Firm agility and digitalisation less helpful than expected during the COVID-19 pandemic, but valuable in the longer run

Redek, Tjaša (author), Čater, Tomaž (author), Čater, Barbara (author), Černe, Matej (author), Koman, Matjaž (author)

Firms’ performance during exogenous crises depends on several factors, from strategic foresight, financial readiness, and a number of firm-specific as well as sectoral aspects, also including luck and government support. The aim of this paper is to investigate the extent to which the ‘crisis readiness’ of firms, defined by factors like a proactive strategic approach, digitalisation, and financial constraints, as well as the reliance on or availability of government support, is responsible for the outcome during the COVID-19 crisis compared to the long-run contribution made by these factors. The empirical investigation uses a unique combination of firm-level balance sheet data and unique survey data concerning the strategic focus and implementation of Industry 4.0. While the literature suggests that digitalisation, a strategic proactive approach, and crisis readiness (itself depending on several factors) impacted the firms significantly during the COVID-19 crisis, the results show firm performance primarily depended on other (sectoral) aspects serving as a major exogenous factor impacting their performance. During the crisis, digitalisation was additionally mentioned as an important adjustment factor. However, using firm-level data we show that while companies were able to mitigate certain impacts of the supply and demand shocks triggered by COVID-19 using their internal resources and characteristics, including strategic elements, the biggest explanatory factor remains the sector involved. This leads to important managerial and policy recommendations, principally stressing the importance of proactivity and agility for firms’ long-run performance, whereas in the short run the state must help mitigate the effects.

• Language: English
• Keywords: company performance, crises, pandemic, digitalization, COVID-19, firm performance, crisis readiness, digitalisation, firm-level evidence
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: Published
• Publication version: Version of Record
• Year: 2022
• Number of pages: Str. 69-87
• Numbering: Vol. 25, iss. 3
• PID: 20.500.12556/RUL-143669
• UDC: 005.3
• ISSN on article: 1212-3609
• DOI: 10.15240/tul/001/2022-3-005
• COBISS.SI-ID: 122830595
• Publication date in RUL: 06.01.2023

Record is a part of a journal

• Title: E+M. ekonomie a management
• Shortened title: E+M, Ekon. Manag.
• Publisher: Hospodářská fakulta Technické univerzity
• ISSN: 1212-3609
• COBISS.SI-ID: 6985500

Licences

• License: CC BY-NC 4.0, Creative Commons Attribution-NonCommercial 4.0 International
• Link: http://creativecommons.org/licenses/by-nc/4.0/
• Description: A creative commons license that bans commercial use, but the users don’t have to license their derivative works on the same terms.

Secondary language

• Language: Slovenian
• Keywords: poslovanje podjetja, krize, pandemija, digitalizacija

Projects

• Funder: ARRS - Slovenian Research Agency
• Project number: P5-0128
• Name: Izzivi vključujočega in trajnostnega razvoja v prevladujoči paradigmi ekonomskih in poslovnih znanosti

• Funder: ARRS - Slovenian Research Agency
• Project number: J5-2555
• Name: Oblikovanje organizacije v digitalni dobi