Innovation Pattern Heterogeneity and Crisis Resilience

Abstract

We use the new taxonomy for innovative firms developed based on microlevel data from the Community Innovation Survey (CIS2018) on a sample of 6360 Norwegian firms, and information on users of COVID-19-related compensation schemes for firms with significant loss of turnover and furloughed employees to analyse how resilient different innovative firms have been to the crisis (in both the short and the long run). By using different probabilistic regression models, we study the probability of firms being affected negatively during the pandemic period between March 2020 and February 2022 covering three waves of societal restrictions in Norway. Our main assumption is that all firms were hit by a shock at an early stage due to a complete lockdown in March 2020, but that firms were more resilient if they either did not use the compensation schemes or used them for a briefer period than the less resilient firms. We find “active R&D doers” to be most resilient, while “strategic adapters” (firms with a main strategy of producing high-quality products for a specific group of customers) are found to be least resilient. These results imply that pre-existing innovation capabilities are important for meeting the crisis.