Stay alert, save businesses. Planning for adversity among immigrant entrepreneurs

Purpose – Against the theoretical backdrop of the embeddedness and the resilience literatures, this paper investigates if and how SMEs’ planning for adversity affects firms’ performance. Design/methodology/approach – The paper develops hypotheses that investigate the link between the risk management of immigrant-led and native-led SMEs and their performance and draw on novel data from a survey on 900 immigrant- and 2,416 native-led SMEs in 5 European cities to test them. Findings – Immigrant-led SMEs are less likely to implement an adversity plan, especially when they are in an enclave sector. However, adversity planning is important to enhance the growth of immigrant-led businesses, even outside a crisis period, and it reduces the performance gap vis- a-vis native-led businesses. Inversely, the positive association between adversity planning and growth in the sample of native entrepreneurs is mainly driven by entrepreneurs who have experienced a severe crisis in the past. Originality/value – This paper empirically uses planning for adversity as an anticipation stage of organizational resilience and tests it in the context of immigrant and native-led SMEs. Results support the theoretical reasoning that regularly scanning for threats and seeking information beyond the local community equips immigrant-led SMEs with a broader structural network which translates into new organizational capabilities. Furthermore, results contribute to the process-based view of resilience demonstrating that regularly planning for adversity builds a firm’s resilience potential, though the effect is contingent on the nationality of the leaders.