A temporal approach to innovation management in recessionary times

Abstract

Business organizations need to adopt a long-term, proactive mindset to prepare themselves for a major economic contraction. This study examines how firms temporally manage innovation productivity over the course of a recession. A historic analysis of the retail coffee and cryptocurrency industries during the 2020 recession offers a unique theoretical perspective. The emergent temporal framework from the historic analysis segments recession into three periods—atrophy, recovery, and proliferation—where each phase is characterized by distinct time horizons and innovation strategies. In the atrophy stage, firms adopted a short-term time horizon and employed defensive tactics, which negatively affected innovation productivity. In recovery, firms quickly adapted to recession conditions and started playing the “long game” by reinvesting in innovation. In proliferation, firms continued their long-term outlook, and innovation productivity heightened as investments into R&D made in earlier periods manifested into new products, services, and business models. Overall, the results suggest that industry-level innovation productivity spiked (vs. diminished) as a result of the economic crisis, and that firms adopted both retrenchment and pro-active marketing strategies to manage innovation during recessionary times. The results suggest that thriving in post-recession markets is, veritably, a multi-stage, temporal game.