Federal Reserve Bank of San Francisco

Navigating Uncertainty and Growing Jobs: Considering Small Employer Firm Resilience During Challenging Economic Times

December 1, 2012

How have certain small employer firms demonstrated resiliency despite ongoing economic uncertainty? This study considers the organizational capabilities of small employer firms operating in low- and moderate-income (LMI) census tract areas. Based on the limited evidence gathered in this mixed-methods study, the authors propose that resiliency, defined in this study as a company’s ability to act effectively in response to uncertain economic conditions such that the firm maintains or expands its workforce, depends strongly on five organizational capabilities. These are: (1) the effective use of measurable indicators, (2) the ability to correctly assess firm strengths and demonstrate market awareness, (3) the ability to plan and implement effectively, (4) creativity under pressure, and (5) adaptability, referring to the capacity to dynamically revise the firm’s strategic positioning in response to market shifts. Resilience is dynamic, shifting as the context changes. And it isn’t necessarily easy to attain—or maintain—even for small employer firms that fared well in up markets. Likewise, these capabilities are deeply interrelated; it would be difficult, if not impossible, to be effective at any of these practices without some mastery of the others. These capabilities are not a universal recipe for small employer firm success and job growth, although these preliminary findings might have important implications for efforts to better support the small firms that are central to job creation.

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