Never Waste a Crisis: Performance Effects of SMEs’ Crises Response in Emerging Markets (with Linda F. Edelman, Bentley University & Galina V. Shirokova, GSOM St. Petersburg University)
Emerging markets’ fragile institutional and market systems are highly susceptible to economic crises, defined as periods of greatly reduced environmental munificence that threatens firm survival. Paradoxically, the “creative destruction” that crises bring along can generate sizeable entrepreneurial opportunities. This poses an existential strategic dilemma for resource-constrained SMEs. In addition to the choice of a market strategy, SMEs can resort to non-market strategies, such as intense personal networking, to help them weather the crisis. Our study addresses the complex interplay between market and non-market crisis response strategies and their effect on SME crisis performance. Data came from a 2015 survey of Russian SMEs (n=656). Results suggest that both a proactive crisis response strategy and effective utilization of personal networks have a positive impact on crisis performance. Surprisingly, the interactive effect is negative, suggesting that in a time of crisis, market-based and non-market (personal networking) strategies substitute, rather than complement each other.