External shocks and the resilience of micro-businesses

Micro-businesses, defined as firms with fewer than ten employees, form the backbone of modern economies, yet they remain exceptionally vulnerable to large-scale external disruptions, as highlighted by the COVID-19 pandemic. Despite their importance, research has largely focused on larger firms, leaving unanswered the question of why and how micro-businesses that survived the external shock exhibit different resilience trajectories. Drawing on the literatures of organizational resilience and micro-foundations, we employ an abductive research design to develop a process model that reveals resilience as a recursive, socially embedded phenomenon that is unfolding across four distinct temporal phases: pre-shock conditions, coping, adaptation, and recovery. Resilience trajectories were shaped by the interplay of organizational enablers and inhibitors, founding owner-manager orientations and strains, and community embeddedness. This paper advances theorizing of micro-business resilience as dynamic, nuanced, and micro-founded, thereby enriching literature on organizational coping with and adaptation to external shocks and rare events while underscoring the major, deeply personalized role of founding owner-managers throughout this process.