Strategic Responses to Crisis
Saturday, April 4, 2020 by Matthias Wenzel, Sarah Stanske, and Marvin Lieberman
Currently the pandemic crisis is affecting the lives of people and organizations around the world.
As the coronavirus continues to spread, more and more governments are implementing strong measures to save people’s lives, such as the prohibition of events, lockdowns, and shutdowns. These measures contribute to slowing down the spread of the coronavirus in order to avoid lethal capacity overloads of national healthcare systems. At the same time, they threaten the survival of firms across all sectors and industries at a global scale—with potentially devastating individual, societal, and economic outcomes, such as massive job losses and social precarity. Therefore, the corona crisis raises important questions about how firms can respond effectively to crises such as the current pandemic.
In this Virtual Special Issue, we gather and discuss key articles published in the journals of the Strategic Management Society (SMS) that shed light on how firms respond to crisis. Our overview focuses on 13 articles that substantially inform our understanding of this issue.
Based on our overview, we identity four strategic responses to crisis: retrenchment, persevering, innovating, and exit. Retrenchment refers to cost-cutting measures that potentially reduce the scope of a firm’s business activities. Persevering relates to the preservation of the status quo of a firm’s business activities in times of crisis, e.g., through debt financing and the consumption of available slack resources. Innovating refers to conducting strategic renewal in response to crisis. Exit refers to the deliberate discontinuation of a firm’s business activities.
This virtual special issue extends understanding of strategic responses to crisis for both strategy scholars and practitioners. The main contribution of this Virtual Special Issue to strategy research is to make sense of the burgeoning work on strategic responses to crisis by developing a taxonomy, one that surfaces “time horizon” as an important dimension when considering the value of such responses. This taxonomy opens up promising directions for future research, especially on the temporal dynamics of responding to crisis in time as well as shifts between strategic responses to crisis over time.
For managers, this Virtual Special Issue raises awareness of the variety of potential responses that managers have available. It also raises doubts concerning the effectiveness of retrenchment as a common but rarely effective strategic response, especially when crises last longer. Importantly, this Virtual Special Issue also includes exit as a strategic response to crisis. As this virtual special issue highlights, an exit may not be the end of the road, as often assumed, but the starting point of a new venture, one that is able to do justice to the changed business conditions that the crisis has created.
Read more papers included in the Virtual Special Issue.
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