Profiting from innovation in the aftermath of an economic crisis

Abstract

Purpose The aim of this paper is to present systematically a variety of benefits from innovating in response to an economic crisis. Design/methodology/approach This is a conceptual paper that draws on prior conceptual and empirical studies, especially the innovation-based view of firm performance. Findings Many firms have cut their innovation expenditures in response to the COVID-19 crisis. However, the financial crisis in 2008/2009 has shown that these short-term cost savings may have severely negative consequences on competitiveness. Several innovation examples from the crisis due to the COVID-19 pandemic further indicate that companies may benefit from a variety of first-order innovations, which go considerably beyond product development. Consequently, researchers and executives need to consider the variety of innovation types beyond product development, and they further need to emphasize second-order innovations, which describe the dynamic transformation of innovation management. Originality/value Academics and practitioners need to put specific attention to the transformation of innovation processes at the beginning of a crisis because firms may have to redesign their innovation processes. This dynamic reconfiguration and realignment of innovation processes further is essential again if a crisis continues for a longer period, such as the crisis due to the coronavirus pandemic. For example, if a company currently does not respond to relevant trends, its competitive position will deteriorate because other companies will enter the market. If firms can afford to continue or strengthen the innovation activities, they may profit substantially after the crisis.

Exploring the COVID-19 pandemic impact on innovation and entrepreneurship – Review and evidence from Global Innovation Index

“…Frugal innovation can be incentive that determine enterprises to redesign processes and adopt rapid decision making. Digital business models and can help companies surpass difficulties and develop frameworks that increase their competitive advantage (Dabic et al, 2022;Jha, 2021;Lichtenthaler, 2021;Kronblad & Pregmark, 2021). Entrepreneurs and usually small and medium businesses have been the most affected by the pandemic and the results show that a rapid decision-making process and adoption of agility can help solve better the problems encountered.…”

Marketing/entrepreneurship interface research priorities (2023–2026)

“…Crisis and extreme conditions of high uncertainty (e.g. COVID-19 pandemic) in the contexts of MEI are receiving an increasing interest among researchers in the field (Eggers, 2020; Garcia et al , 2021; Lichtenthaler, 2021; Miles et al , 2016; Morrish and Jones, 2020; Pidduck and Clark, 2021).…”

Innovating resilience

“…The work of Lichtenthaler (2021) has identified that with many organizations which survived the economic effects of the COVID-19 pandemic turned to budget cuts within innovation and R&D departments in order to free up resources to shore up other parts of the organizations. Innovation is often considered a necessary but not essential element of an organization, usually due to its speculative working ethos of looking for potential products or services, and the fact that any boost to revenue comes when an idea has been moved into a realized product or service.…”

“…Innovation is often considered a necessary but not essential element of an organization, usually due to its speculative working ethos of looking for potential products or services, and the fact that any boost to revenue comes when an idea has been moved into a realized product or service. Lichtenthaler (2021) has categorized innovation within organizations into two "orders":…”

“…The crux of the work by Lichtenthaler (2021) highlights that cutting funding or resources to any areas touching on first-or second-order innovations can in the long-term be highly damaging to the recovery of an organization after a crisis. Moreover, second-order innovations tend to be the area where most resource cutting occurs due to the belief that these areas are least important to the functioning of the organization.…”