Beyond Physical Capital: The Untold Story of MSMEs’ Survival When Larger Firms Failed

Purpose: This study investigates how Indonesian micro, small, and medium enterprises (MSMEs) in the tourism sector, survived and thrived during the VUCA environment, in contrast to larger companies that collapsed despite possessing significant physical capital. Challenging the traditional focus on physical assets, this research emphasizes that the orchestration of economic, social, and human capital, combined with effective contingency planning, is critical for ensuring MSMEs' long-term survival and adaptability. Design/methodology/approach: This research analyzes data from 240 respondents from Indonesian tourism MSMEs across 14 categories. Our hypotheses are tested using survey data from business owners and managers, analyzed using PLS-SEM. Findings: The findings reveal that resilience in MSMEs is driven more by the strategic orchestration of economic, social, and human capital than by physical capital. Effective contingency planning—through crisis management frameworks, scenario planning, and business continuity strategies—amplifies the positive impact of these capitals, ensuring MSMEs’ survival and enabling growth during crises. Research limitations/implications: This study focuses on tourism MSMEs in Indonesia, which may limit generalizability to other sectors or regions. Future research should explore resource orchestration and contingency planning across industries worldwide. Originality/value: This research demonstrates that MSMEs, particularly in the tourism sector, can thrive without relying on physical capital, challenging traditional resilience theories. The study expands Resource Orchestration Theory by emphasizing dynamic resource management and integrates High Reliability Theory, showing that contingency planning moderates the effects of organizational capital on resilience. This paper offers valuable strategies for reshaping resilience approaches in a VUCA world.