Niche champions under environmental distress: an organizational resilience perspective

Abstract

Studies on niche champions have assumed a largely stable and benign environment, thereby neglecting the exogenous jolts that can cause widespread and significant disruptions. To bridge this gap, this research examines niche champions amid an environmental jolt. Adopting a multi-level analytical framework, I differentiate between the cross-sectional and longitudinal dimensions of their performance and, building on the organizational resilience literature, identify financial slack and operational focus as two antecedents. I argue that these two antecedents diverge in their effects on the two performance dimensions during periods of environmental distress: they enable a niche champion to outperform its peers (the cross-sectional dimension) but also cause a steeper decline in its own performance over time (the longitudinal dimension). Evidence from a sample of Chinese niche champions during the COVID-19 pandemic strongly supports my framework. The findings reveal the sources of resilience in niche champions, highlight their vulnerabilities to environmental disruptions, and underscore the trade-offs involved in managing slack and corporate scope.