The role of flexibility, digitalization, and crisis response strategy for SMEs: Case of COVID-19

Abstract

ABSTRACT We explore the impact of COVID-19 on small- and medium-sized enterprises (SMEs) and examine how crisis management strategies, particularly related to flexibility and digitalization, have influenced their responses during and after the pandemic. In this regard, we investigate the relationships between strategic flexibility, digitalization, digital technology adoption, COVID-19 perception, and firm strategy after the pandemic by specifically incorporating the mediating role of the crisis response strategy. Based on a survey of 206 Turkish SMEs in manufacturing and service industries, our research employs structural equation modeling using Smart PLS. Our findings indicate that crisis response strategies play a significant role in shaping the firm strategy after COVID-19, mediating the impact of strategic flexibility, digitalization, digital technology adoption, and COVID-19 perception. The findings highlight the importance of crisis response strategies—including optimizing business models, developing marketing channels, investing in technological innovation, diversifying into new business areas, and integrating the supply chain—during the COVID-19 period. These strategies are crucial influencers in shaping the firm strategies of SMEs beyond the pandemic. In particular, SMEs demonstrate adaptation by reassessing and restructuring their product portfolios, expanding their presence in regional markets, and establishing strategic collaborations to thrive in the evolving business landscape.