Managing to Adapt: Structured Management Practices and Firm Resilience

Why do some firms adapt and even thrive when major unexpected shocks occur? We hypothesise that structured management practices are a General Purpose Technology that helps firms adapt to unforeseen shocks. Using a novel, custom-designed survey, we find that firms with more structured management practices were more resilient to the large and unexpected shock of the Covid-19 pandemic, adopting homeworking and online sales practices more fully, adapting supply chains more effectively, and avoiding larger falls in their sales. Linking at the firm level to a high-frequency business survey, we show that firms with highly structured management practices undertook more product, process and logistics innovation to facilitate enforced changes in working practices and business operations. We conclude that this episode illustrates the many mechanisms by which structured management practices may improve firms’ resilience to shocks.