COVID-19 as a trigger for dynamic capability development and supply chain resilience improvement

Abstract

A firm’s ability to manage risk and resilience in supply chains has turned out to be an invaluable capability during the COVID-19 pandemic. Fast responsiveness, quick decision-making, and the ability to reconfigure the resource base have helped firms during the pandemic, which caused rapid disruptive effects for which they were unprepared. This research applies the dynamic capability view as a theoretical framework to study the impact of the COVID-19 pandemic on firms’ dynamic capabilities and, the influence of dynamic capabilities on supply chain resilience. These capabilities are highly needed to survive during the pandemic. Using the survey data, we found that the impacts that COVID-19 had on a firm’s upstream supply chain influence firms’ capabilities to seize opportunities or neutralise threats. Furthermore, we found that reconfiguring ability has a strong influence on supply chain resilience. Thus, the impacts of COVID-19 on the downstream supply chain pushed firms to realign resources to respond better to demand. Upstream disruptions pushed companies to react to threats and opportunities in the supply market, while downstream disruptions leveraged reconfiguring capabilities.