How to Manage a Crisis: Entrepreneurial and Learning Orientation in Out-of-Court Reorganization

Abstract

This paper analyzes the impact of SMEs’ entrepreneurial and learning orientation on the outcome of reorganization. We draw on a resource-based view on reorganization, linked with entrepreneurial and learning orientation. Previous research indicates a higher success rate of out-of-court reorganization compared to formal court-supervised proceedings. Out-of-court solutions are handled privately, therefore little is publicly known about the process of an out-of-court reorganization and what determines its success or failure. Thus, we focus on out-of-court reorganization, analyzing a sample of 521 Austrian SMEs. The data were collected from the financing banks. To test our hypothesized model of the impact of entrepreneurial and learning orientation on reorganization success, we applied bivariate analyses and logistic regression. The findings indicate that both entrepreneurial orientation and learning orientation positively influence the success of reorganization. While action-oriented entrepreneurial orientation probably has a stronger impact on short-term success, vision-oriented learning orientation seems to be more important for long-term turnaround. Company size acts as a moderator, indicating that small companies are less likely to succeed than micro- and medium-sized companies. The study has implications for corporate practice and future research.

Crisis management process for project-based organizations

“…The dynamic capability theory also supports the notion that organizations working in highly competitive and rapidly changing environment can rely on the learning process for long-term survival and growth (Mansour et al, 2019). Irrespective of the success or failure of crisis management adoption, organizations can learn from outcomes and use this information in the future (Mayr et al, 2022). Hence, we propose the following proposition: P7.…”

“…The dynamic capability theory also states that learning is the byproduct of organizational decision-making as every decision taken by the organization irrespective of its consequences provides a learning environment which can help an organization in taking smart decisions in the future (Hung et al, 2010;Teece et al, 1997). Crisis management strategies promote learning among project managers who can use learning experiences while handling similar crisis in the future (Mayr et al, 2022). Thus, this study proposes the following proposition: P6.…”

“…According to Killen and Hunt (2010), dynamic capability consists of people, structures and processes that are continually monitored and adjusted to meet the changing requirements of the dynamic environment. Although, studies on crisis management have recently adopted insights from dynamic capability theory (Mayr et al. , 2022; Sahebalzamani et al.…”

“…According to Killen and Hunt (2010), dynamic capability consists of people, structures and processes that are continually monitored and adjusted to meet the changing requirements of the dynamic environment. Although, studies on crisis management have recently adopted insights from dynamic capability theory (Mayr et al, 2022;Sahebalzamani et al, 2023); however, research on crisis management in PBO's under the lens of dynamic capability theory is still lacking. Since PBO's are different from traditional organizations, the nature of the crisis, its sources and solutions may also vary for PBOs.…”

Getting by With a Little Help From Our Friends: Cultural Influences on Entrepreneurial Orientation and Strategic Alliance Portfolio Diversity in SMEs

“…SMEs are often flexible in terms of strategy formation, but commonly lack the resources and capabilities necessary to create a competitive advantage (Ireland et al, 2003). While entrepreneurial firms may have the ability to rapidly cope with shifting dynamism in the marketplace and environmental conditions (Hitt et al, 1991;Mayr et al, 2022), they also frequently face difficulties in obtaining and managing resources strategically (Ireland et al, 2003). To overcome these difficulties, SMEs can build and leverage their social capital by forming multiple and varied connections.…”