Business Instability and Lack of Resilience: A Study of Adaptive Management Practices in MSMEs

Abstract

This paper will discuss how business instability affects the resilience and performance of MSMEs, particularly the importance of adaptive management practices. A quantitative research design was used to gather primary data on MSME owners and managers and analyze it using SEM. The results indicate that lack of resilience is highly depended on the business instability, thus impacting negatively on the performance of the organization. Nevertheless, a more responsive approach to decision-making, where flexibility, continuous learning, and adaptive management practices prevail, are fairly important in terms of the increased resilience and better performance results. The research also determines that the relationship that exists between instability and performance is partly mediated by adaptive management and resilience. The findings indicate the role of establishing dynamic capabilities within MSMEs to manoeuvre their way through unpredictable business environments. The research provides an addition to the body of knowledge through the presentation of results based on empirical evidence and practical implications to policymakers and managers.