Response to the global financial crisis: a follow-up study

Eric Hansen,Erlend Nybakk

doi:10.1186/s13731-018-0087-2

Abstract

Firm response to decline has seen renewed interest based on the impacts of the global financial crisis. Here, we investigate the long-lasting effects of decline on the innovativeness of firms and, ultimately, the performance outcomes of those actions. The study focuses on SMEs in the US forest products manufacturing sector. We analyze the situation within 89 firms with respect to innovativeness in the years 2008, 2012, and 2015. Theory suggests that firms increasing innovativeness in response to the crisis would subsequently decrease innovativeness as US markets improved. With respect to product innovativeness, we find convincing evidence that firms increasing innovativeness subsequently decreased innovativeness. With respect to process and business systems innovativeness, the evidence is weaker, but indicative of a decrease in innovativeness between 2012 and 2015. Expected reduction in innovation efforts and increased focus on producing commodity products is not evident from our responding firms. Based on these findings, it is recommended that firms carefully consider their innovation investments/activities across the business cycle as a more consistent approach may be more productive.

Highlights

Firm response to decline has seen renewed interest based on the impacts of the global financial crisis (GFC) (Sun et al 2018; Zouaghi et al 2018; Archibugi 2017; Ferreira and Teixeira 2016; Paunov 2012; Bancel and Mittoo 2011; Filippetti and Archibugi 2011)
A surprising proportion of our responding firms claim to have increased innovativeness as a mechanism to combat the chaos of the GFC
Over half of our respondents increased their level of innovativeness in response to the GFC

Summary

Introduction

Firm response to decline has seen renewed interest based on the impacts of the global financial crisis (GFC) (Sun et al 2018; Zouaghi et al 2018; Archibugi 2017; Ferreira and Teixeira 2016; Paunov 2012; Bancel and Mittoo 2011; Filippetti and Archibugi 2011). There are few examples documenting the post-recession actions of firms (e.g., Brancati et al 2017), especially those that attempted to innovate their way out of the recession. Once overall economic recovery from a recession begins, what do companies that increased their innovativeness tend to do? Do those companies that increase innovativeness during a recession facilitate improved performance as markets recover? Improved performance via increased innovativeness is assumed to be aspirational for managers but it is not clear how regularly it occurs (McKinley et al 2014). This is an important question since innovation or organizational innovativeness is often accepted

Methods

Results

Conclusion