Firm performance in times of crisis: does an innovative business strategy matter?
This study examines whether a firm’s business strategy – innovative vs. conservative – determines the extent to which a crisis impacts its performance. To explore this, the study calculates business strategy scores as a composite measure of six variables, where a high (low) score indicates an innov...
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| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Vilnius Gediminas Technical University
2025-08-01
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| Series: | Journal of Business Economics and Management |
| Subjects: | |
| Online Access: | https://journals.vilniustech.lt/index.php/JBEM/article/view/24216 |
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| Summary: | This study examines whether a firm’s business strategy – innovative vs. conservative – determines the extent to which a crisis impacts its performance. To explore this, the study calculates business strategy scores as a composite measure of six variables, where a high (low) score indicates an innovative/prospective (conservative/defensive) strategy. The COVID-19 pandemic (2020–2021) serves as the crisis context for the analysis. Using a sample of 7,143 firm-year observations in the U.S., the study finds that while the sample firms experienced a decline in their performance during the COVID-19 crisis period compared to the pre-crisis level (2018–2019), the decline was less pronounced for firms following innovative strategies. This finding suggests that a firm’s business strategy is a crucial determinant of its performance during a crisis. The study enhances theoretical understanding that business strategy is particularly important when operating conditions are abnormal.
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| ISSN: | 1611-1699 2029-4433 |