SME managers' learning from crisis and effectual behaviour

Abstract

PurposeThe COVID-19 pandemic has entailed a critical situation for small- and medium-sized enterprises (SMEs) since restrictions on business activity have been imposed by authorities to reduce infections. The result is that SME managers must manage their firms through a crisis under very challenging conditions. The purpose of the present paper is to address how SME managers respond in the second “wave” of COVID-19 based on their perceived uncertainty as well as eventual learning from the first “wave” in early 2020.Design/methodology/approachFour hypotheses are presented, resulting in a theoretical model relating crisis impact, uncertainty, learning from crisis experience and effectuation behaviour. The theoretical model is tested through an empirical questionnaire-based quantitative study of Norwegian SMEs in the bar and restaurant sector, applying structural equation modelling as the analytical technique.FindingsThe results show that impact from COVID-19 leads to both uncertainty and learning and further that uncertainty primarily leads to a focus on affordable loss while learning leads to experimentation behaviour.Originality/valueThe present paper is novel in several ways. First, it empirically studies a unique situation where a crisis encompasses two “waves” of significant impact on the firms in focus. This provides the opportunity to address managers' learning through a crisis for application in a very similar situation later. Second, the present paper provides an empirically supported model of how uncertainty or learning leads to different dimensions of effectuation behaviour in a crisis situation.