Driving Strategic Flexibility: Unleashing the Power of Employee Engagement and Customer Experience for Business Recovery

In times of business adversity, the significance of Employee Engagement (EE) and Customer Experience Management (CEM) is often overlooked by companies. This study aims to investigate the roles of these factors in facilitating the Business Recovery (BR) of Small and Medium Enterprises (SMEs) in the post-COVID-19 era, with a particular focus on the food service sector. Data for this investigation was gathered through surveys and subsequently subjected to analysis using Maximum Likelihood - Structural Equation Model (SEM) estimation. The results indicate that Strategic Flexibility (SF) mediates the relationship between CEM and BR, while the mediation of EE to BR by SF was not confirmed. The study underscores the crucial role of CEM as a fundamental capability that supports SF, thereby expediting BR. Additionally, this research confirms the interplay between the Conservation of Resource Theory and the Broaden-and-Build (B B) theory in the formation of a company’s Dynamic Capabilities, which ultimately determine its performance. Limitations of this study include a restricted observation period at a single point in time, a lack of sample diversity, and the possibility of subjective responses from respondents during the questionnaire completion process.