Chapter 8: Nothing Ventured, Nothing Gained: The Contrary Relationship Between Resilience and Innovation

Disruptions in the business landscape have made resilience an increasingly important concept for multinational firms. As resilience has gained momentum, firms try to enhance their resilience to mitigate the impact of future disruptions and foster performance stability. However, empirical studies on the long-term effects of resilience on firms are rare. This study explores the relationship between resilience and innovation performance. We draw on the resilience literature and the ambidexterity view to suggest hypotheses that link higher resilience to lower innovation performance. Specifically, we argue that higher resilience puts an emphasis on exploitative capabilities and reduces explorative capabilities necessary for innovation. Using a sample of S&P 500 firms, we find support for our main hypothesis. More resilient firms had a lower innovation performance in the long run. This provides evidence for the inherent tension between short-term resilience and long-term success. Our results suggest that resilience is not the ultimate solution, but rather that firms need to carefully balance the resilience measures implemented to ensure long-term success. Our results also show that this effect is even more pronounced for more internationalized firms.