Flow and Ebb: Factors affecting SMEs to exit from the DRP market during pandemic

Abstract

Based on organizational ecology theory, this study demonstrates the exit issue of small- and medium-sized enterprises (SMEs) that grasped the opportunity from the surging demand for disaster relief products (DRPs) while facing uncertainty during the early COVID-19 pandemic. Specifically, we find that higher product complexity and spatial proximity limit DRP SMEs’ organizational niches and increase the competition within organizational niches, facilitating their exit. Following the framework of organizational ecology theory, we further clarify the moderating effects of market demands and managerial experience. Our findings extend the firm exit literature by shedding light on the opportunity-seized SMEs during the pandemic and contribute to the organizational ecology literature by expanding its application to the disaster context.