Jared Harris, a professor at the University of Virginia’s Darden School of Business, recently told local entrepreneurs how they could build resilience into their companies. His talk was sponsored by coordinators of the Better Business Challenge, a friendly competition for local companies integrating sustainable practices into their business strategy.
During the “lunch and learn” session, held Oct. 24 in downtown Charlottesville, Harris described a current research project that examines three approaches to building organizational resilience:
- Psychological approaches enhancing the ability to face challenges with positivity and a resourceful mindset;
- Operational approaches highlighting structural or other organizational ways to prepare for or respond to hardships; and
- Stakeholder approaches encouraging engagement and cooperation with stakeholders.
Although all three approaches seemed to help build resilient organizations, by far the most substantial factor was the “stakeholder approach” – the way a firm engages with external stakeholders , defined as communities, business support groups and others who do not usually participate in direct economic transactions with the business, but are still affected by it or can affect it.
Harris and two co-authors studied more than 150 Virginia businesses across different industries. These firms managed to weather economic, geographical, environmental and social storms, and strengthened their businesses for the future.
“We found that 11 percent of the businesses we studied did all three of these strategies,” said Harris, who is also a senior fellow with Darden’s Olsson Center for Applied Ethics. “We saw that there was a significant positive relationship between stakeholder engagement approaches and economic growth, and there was a link between the breadth of the hardship the companies faced and the amount of resources they deployed.”
The big lesson for companies is that stakeholder engagement pays off. Cooperating with stakeholders within a community and allowing those stakeholders to support the firm during difficult times reaps rewards, according to Harris’ research. In addition, the research findings suggest that practice makes perfect.
“The number of strategies of resilience enacted by firms significantly suppressed the negative effects of hardship on firm profitability,” Harris added.
The Darden School is a partner with the Charlottesville Area Better Business Challenge, in conjunction with the school’s efforts to be a zero-waste, carbon-neutral organization by 2020. Other partners include the city of Charlottesville, Albemarle County and the Charlottesville Regional Chamber of Commerce.
The next U.Va. event will be a sustainability innovation “Pitch Nite,” to be held Jan. 23 at the W. L. Lyons Brown III Innovation Laboratory, or i.Lab, on the grounds of Darden. The challenge culminates with an awards night at The Paramount Theater in June.