positive and significant effect on the sustainability of community-based social enterprises. Also, the effect of organizational adaptability is shown by the t-value of 2.82, which implies that the effect of organizational adaptability surpasses that of the error. The results conform with Obrenovic et al. (2020) assertion that the ability of social enterprises to adapt to unpredictable threats such as Covid-19 is key to attaining their sustainability. Therefore, sustaining business operations during a pandemic required an adaptive culture and distributive leadership. However, Pinzaru, Zbuchea, and Anghel (2020) failed to establish if organizational adaptability influences the sustainability of enterprises. The present study, therefore, addresses this knowledge gap.

Finally, organizational robustness had coefficients of the estimate, which was significant basing on β3 = 0.201 (p-value = 0.047, which is less than α = 0.05) thus, the conclusion is that organizational robustness has a positive and significant influence on the sustainability of community-based social enterprises. Moreover, the calculated t (2.015) is higher than the critical t (1.96), confirming that organizational robustness significantly influences the sustainability of community-based social enterprises. Consistent with the findings, Rai et al. (2021) established that organizational robustness positively influenced social enterprises' sustainability. Further support to the results is by Vidmar et al. (2020), who found out that organizational robustness contributed to the immunity of SMEs in the space industry from the Covid-19 pandemic. Additionally, Islam et al. (2021) observed that robust SMEs are in a position to endure the Covid-19 pandemic.

Conclusion and recommendations

The study indicates a positive link between Covid-19 crisis anticipation and the sustainability of community-based social enterprises in Nairobi County. Though crisis preparedness is evident among the social enterprises, it is clear that they were unable to predict the Covid-19 crisis before it had hit their operations. There is thus a need for social enterprises to have a risk management system for crisis preparedness. In that way, they can anticipate the upcoming challenges before the onset of a pandemic. Further, organizational adaptability enhances the sustainability of community-based social enterprises. Therefore, social enterprises need to fully adopt digital technologies to capitalize on them in remote working and take advantage of virtual meetings and conferences in their operations. Finally, the findings point to a positive relationship between organizational robustness and the sustainability of community-based social enterprises. There is thus a need for social enterprises to put in place a risk mitigation mechanism to predict risks and adjust accordingly. In so doing, they will develop robust organizational structures that are immune to pandemics, such as the Covid-19.

References