The impact of global economic crisis on SMEs

Abstract

Purpose -The purpose of this paper is to examine the role of the entrepreneurial orientation (EO) in global economic crisis and whether it can mitigate the negative effects of economic crisis both on firm's operations and on firm's financial performance. Design/methodology/approach -A quantitative approach is used to test the hypotheses. Principal component analysis and multiple regression analysis are used on the empirical survey data. Findings -Results based on a sample of almost 200 Finnish small and medium-sized enterprises indicated that the different dimensions of the EO can have diverging effects on how firms are impacted by the recession. In general, the more innovative and proactive the firm is, the less its operations are affected by the recession and the more risk-taking the firm is, the more its profitability is affected by recession. Research limitations/implications -A longitudinal design -rather than the current cross-sectional design -would give a better premiss to explore the causal relationships among the research variables. Originality/value -The paper is one of the first works linking EO with the effects of recession at the firm's operational level and the paper expands prior knowledge by taking the EO-performance relationship into the context of recession.

The Moderating Role of Bridging Ties between Risk-Taking, Proactivness and Performance: The Evidence from Iranian SMEs

“…Naldi et al (2007), found that there is a negative relationship between risk-taking and family firm performance and that there is a positive relationship between risk-taking and performance among Iranian SMEs. Our results do, however, support previous studies reporting that risk-taking strategy is significantly positively related to higher variability in profitability (Frese et al, 2002;Rauch et al, 2009;Soininen et al, 2012). Risk-taking enables Iranian SMEs to commit resources to ventures in uncertain environments that can lead them into international markets.…”

“…We examined the composed dimension of firm performance based on the work of Cowling (2004), who have explicitly addressed the growth-profitability relationship as their main research question, unlike previous studies (e.g. Soininen et al, 2012). This study contributes toward improving our understanding of how proactiveness, risk-taking and bridging ties construct the performance of a firm (Aldrich & Fiol, 1994).…”

Economic resilience in Great Britain: the crisis impact and its determining factors for local authority districts

“…In the UK, Fotopoulos (2014) provides evidence on the time persistent spatial stickiness (slow propensity to change) of entrepreneurship for the period 1994-2007. The flexibility and innovation aspects of entrepreneurial activity are key to identifying and exploiting opportunities during a crisis (Soininen et al 2012), whilst firm formation can replace the existing stock of firms with more dynamic ones. Higher rates of firm births may imply more opportunities for employment growth and less impact from the economic downturn.…”

How Supplier Economies of Scale Drive Supplier Selection Decisions

“…The automotive industry is not spared by global economic cycles (Soininen, Puumalainen, Sjögrén & Syrjä, ). Like many other industries, it experienced a large‐scale market shift during the 2008 financial crisis (Dooley et al., ; Van Biesebroeck & Sturgeon, ).…”