Service innovation in times of economic crisis: the strategic adaptation activities of the topE.U.service firms

Abstract

This article examines the long‐term strategic adaptation activities top service firms use to respond to economic crisis. Based on a longitudinal dataset of 97 leading European service firms, it empirically conceptualizes three clusters or strategic types of organizational response to overcome long‐term financial strain experienced during 2008–2011, it tests the survivability of their strategic orientation and it assesses their relationship with organizational performance during the crisis (2008–2011) and in the post‐crisis period (2014–2016). Leading E.U. service firms that attempt to maximize adaptation by ‘Commitment‐to‐expansion’ (i.e., increase in R&D investment, strategic M&A and recruitment) ensure the long‐term survivability of their strategic orientation and generate growth in their operating profits, sales and market capitalization in contrast to service firms that implement cost‐oriented actions (layoffs and cutting back on R&D investment). These results extend the limited knowledge available on strategic adaptation in top E.U. service firms and provide insight into the role that different responses play in fostering recovery from ongoing economic and financial crisis, which have thus far remained empirically under‐researched.

Resilience building in service firms during and post COVID-19

“…More specifically, by adjusting Fromhold-Eisebith's framework for service firms, this study develops a conceptual framework that illustrates resilience-building strategies, success factors, and resources that may help service firms to survive, recover, and grow during and after the COVID-19 pandemic. In previous economic disruptions, service firms that had a continuous commitment to expansion by adopting resilience-building strategies showed long-term survivability and growth in operating profits and market capitalization (Martin-Rios & Pasamar, 2018). The following sub-sections discuss these strategies.…”

“…Thus, this study responds to this need by addressing an individual firm's resilience. Also, due to the lack of research on service firms' responses to a crisis (Borchert & Mattoo, 2010;Martin-Rios & Pasamar, 2018), the current study merely focuses on service firms. More specifically, by adjusting Fromhold-Eisebith's framework for service firms, this study develops a conceptual framework that illustrates resilience-building strategies, success factors, and resources that may help service firms to survive, recover, and grow during and after the COVID-19 pandemic.…”

“…Mergers and acquisitions allow service firms to enter new markets, grow and diversify their service portfolios, and obtain access to various financial and technological resources (Martin-Rios & Pasamar, 2018). Also, returns from merger and acquisition deals in economic downturns are higher on average than the ones in economic upturns.…”

R &D investments and profitability during the crisis: evidence from Greece

“…Lome et al (2016) in a study of Norwegian companies indicated that firms devoting significant resources in R&D after the 2000 financial crisis performed better relative to firms that seized such projects. Such findings have been verified by Martin-Rios and Pasamar (2018) and Nemlioglu and Mallick (2017) in the European Union and United Kingdom, respectively.…”

How Will We Dine? Prospective Shifts in International Haute Cuisine and Innovation beyond Kitchen and Plate

“…Creativity and innovation are considered important antecedents of competitive advantages, especially for restaurants [ 2 , 12 , 36 ]. Therefore, the crisis could even increase some restaurants’ performance [ 74 ]. P2: In the next five to ten years, crises like the corona virus pandemic will significantly increase creativity and innovation in haute cuisine restaurants.…”