Strategic Responses to Uncertainty

Abstract

This study tests dynamic capabilities and resource dependence theory using panel data from 101 U.S. private nonprofit universities (505 institution-year observations, 2019–2023), using linear mixed-effects models to examine strategic diversification and financial sustainability. Fully online instruction was positively associated with financial sustainability (B = 0.848, p = .003), robust to winsorization, and absent in naive, non-clustered regression. Hybrid delivery (p = .244) and international enrollment (p = .352) showed no significant relationship. Institutions pursuing moderate, diversified adaptation achieved the highest post-implementation sustainability (M = 2.15), 43% higher than traditional institutions, though underpowered (η2 = .053). Findings offer nuanced support for dynamic capabilities theory: decisive digital transformation, not partial diversification, was most strongly associated with resilience, and naive models ignoring firm-level clustering produced opposite conclusions from properly specified mixed-effects models.