Abstract
Within this short commentary, we explore the notion of pivoting; following major exogenous shocks, firms often contemplate business model pivoting where they change product or service offerings to capitalise on emerging opportunities. We assess the potential bright and dark sides of pivoting for new and existing firms in regard to quality of opportunities, fit with current capabilities and potential costs. The extant literature suggests that two forms of opportunities exist, arbitrage and innovation. We discern that post-shock, new firms may be better positioned to pursue arbitrage opportunities, whereas existing firms should target innovation. Existing firms may have more complications when pursuing arbitrage due to resource embeddedness and stakeholder obligations, and have a greater ability to innovate with an established resource base. Conversely, new firms can capitalise on arbitrage due to lack of embeddedness, as arbitrage requires a significant investment in opportunity selection. In addition, we offer suggestions for future research in regard to the current pandemic and more broadly, exogenous shocks.
Highlights
Major exogenous shocks such as the COVID-19 pandemic unsettle the flow of economic processes and disrupt economic equilibrium (Li and Tallman, 2011)
Exogenous shocks put the very survival of small firms in doubt (Pal et al, 2014); unlike incumbents that may be ‘too big to fail’ and, as such, can negotiate special arrangements with policymakers to stay afloat due to their size and perceived importance to local or even national economies, smaller entrepreneurial ventures are often left with nebulous advice to ‘pivot’
Based on the analysis of opportunities offered by exogenous shocks, we offer some implications for decision makers at the firm level and for policymakers
Summary
SME response to major exogenous shocks: The bright and dark sides of business model pivoting. Todd Morgan Sergey Anokhin Laurel Ofstein Wesley Friske Missouri State University. Follow this and additional works at: https://bearworks.missouristate.edu/articles-cob. Recommended Citation Morgan, Todd, Sergey Anokhin, Laurel Ofstein, and Wesley Friske. " SME response to major exogenous shocks: The bright and dark sides of business model pivoting." International Small Business Journal 38, no. 936590 ISB0010.1177/0266242620936590International Small Business JournalMorgan et al research-article2020. Article reuse guidelines: sagepub.com/journals-permissions httpDs:O//dIo: i1.o0r.g1/1107.171/0772/606226642246226029093366559900 journals.sagepub.com/home/isb
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