The role of technological innovation in the mitigation of the crisis generated by COVID-19: an empirical study of small and medium-sized businesses (SMEs) in Latin America

Abstract

Purpose This article aims to analyze the role of innovation in mitigating the economic crisis generated by the coronavirus disease of 2019 (COVID-19) pandemic in Latin American small and medium-sized enterprises (SMEs). The goal is to determine whether actions, activities, and perceptions related to impact and positioning within three distinct areas—finance, management, and competition—contribute to increased innovation within companies, remain neutral in their effects, or have an inverse impact. Design/methodology The sample consisted of 9,186 SMEs from 14 countries in the Ibero-American region: Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Spain, Guatemala, Honduras, Mexico, Panama, Paraguay, and Uruguay. The data were analyzed using a structural equation model (SEM). Findings The study provides empirical evidence that the SMEs in the Ibero-American region have faced the crisis generated by the COVID-19 with a predominant negative impact on their financial factors and sales. These impacts have affected the organization, particularly at the operational level, leading to the need for self-financing and more conscious resource management. The most significant finding is that, as financial challenges, as in productivity, turnover, and profitability, among other difficulties, increase innovation actions. Limitations Research exposes limitations that pave the way for future studies. Firstly, the study relies solely on data obtained from top-level company consultations. Second, there are variations in sample sizes by country. Practical implications The results reveal practical implications for SMEs owners and managers, shedding light on the influence of innovation in sustaining competitiveness during times of crisis. This, when combined with resilience, product quality, employee engagement and customer satisfaction, has facilitated the sustainability of a significant portion of SMEs that have weathered an unprecedented crisis. Originality-value The value of this work lies in highlighting the significance of innovation for SMEs and the opportunities that arise during a crisis to enhance competitiveness. Companies that have embraced innovations in the way they offer or deliver their products and services have managed to remain in the market despite the challenges posed by the crisis.