Resilience of Organizations in the Construction Industry in the Face of COVID-19 Disturbances: Dynamic Capabilities Perspective

Abstract

The construction industry has been significantly impacted by the economic, financial, and operational consequences of the COVID-19 pandemic. Because the pandemic continues to evolve, this study aimed to better understand its impact and propose a roadmap to support the survival and recovery of construction organizations through a two-stage research design. The first stage of this study built upon the economic contagion literature to empirically examine the magnitude and severity of the impacts of the pandemic on construction organizations globally. A joint contagion model, the crisis severity index, and Student t-tests were used to analyze the longitudinal daily stock prices and indices collected from 80 construction organizations and the Chinese and US stock markets, spanning both the pre-COVID-19 and COVID-19 periods (i.e., a total of 840 observations). The results showed the extent of the impact of the pandemic within the construction industry and its varying severity levels over time across regions in a pattern that is consistent with the spread of the pandemic itself. These findings urgently call for construction organizations to plan their response strategies for short-term and long-term performance. Accordingly, a systematic literature review was conducted in the second stage of this study to synthesize the best practices undertaken by construction organizations in the face of historical economic downturns. Specifically, the theoretical lenses of dynamic capabilities and organizational resilience were applied to synthesize the literature to develop an evidence-based roadmap. Construction organizations can use this roadmap to systematically scan their environments for threats or opportunities (i.e., sensing), formulate suitable responsive strategies (i.e., seizing), and build their resilience over time (i.e., reconfiguration). These insights can help them to survive, recover, and even thrive in the face of the pandemic and build resilience in the anticipation of future disturbances.