Crisis-driven Innovation by Established Firms: A Sensitization Process of Innovating New Products

Abstract

The Covid-19 pandemic disrupted societies worldwide, and many firms answered the call for Covid-19-related innovations, with some quickly developing innovations to personal protection equipment, an area outside of their core businesses prior to the pandemic. How firms respond during crises to pressing societal needs by suspending a profit orientation to satisfy stakeholder needs is not understood well. We conducted inductive case studies of eight companies to address why such firms pivot from shareholder- to stakeholder-oriented new product development and how they satisfy new stakeholder needs during crises. Findings suggest that such companies model the process of internalizing and internal propagation of affectively charged signals that impress urgent humanitarian needs and alteration of how extant resources were recognized in relation to social norms and how capability assembly was initiated. These findings explain how for-profit product innovation prior to pandemic led to an additional mode of crisis-driven, new product innovation by suspending a profit orientation to respond quickly to calls for help. Implications to theory and practice are discussed.