Post-Crisis Sustainable Performance of Manufacturing SMEs: The Roles of Positive Orientation, Financial Slack, and External Networks

This paper examines the roles of positive orientation, financial slack, and external networks in the sustainability of small and medium-sized manufacturing enterprises (SMEs) following the global financial crisis in 2008–2009. The financial crisis is a good example of sudden, unexpected external disruption, in which a firm’s resilience as well as sustainability is seriously tested. Using a sample of 207 manufacturing SMEs in Hong Kong, we tested the simultaneous effects of positive orientation, financial slack, and external networks on post-crisis firm performance through strategic change. Our findings show that positive orientation and external networks play an enabling role in strategic change, which in turn leads to high performance. The enabling role of financial slack is, however, not supported. The study also shows that positive orientation, financial slack, and external networks play a buffering role, which has direct and positive effects on performance. The results provide academics and practitioners with a new perspective of the underlying mechanism that sustains the firm performance of SMEs under a financial crisis.