Avoiding Relapses After Crises and the Influence of Investors. A Resource Dependence View.

During the recovery from an organizational crisis, firms intensely depend on provision of resources. Building on a resource dependence perspective, we argue that investors’ diversity, patience, and concentration during the crisis and recovery process influences the risk of relapses in the future because they facilitate the appropriate orientation for a resilient approach (fostering flexibility, stability, and commitment, respectively). Our sample includes data from 33 countries of 359 recovered firms, that is, firms that were rated in a stressful financial situation in 2015 and normal in 2016 according to their Altman Z-Score’s values. After analysing the firms’ financial situation from 2014 to 2019, we find that while both investors' diversity and patience reduce the risk of relapsing into crisis, the risk grows when the large investors gain share in the firm capital during the crisis and recovery period. Our study contributes by showing how investors can be a source or a constraint for building organizational resilience in firms and the importance of the investors to analyze dependence in financially difficult situations for firms.