Building organizational resilience with digital transformation

Purpose Uncertain times e.g. coronavirus disease 2019 (COVID-19) require service businesses to respond in creative, flexible and resilient ways. This paper aims to develop and test the theoretical relationship between digital transformation and organizational resilience (OR), and the consequences of OR on organizations and employees during turbulent times. Design/methodology/approach A scale development was first conducted with an expert panel. Later, 474 participants who work as employees in small and medium-sized service enterprises were recruited for structural equation modeling (SEM). Exploratory factor analysis (EFA), confirmatory factor analysis (CFA) and path analysis were conducted to test the relationship between dimensions of digital maturity, dimensions of OR and two consequential variables: organizational performance and employees’ state optimism. Findings Strategic technology investment helps organizations to develop systematic control sustain operations in crises but may not directly contribute to employees’ capabilities of accurately understanding external turmoil, actively seeking available resources and rapidly developing adaptive solutions. Transformation management intensity equips an organization with transformative vision, governance and culture, and such transformative built-in leadership enables the organization to embrace employees with talents and innovativeness and help employees grow their capabilities when facing crises. The dimensions of OR have different influences on the organization and employees. Originality/value This research develops and tests the dimensions and measurement items of OR for the services domain and empirically tested how the dimensions of digital maturity influence the dimensions of OR, and how OR influences the organization’s performance and employees’ state optimism.