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Managing through a crisis: Managerial implications for business-to-business firms

Carsten lund pedersen.

a Department of Marketing, Copenhagen Business School, Solbjerg Plads 3, 2000 Frederiksberg C, Denmark

Thomas Ritter

b Department of Strategy and Innovation, Copenhagen Business School, Kilevej 14, 2000 Frederiksberg C, Denmark

C. Anthony Di Benedetto

c Fox School of Business, Alter Hall 523, 1801 Liacouras Walk, Philadelphia, PA 19122-6083, USA

1. Introduction

The world is in crisis, locked in the throes of an unprecedented economic lockdown as the coronavirus, in the specific form of COVID-19, takes its toll on societies around the world. At the time of this writing, countries have shut down vital parts of their administrations, education sectors, and economic activities. Whole industries, including hospitality and air transport, have essentially stopped functioning; the closing of national borders limits free movement to a minimum anyway. The related humanitarian crisis came as a shock to many people, and new restrictions together with enormous challenges represent a discontinuity, breaking from the past reality. Furthermore, this crisis features immense volatility, making it nearly impossible for people to imagine all the potential, invisible dangers and visible changes. Simply put, we are living in truly disruptive times.

But the notion of disruption is not new; it has long appeared in business discussions. Executives have tried to understand, be prepared for, and even initiate disruption ( Markides, 2006 ). Not every disruptive idea follows the trajectory predicted by Clayton Christensen (1997) , but substantial energy has gone into preparing for business model disruptions along the lines that he outlined ( Markides, 2006 ). For example, executives have tried to anticipate disruptions due to digital advances (e.g., Ritter & Pedersen, 2020 ), platform business models (e.g., Cusumano & Gower, 2002 ), or new market orientations (e.g., Kumar, Scheer, & Kotler, 2000 ). Yet these types of preemptive measures were made obsolete by the truly unexpected and far-reaching disruptions created by the highly contagious virus, which has already prompted a greater downturn than might have been caused by any alternative business models, innovative technologies, new forms of working, or the like.

At the same time, another important difference pertains to predicted durations. Digitalization, the Internet, and connectivity through the Internet-of-Things have prompted shifts that remain relevant. Although the immediate crisis created by COVID-19 may have mainly a temporary effect, followed by a partial return to “normal” times, its broader impact may be persistent and significant, leading to the “new normal” of a post-corona world. In this shift, health care service preparedness must be rethought, supply chain risk needs to be redefined, online meetings likely will become the norm, and virtual teaching may represent a critical channel for education. In this sense, the virus crisis represents a temporary discontinuity, after which some aspects will return to their prior status, even as others might be changed forever.

Furthermore, the crisis could have negative consequences for firms, if not managed appropriately ( Coombs, 2007 ), while also offering an opportunity, as long as decision makers perceive it accurately ( Brockner & James, 2008 ). For example, environmental crises often have fueled human development, throughout history, revealing how they can create opportunities if exploited and managed wisely ( Bernstein, 1996 ). Some firms that perform well during the crisis may gain new customers, but other firms appear destined to fail. How firms respond and react during the crisis arguably will determine, at least partially, whether they thrive.

With some notable exceptions (e.g., Andersson & Mattson, 2010 ; Hermes & Mainela, 2014 ; Naidoo, 2010 ), business-to-business marketing has not, remarkably, focused much on crisis management. Yet business-to-business firms have encountered a multitude of recent crises, from the dot.com bubble to the financial crisis to 9/11 to SARS to Brexit. Furthermore, the COVID-19 crisis is unprecedented, to the extent that we lack any established knowledge to comprehend its consequences fully. Similar to most sectors in society, business-to-business marketers lack relevant guidance for meeting the enormous challenges they face. Both marketing in general and Industrial Marketing Management in particular have a long-standing tradition of conducting research with and for practitioners, and accordingly, we believe the business-to-business academic marketing community is uniquely well qualified to address these issues and concerns, using theory-based reasoning to help support executives' efforts to manage their firms through the COVID-19 crisis and beyond.

Against this backdrop, we prepare this special issue on managing crises by establishing its strong focus on the managerial implications for business-to-business firms, as derived from business-to-business marketing research. We have two primary aims with this special issue: First, we seek to offer business-to-business marketing practitioners theory-based insights and practical implications. The business-to-business marketing community can and should bridge the rigor–relevance divide, by providing research-based, practical implications that rest on a strong foundation of theory. In accordance with this aim, the articles in this issue can be purposefully shorter than typical Industrial Marketing Management articles, written mainly to argue for practical implications rather than make novel theoretical contributions. Second, we emphasize the continuing need for crisis management research from a business-to-business marketing perspective. Such a research tradition should prove highly relevant for practitioners facing crises, now and in the future.

In the next section, we thus define a crisis and explicate its different phases. Following a discussion of crisis management in general, we summarize some crisis management contributions in Industrial Marketing Management . We also zoom in on some selected theories and their implications for business-to-business marketers during the COVID-19 era, which in turn suggest areas for further research. Thus, this editorial offers a terminology for discussing crisis and crisis management, describes the current state-of-the-art of business-to-business crisis management literature, and offers a research agenda.

2. Crisis and crisis management

2.1. definition of crisis.

The word crisis has its etymological origins in the Greek word krisis , which denotes choice, decision, or judgment ( Paraskevas, 2006 ). It often refers to a turning point or decisive moment, implying that the historical meaning of the word might presume some individualism, rather than determinism in terms of (re)acting in volatile situations—at least connoting choice at some decisive moment. However, uses of the term also vary by disciplines and contexts (see Table 1 ). For example, Holsti (1978, p. 41) refers to crisis as “a much overused term which has become burdened with a wide range of meanings, some of them quite imprecise,” and Smith (2005, p. 319) acknowledges that “the definition of crisis has generated considerable debate within the academic literature and there is no real collective acceptance about the precise meaning of the term.”

Definitions of a crisis.

Crisis management literature in particular comprises at least two main strands, separated by their views of crisis as either an event or a process (e.g., Jaques, 2009 ). A crisis could be a singular, large event, but it may be more useful to conceive of sequences of sub-events over time, as in a process perspective, such that this approach synthesizes elements from both strands of research. Accordingly, we define a crisis as a sequence of events that can have substantial negative consequences if not managed appropriately. In this definition, an event is a delimited element, with a beginning and end, such that it happens or takes place. Internal or self-inflicted events can also be distinguished from external or other-inflicted and natural events (e.g., Faulkner, 2001 ), depending on whether the event has been triggered by, for example, the organization itself (e.g., misconduct, poor work safety standards, environmental damage, bribery, tax evasion) or external factors (e.g., a supplier has inappropriate safety measures, hurricane ruins production facilities). The phrase substantial negative consequences indicates the extent or importance of the damage caused by the event; for organizations, a crisis typically implies substantial losses, interruptions to their usual operations, or even bankruptcy. We include the notion of being managed appropriately to acknowledge that organizations can act during a crisis. Even if they cannot influence its course or prevent a crisis completely, they can react in more or less optimal ways to its occurrence. In this way, the substantial negative consequences might be due to the crisis, but they also could result from inappropriate management by the firm.

Alternative terms such as risk and disaster similarly appear in prior literature, also with varying definitions. From our perspective, risk refers to the probabilistic likelihood that a crisis may happen and its (often economic) impact. Therefore, we conceive of risk as preceding the crisis. Disaster generally pertains to nature-induced crises, such as storms, floods, fires, earthquakes, or major accidents. In this view, a disaster is a subcategory of crisis.

2.2. Phases of a crisis

A crisis can arise as different types (e.g., natural disaster, self-inflicted) and take different forms (e.g., immediate, sustained). Extant crisis literature features debates about how many stages constitute a crisis lifecycle (e.g., Faulkner, 2001 ; Fink, 1986 ; Roberts, 1994 ). Following Coombs (2007) , a narrow view of crisis in its simplest form has three phases: pre-crisis, crisis , and post-crisis . However, issue management literature also suggests the need to consider the period immediately before the crisis, when it is building, to identify and proactively react to early symptoms (e.g., Ansoff, 1975 ), as well as immediately after the crisis, when extraordinary activities are required to handle its effects before a new “normal” stage might be achieved, which ensures that the firm learns and prepares ( Madsen, 2009 ). We therefore suggest a model with five distinct phases for our crisis analysis: pre-crisis normality , emergence , occurrence , aftermath , and post-crisis normality ( Table 2 ). Each phase differs in its content, duration, and managerial opportunities.

Phases of crisis.

According to Jaques (2007) , a key weakness of crisis lifecycle models is that they presume the crisis is linear, with events that take place in sequential fashion. The coronavirus pandemic appears likely to run counter to such models, considering the expert predictions that it might flare up again in intensity, after a first wave and ebb. Therefore, linear lifecycle models must be viewed as purposefully simplified, to establish a conceptual approach, rather than as natural laws. Alternatively, the process could be described in circular terms, similar to disaster management cycles, with an emphasis on reducing the impact of rather than preventing disasters, such that the management of a disaster entails continua of interrelated, interdependent activities ( Jaques, 2007 ).

2.3. Framing crisis: actor, content, and pace

Framing crisis entails specifying who (actor) experiences what kind of crisis (content) at what speed (pace). An actor might be an individual, group, organization, or network of organizations ( Wilke & Ritter, 2006 ). These actors tend to exhibit significant differences in their perceptions and the impacts they experience. For example, the coronavirus crisis has affected countries (framed as groups of individuals and of organizations) at different times: starting in China, then hitting Italy before Denmark. The different countries accordingly have entered different crisis phases; at the moment China seemingly reached the end of crisis occurrence or beginning of crisis aftermath, Italy was in the midst of its crisis occurrence, and some Eastern European countries were in crisis emergence. There may also be within-country differences; in the United States, the coronavirus spread early in the state of Washington, then was noted in New York, before it spread to other major cities. In parallel, different business units within a company can experience the impact of a crisis differently, perhaps due to their geographical locations or work content. For example, in a single hospital, the emergency units are extremely busy, but elective surgery and dentistry units even may have closed.

To understand the content factor, it is helpful to consider sub-crises; for the coronavirus for example, we might distinguish five different sub-crises:

• 1 Contagion: Because of the highly contagious character of the virus, many people may be infected. This sub-crisis may entail several solutions, such as (a) developing a vaccine, so that spreading is irrelevant; (b) eliminating the virus, so there is no virus to spread; (c) allowing the virus to spread and let humans develop immunity through infection (e.g., 60% of the population is infected), which may result in “flock immunity”; and (d) social distancing. The first two options are not immediately available; the third option would evoke a different sub-crisis with devastating implications. Therefore, governments mainly are implementing social distancing at large scales to limit spreading.
• 2 COVID-19: Severe respiratory problems threaten people's lives and require intensive health care. Thus, this sub-crisis is concentrated among the approximately 5–10% of infected people. Its solution requires finding a treatment that can mitigate the most severe health problems, to help patients survive and retain their health. The current solution admits patients with severe symptoms to intensive care, which leads to the next sub-crisis.
• 3 Healthcare: The capacity of health care systems may be insufficient. Patients with severe respiratory problems need intensive care, including respiratory support, but the equipment to provide it is limited. This limitation drives many political decisions. Without any alternative solutions to the contagion or COVID-19 sub-crises, many countries are stuck with social distancing measures, which leads to another sub-crisis.
• 4 Business models: Social distancing has led to closures of multiple industries: travel (e.g., airlines, airports, cruise lines, holiday destinations, train and bus operators), hospitality (hotels, restaurants, bars, theme parks, concert and event operators), sports (professional leagues, sports clubs, Olympic Games, betting firms, fitness clubs), brick-and-mortar retail (retail outlets, shopping centers, consumer goods producers), and service providers (hair salons, barbers, theaters, concert halls, pet groomers). Even if they remain in operation, many businesses have had to change their business models significantly, such as letting employees work from home (nearly all firms) and adopting online solutions (e.g., schools and universities, counseling and therapists, public administration). For firms that are experiencing growth due to social distancing measures, other elements of the business model sub-crisis become relevant, such as capacity limitations for online retailers or the network capacity of Internet providers.
• 5 Economic: The massive lockdown of businesses and countries threatens a recession, including high levels of unemployment, long-term spending decreases in consumer investment markets, more bankruptcies, and so forth.

The distinctions among different sub-crises are important, in that each one might have entered a different phase, and they also are perceived differently by the various actors. For example, people with mild symptoms might be primarily affected by the contagion sub-crisis. At an industry level, the short- and long-term impacts of the business model sub-crisis vary by sector, such that many universities managed to complete the spring 2020 semester by moving to an all-online format, but the curtailment of campus visits by graduating high school students seems likely to affect their future enrollments. Different countries also might suffer distinct impacts of a potential recession.

Finally, the pace of a crisis captures elapsed time in different phases. Ritchie (2004) and Parsons (1996) distinguish immediate crises (little or no warning, so the crisis emergence phase is very short), emerging crises (slower to develop, with a long emergence phase), and sustained crises (which may last for months or years, over a very long crisis existence phase). Each phase can vary from shorter or longer, as illustrated in Fig. 1 (steeper gradients indicate higher pace).

Crisis Framing Chart.

The current coronavirus crisis (or rather, the five related sub-crises) should be viewed through all of these lenses: It originated with little or no warning ( immediate crisis, short emergence ) in China ( actor ). It followed a gradual pattern with regard to contagion and healthcare, across the world ( emerging crisis, longer emergence ), and it seems likely to result in a subsequent economic crisis (possibly sustained crisis ), as well as possibly recurring in waves of continued contagion ( cyclical crisis , phases start over again).

3. Crisis management

3.1. five phases of crisis management.

As noted by Jaques (2009) , crisis management emerged after World War II, gaining prominence in the wake of the Cuban Missile Crisis, as well as legitimacy as a formal management discipline after the 1982 Tylenol poisoning scandal and the 1986 Chernobyl disaster. Tylenol sales rebounded to pre-crisis levels due to the swift and effective handling of this product harm crisis by the manufacturer, Johnson & Johnson; to this day, it offers an excellent, teachable example of effective crisis management ( Latson, 2014 ). Some authors delimit crisis management to efforts after a crisis happens (e.g., Bundy, Pfarrer, Short, & Coombs, 2017 ), whereas others regard the pre-crisis phases as important ( Jaques, 2009 ) or else highlight post-crisis learning as essential ( Madsen, 2009 ). We define crisis management as the intentional handling of a crisis in all five phases (see Table 3 ).

Example studies in crisis management.

3.1.1. Pre-crisis

In the pre-crisis phase, organizations can seek to prevent (if possible), predict , or prepare for it. The differences among these three options are not trivial. In some cases, organizations have sufficient agency to prevent a crisis proactively; Bundy et al. (2017) even propose that a pre-crisis, prevention phase includes organizational preparedness (changes to the culture, design, or structure can prevent system breakdowns) and stakeholder relationships (good relationships with stakeholders may reduce crisis likelihood). These options are available prior to the crisis; in the coronavirus setting, they would have involved prevention through improved health standards or immediate containment of the first patients, and preparation in the form of increased precautionary measures and health care capacity.

The prediction phase also can be informed by Knight's (1921) definition of risk as events for which the outcome can be assessed using probabilistic outcomes, but uncertainty as hard to quantify, such that its assessment cannot rely on any probabilistic foundation. For example, we know that pandemics arise with some regularity (risk), but the current version is exerting many unknown impacts on businesses, for which we have no historical basis (uncertainty). Nor does statistical regularity necessarily imply predictability; Makridakis, Hogarth, and Gaba (2010) use the analogy of earthquakes to establish this distinction. We can predict that in the next 35 years, the Earth will experience about 44 earthquakes with intensities of around 7.5 on the Richter scale, but seismologists cannot say when or where they will hit, beyond noting earthquake-prone zones. In such cases, it may be a better approach to prepare for different contingencies, like firefighters who cannot predict when or where a fire will be but can train for different contingencies and stay ready.

3.1.2. Crisis emergence

In the emergence phase, a crisis has not yet started, but its signs become clearer. Depending on the pace, actors still have a chance to prepare and potentially postpone the occurrence of the crisis. With respect to the healthcare sub-crisis, some countries increased their health care capacity as much as possible, just before the crisis started there, after having noted the developments in other countries where COVID-19 had struck earlier. Other actors took other measures to postpone the crisis, such as lockdowns; once COVID-19 began to spread, health officials recommended such measures to “flatten the curve” and minimize its expansion, noting that otherwise, the health care system would be inundated and ultimately result in higher mortality rates.

3.1.3. Crisis occurrence

Once the crisis hits, the organization must initiate crisis responses, which usually are tactical in nature, involving communication (see Coombs, 2007 ), actions, and behaviors (consider actions by British Petroleum after its Texas City refinery explosion in 2005 or Deepwater Horizon explosion in 2010; Andersen & Andersen, 2014 ). Depending on the type of crisis, the organization might take different forms of action. Even if the crisis is unpredictable and evolving, decision makers must follow logical patterns, which can be especially difficult with insufficient or conflicting data. Furthermore, decision-making speed is often of paramount importance, suggesting that many decisions must be made on an ad hoc basis during the crisis. This point is not to suggest that decisions are not thought through though. Simple cost–benefit analyses, effect models, stakeholder analyses, and trade-off models are often involved. Yet decision making also cannot fall victim to “analysis paralysis,” and accordingly, the need for strong leadership tends to be pronounced in this phase of a crisis. Bundy et al. (2017) emphasize the importance of crisis leadership (characteristics of leaders and how they frame the crisis) and stakeholder perceptions (how organizations influence how stakeholders perceive and react to crises).

3.1.4. Crisis aftermath

Once the crisis is over, there is a time immediately afterward, focused mainly on rebuilding destroyed property (e.g., after natural disasters), giving overworked response units some time off (e.g., fire brigades, health care professionals), and catching up on postponed or disrupted work flows (e.g., replenishment of warehouses). In this phase, extraordinary activities precede the new normality. The main managerial activities include recovery and remedy.

3.1.5. Post-crisis

After the crisis, the organization tries to revert to “business as usual” ( Coombs, 2007 ). In a simple categorization of outcomes after a crisis, the organization may be worse off (unable to revert to its original position), might revert to its original position, or it could be better off (come out of the crisis strengthened in some way). The outcome likely depends on different systems, such organizations, networks, or countries. Systems that worsen after a crisis are vulnerable , those that bounce back are resilient , and systems that grow stronger due to adversity are antifragile ( Manyena, 2006 ; Taleb, 2012 ). These systemic outcomes also relate to how well-prepared organizations were in the pre-crisis phase and their actions during the three central crisis phases ( Pedersen & Ritter, 2020 ). Finally, the post-crisis phase offers opportunities to learn and prepare for future crises, resulting in a circular process of crisis management in which the post-crisis becomes the pre-crisis. Bundy et al. (2017) accentuate the importance of organizational learning from a crisis to identify new competitive opportunities, as well as social evaluations of how stakeholders perceive the organization's responses to the crisis.

3.2. Crisis management research in industrial marketing management

Industrial Marketing Management has featured articles on crisis from its very beginning—the first article on “the environmental crisis” was published in Volume 1, Issue 2 ( May, 1972 ). A search produced a list of 260 papers that include the word “crisis.” After clearing the list of articles that do not address crisis management and instead refer to unrelated forms of crisis (e.g., Laari-Salmela, Mainela, & Puhakka, 2019 , which pertains to “identity crisis”), we are left with eight articles that offer theoretical contributions and managerial implications regarding how organizations can deal with a crisis ( Table 4 ). This lack of research on crisis management is surprising, particularly in light of the opportunities to study it following events such as 9/11, the 2008 financial crisis, or the opening of the Berlin Wall. Overall, business-to-business marketing research has paid little attention to crisis management and accordingly has offered few insights for marketing practice. This situation needs to change; we need a better understanding of how business marketing, business relationships and networks, marketing orientation, and so forth can contribute to managing ongoing crises and post-crisis realities.

Articles on Crisis Published in Industrial Marketing Management.

Overall, the treatment of crisis and crisis management in Industrial Marketing Management has been eclectic, fragmented, and partial. There is no established stream of literature in the journal though—despite the importance and regular occurrence of crises and the potential impact of the marketing field on crisis management by leveraging market intelligence (to predict and prepare) and relationship management (of particular interest for crisis occurrence), for example.

4. Managerial implications and research issues

Considering the lack of meaningful contributions in marketing literature, we might speculate that each crisis is unique and unpredictable, such that findings from one cannot transfer to another. But we do not subscribe to this view; existing theories, based on studies of previous crises, can help organizations navigate through and after any crisis. We thus outline some theoretical insights and managerial implications pertaining to the current coronavirus crisis. As noted, the aim of this special issue is to develop more detailed, qualified managerial implications from theories, to inform practitioners. The field of business-to-business marketing contains theories relevant to the current crisis, especially if applied to adapt some established constructs or models. In addition, we need established constructs to cross-pollinate these insights with evidence from crisis management fields.

4.1. Crisis phases model

We propose that managers should divide each crisis into relevant sub-crises, analyze and include all five phases in their decision making (in particular, by thinking of the aftermath and post-crisis phases in their early decision making, e.g. Pedersen & Ritter, 2020 ), ensure their future preparedness, and learn how to prepare for and predict potential future crises.

4.2. Business-to-business theories and resilience

The long tradition of studying value propositions in industrial marketing ( Eggert, Ulaga, Frow, & Payne, 2018 ) offers pertinent opportunities for combined considerations of resilience. Such a cohesive view might address whether a firm's value propositions can remain resilient during a crisis. In some industries, the value propositions have been virtually unaffected; in others, existing value propositions have mostly disappeared. Similarly, resilience notions could inform business network models to consider, for example, how business networks might increase or decrease resilience to a crisis. Networks can impose rigidity but also enhance responsiveness to external shocks for example ( Håkansson & Ford, 2002 ).

Can value propositions and business networks help organizations be resilient during a crisis?

4.3. Relationship management

A key focus of business-to-business marketing is on salespeople and the management of boundary-spanning personnel ( Walter, 1999 ). Industrial marketing has a plethora of insights to provide. Moreover, the role of salespeople is likely to change substantially during a crisis; personal meetings once seemed critical to maintaining business relationships, but digital sales channels take priority during the COVID-19 crisis. How does such a shift affect business relationships and the quality of sales encounters? Organizations also need to provide new training to ensure their representatives' online sales skills. Although we lack detailed insights into the specifics, established literature and anecdotal examples may provide some tentative guidelines for these efforts.

How do relationships and relationship management change during a crisis, and what impacts do they have on relationship outcomes during and after the crisis?

4.4. Salespeople's autonomy

The empowerment of salespeople is critical to customer relationships, and job autonomy enhances both employee and customer satisfaction ( Anderson & Huang, 2006 ). Employee autonomy also increases agility and creativity, to help the firm be responsive and innovative in uncertain and dynamic environments ( Pedersen, 2019 ). The pandemic has created a completely uncertain environment, so employees may need to take unconventional measures to manage their business relationships. It is not unreasonable to anticipate that decentralizing decision power to salespeople (salesperson autonomy) will provide a more appropriate management model for sales channels in this era. Early evidence has shown that the Haier Group reached full-scale operations soon after the start of the pandemic, when most manufacturers were just starting to open again, partly due to its very decentralized set-up. 1 For Haier, autonomy created resilience.

How does salespeople autonomy relate to crisis resilience?

4.5. Omnichannel, digitalization, and business model resilience

Other key topics in recent business-to-business marketing have involved omnichannel efforts and digitalization ( Ritter & Pedersen, 2020 ). Omnichannel capabilities and the digitalization of business models arguably increase resilience in business models; if an organization's business model and communication channels already had gone digital and been integrated prior to the crisis, it is reasonable to hypothesize that this organization has shown greater resilience than its competitors without such expanded capabilities. The coronavirus crisis provides verisimilitude for these popular topics in industrial marketing, as well as a natural experiment for investigating these topics further.

How do business models (e.g., digitalization, omnichannel) change during a crisis, and what are the long-term effects of such changes?

4.6. Disruption

The theory of disruption ( Christensen, 1997 ) cites three fundamental conditions: First, a new offering must initially perform worse than existing market offerings from incumbents, in terms of performance. Second, incumbents improve their market offerings, to meet the most demanding customers' needs along a sustaining trajectory, and thus overshoot the needs of mainstream and low-end customers. Third, the disruptive offering develops over time to meet the needs of mainstream customers better than an “over-engineered” incumbent offering and takes over major market share, if not the whole market.

Although the coronavirus pandemic is not disruptive in the sense of Christensen's (1997) theory, it can help accentuate disruptive processes in established business markets. In particular, it certainly has put pressure on several established, “high-end” solutions. For example, personal business meetings with customers have been replaced by video conferences (typically seen as low-end, low quality interaction modes). Even if the high-end option is not being disrupted per se by the low-end option, the unavailability of high-end meetings provides a foothold for the online meetings to disrupt customer relationships, as exemplified by the rapid growth in the use of Zoom and other online meeting platforms. After the crisis, we anticipate that video conferences may retain a significant market share, even if they seem unlikely to fully replace personal meetings. As such, the situation is not a “true” disruption in the Christensen (1997) sense, but it certainly is a troubling outcome for certain industries (e.g., travel, hospitality), during and after the crisis.

To which extent does a crisis infuse disruption into a market?

5. This special issue

The current coronavirus crisis is unique, in terms of the number of fatalities, its global reach, and its economic impact. However, crises in general are not special; they are a regular part of business. As Kash and Darling (1998, p. 179) note, “it is no longer a case of ‘if’ an organization will face a crisis; it is rather a question of ‘when’, ‘what type’ and ‘how prepared’ the organization is to deal with it.” Likewise, “anytime you (i.e. managers) are not in crisis, you are instead in pre-crisis” ( Fink, 1986 , p. 7). It is therefore of paramount importance that the business-to-business marketing community develops a better understanding of crisis management in industrial firms and business-to-business markets. We have outlined some promising research avenues, which is not meant to imply that the list is exhaustive or covers all of the many interesting aspects of crisis management for business-to-business marketing. It merely highlights that there are ample research opportunities—and that Industrial Marketing Management hopefully will be a platform for sharing and debating such contributions.

For here and now, this special issue comprises 19 contributions of what executives should consider based on business-to-business marketing theories. While we were astonished by the small number of crisis management studies already published in Industrial Marketing Management , we were evenly overwhelmed by the many submissions offered by authors from around the world. In total, we received 73 submissions on a call-for-papers that only offered about six weeks for preparing a contribution.

In order to offer a timely special issue, we created a high-speed reviewing process with two reviewers and co-editor approval with an average turn-around time of only six days. Only papers with requests for minor revisions were invited to the next round to keep our set deadline targets. This meant that a number of papers with potentially great contributions had to be referred to resubmitting a developed paper at a later point in time—thus, there are great papers under development and there is a promising pipeline for developing a crisis management stream in the business-to-business marketing literature.

We are proud to present 19 contributions in this special issue—from many different corners of the business-to-business marketing literature—and with four clear overarching managerial imperatives for executives in business-to-business firms ( Fig. 2 ):

• 1 Understand fast: a crisis forces executives to think fast, to analyze quickly, and to keep an overview. Panic is not a good approach in a crisis. While high levels of uncertainty prevent exact planning, comprehending the situation is of paramount importance: what kind of risks are we facing (McNulty et al.; Oehmen, Locatelli, Willumsen, & Wied), how is our organizational preparedness (Hughes, Morgan, Hodgkinson, Kouropalatis, & Lindgreen), what can we learn from former crisis exposures (Kottika, Ozsomer, Rydén, Theodorakis, Kaminakis, Kottikas, & Stathakopoulos), and what is the impact of the crisis on our business model (Ritter & Pedersen).
• 2 Think allocentric: a crisis should not lead to egocentric thinking, as this will not only destroy opportunities during the crisis but also in the aftermath and post-crisis era. Businesses can only thrive in a society, if they take an active part in developing it (Sheth), big challenges can be best solved together and openly (Chesbrough), competitors can be collaborators (Crick & Crick), and differences in relationships need to be understood and utilized (Cortez & Johnston; Obel & Gau; Zafari, Biggemann, & Garry).
• 3 Change proactively: a crisis can barely be handled by continuing current operations, or pausing activities and waiting for the past to return. Change is often needed. Changes can relate to shaping markets (Nenonen & Storbacka), designing innovative solutions (Cankurtaran & Beverland), or using middle managers as change agents (Heyden, Wilden, & Wise). Change must be seen as an interconnected process encompassing various elements (Hartmann & Lussier).
• 4 Sell intelligently: Instead of cutting prices and adjusting budgets downwards, sales enablement can drive positive results, or at least minimize negative impacts of the crisis. Sales focus can be moved to specific customers (Habel, Jarotschkin, Schmitz, Eggert, & Plötner), to new offerings (e.g., services; Rapaccini, Saccani, Kowalkowski, Paiola, & Adrodegari), or to new ways of selling (e.g., value selling; Keränen, Salonen, & Terho). This may also involve adapting the sales force (Sharma, Rangarajan, & Paesbrugghe).

Four managerial imperatives for crisis management.

We are very thankful to all authors who have contributed in such fast and dedicated fashion. We do hope that this special issue is of inspiration to fight the impact of the coronavirus on businesses and markets. And we know that there are more insights on their way. The coronavirus crisis presents enormous challenges to research and practice of business-to-business marketing – but also offers huge opportunities that we can and should explore and exploit together.

1 https://sloanreview.mit.edu/article/how-autonomy-creates-resilience-in-the-face-of-crisis/ .

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Management in times of crises: reflections on characteristics, avoiding pitfalls, and pathways out

• Open access
• Published: 19 August 2022
• Volume 16 , pages 2035–2046, ( 2022 )

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• Ricarda B. Bouncken   ORCID: orcid.org/0000-0003-0510-7491 1 ,
• Sascha Kraus   ORCID: orcid.org/0000-0003-4886-7482 2 , 4 &
• Antonio de Lucas Ancillo   ORCID: orcid.org/0000-0002-8876-7753 3  

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The world is shaken by global crises that have severe implications for firms and their management. But what is characteristic of a global crisis, and why do firms and their managers often fail to deal proactively and strategically with coping strategies for crises. This introductory paper explains the characteristics of crises and important underlying management behavior. These behaviors are most important to understand because they might escalate or reduce the effects of a global crisis in firms. We also explain the challenges associated with emphasizing the local effects of crises while ignoring or downplaying their global effects. Finally, we present the papers in this special issue that provide specific answers that can help to deal with aspects of a global crisis.

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1 Introduction

Since the beginning of 2020, the world has been changing on a scale and with an intensity that no one could have predicted. While we see the emergence and consequences of the still ongoing COVID-19 pandemic, the Russian war in Ukraine and climate change in society and politics, we also perceive the strong disruptions of these crises for established businesses, entrepreneurship, but also for innovation and global management (e.g., Kuckertz et al. 2020 ; Aguinis et al. 2022 ). Firms not only need to deal with dramatic changes that were not anticipated but also need to maneuver with the long-term consequences of these crises strategically (e.g., Breier et al. 2021 ).

Obviously, the sudden challenges related to the health situation, social welfare, lockdown, and supply chain disruption of COVID-19 have had a strong negative impact on the overall economic situation, perhaps deepening some latent challenges that have their origins in the 2009 financial crisis (Sharma et al. 2022 ). Some industries and firms were more strongly affected by the situation while policymakers hile policymakers were eager to soon bring the economic situation back to pre-COVID levels (Galindo-Martín et al. 2021 ). Still coping with COVID-19, 2022 has shown another additional crisis caused by the war in Ukraine that will have ongoing and more severe problems in the future (Mbah & Wasum, 2022 ). These two sudden crises are accompanied by the most severe and boundaryless climate change that increasingly has strong negative influences of different kinds (e.g., heat waves, droughts, erosion).

Previous research can deliver some answers to the actual challenges for firms in crises. Especially the COVID-19 pandemic motivated research on the health care situation and virtual work. Yet, surprisingly little research has examined the characteristics and challenges of such global crises? What does crisis mean, and what are the specifics and challenges? On these critical questions, this introductory paper aims to disentangle the characteristics as well as local and global challenges and causes of innovation and entrepreneurship and to provide an overview of the studies in this special issue with regards to how they answer challenges related to these crises.

2 Current crises and their comparison

Today, economies and firms face three major global crises. The most sudden and unanticipated is the COVID-19 pandemic crisis. Global and local economies were hit hard, sudden, and partly continuously by the adverse effects of the pandemic. COVID-19 has globally and dramatically influenced individual lives, exerted huge health and economic costs, and affected many firms in diverse ways (e.g., Meyer et al. 2022 ; Harms et al. 2021 ). For example, it has led to staggering unemployment and restrictions in normal life (Clark et al. 2020 ; Kraus et al. 2020 ). Interestingly, the COVID-19 pandemic has called for the willingness to show solidarity with others while accepting negative effects on self-interest (Cappelen et al. 2021 ).

The second and also sudden crisis is the ongoing war in Ukraine. When it started, it first truncated delivery of supply chain parts and food. In addition, the sanctions against Russia and the lowered supply of fossil energies have lowered global trade and supply. The sanctions show solidarity on the level of countries and super country arrangements, such as on the level of the EU (van Bergeijk 2022 ). However, the solidarity of the population does not always or fully match the actions and sanctions on the collective level initiated by governments. The crisis initially hit the Ukrainian population and specific firms in different countries. Yet, it is already visible that energy supply problems will increasingly exert several additional severe threats, for example, on industrial manufacturing and social wellbeing over the next months.

The third crisis of this time − climate change − has been ongoing, but its effects become more visible and severe every coming year (Bouncken et al. 2022 ). Compared to the progressive, long-term environmental crisis, the COVID-19 pandemic nuances the short-term effect of a major disruption. For example, individuals’ anxieties of contamination, of becoming ill or dying, connected to limitations health facilities initiated immediate and often dramatic actions from the side of the government that caused strong disruptions on the level of individuals and firms (Dosi and Soete 2022 ). Potentially, the more pressing the environmental problems, the greater the modifications of the conventional objective of economic growth towards the inclusion of metrics for sustainable development. Some research has already nuanced that climate change will demand changes in organizations and individuals’ behavior toward the development of identification processes that are in favor of environmental sustainability (Bouncken et al. 2022 ; Clauß et al. 2022 ).

Concerning the COVID-19 pandemic, the war in Ukraine, and the environmental crisis, we can disentangle a ‘local dimension’ related to the problem’s surface and a more ‘global dimension’ that includes the deeper global drivers and causes (Dosi and Soete 2022 ). Together, the three crises have nuanced effects that are first and foremost perceived and evaluated locally although their effects. Yet, they are far more long-term and global in the context of a highly interlinked globalized world, where boundaries to the crises are lower than many expect them (Dosi and Soete 2022 ).

3 Definition and understanding of crises

Crises are related to strong changes that have not been anticipated and which are not short occurrences but which even become more severe over time (Pearson and Clair 1998b ; Kraus et al. 2013 ).

Due to the uncertainties and disruptions, crises escalate fear in individuals and organizations. With this fear, individuals tend to hang on to their habits, engage strongly in the search for certainty, look for clear formal guidance, even authoritarian regimes, and cling to identity processes and social categorization that might lead to social effects such as polarization and the growth of intolerance (Dosi and Soete 2022 ). Hence, the fear that clings to crises causes extra challenges, reduces solidarity, and limits the success of actions taken towards coping with the crises. Accordingly, when solidarity is low and ego-interests high, there will be declining chances of reducing the escalating problems of a crisis.

Although environmental and economic crises might appear suddenly, their influences on firms in the appearance of organizational crises are usually understood via a process (Claeys and Cauberghe 2014 ; Pearson and Clair 1998a ; Sayegh et al. 2004 ). Traditionally the literature understands an organizational crisis not as a sudden event but as a process that might be differentiated into stages (Lukason and Laitinen 2019 ) or specific cycles (Fernandez and Mazza 2014 ). So typically, the crisis emerges and remains over a period of time but might allow for actions to reduce it respectively (Trahms et al. 2013 ; Weitzel and Jonsson 1989 ). Yet, wrong actions or inactivity might escalate the process.

Even though a crisis relates to a process, previous research has revealed that an organizational crisis demands quick decisions of managers, mainly at the C-level or by the organization’s founders (Merendino and Sarens 2020 ). Often, the crisis evolves from a smoldering state, but to prevent its diffusion and escalation, managers need to look for immediate solutions (Williams et al. 2017 ). Research pinpoints that for organizational crises that there is not a single triggering or initial event but a long journey of misguidance that enfolds unknown paths (Coombs 2014 ; Pearson and Clair 1998a ).

Similarly, an organizational crisis is rarely the outcome of only one factor but rather of different ones. Often, the combination of internal and external events causes an organizational crisis (MacDougall et al. 2016 ; Sheng and Lan 2019 ). There might be external causes and environmental uncertainty which become severe threats to the firm because of specific contextual conditions (Lorsch and MacIver 1989 ). The internal view or the important internal causes often relate to environmental maladaptation, combined with wrong decisions, conflicts, or misconducts of managers (Merendino and Sarens 2020 ). Hence, misconduct or managers might further escalate an organizational crisis while proper management behavior can shorten the crisis and deliver ways out of it. We reason that the following insights into misconduct in organizational crises might also provide guidance about how to work with a global crisis that affects the organization.

3.1 Management misconduct in crises

Understanding the crisis as a process calls for managers to strategize and action toward identifying ways out of the ongoing crises. However, previous research has identified factors that reduce dealing with the crisis. The knowledge of such misconduct can help avoid those behaviors and guide pathways that better cope with global crises. In the following, we explain important causes and bring arguments on how they relate to the actual crises.

3.2 Overconfidence

When a crisis unfolds, be it gradually or suddenly, managers show overconfidence in dealing with it. Overconfidence spoils effective decision-making as it produces less accurate or over-optimistic evaluations of a decision’s outcomes (Simon and Shrader 2012 ). In situations of overconfidence, managers’ cognitive processes are too lowly activated as they do not see the challenges or threats of the crises. In detail, overconfident managers are largely ignorant of potential problems, so they do not enter search processes, crisis planning, and the development of creative visions out of the crises (Merendino and Sarens 2020 ).

All the recent three crises might have been triggering overconfidence in managers. At the beginning of the pandemic, managers had not considered the dramatic and worldwide challenges that affected more and more firms in different industries and the international transfer of goods that limited or blocked the global supply chain processes. Then managers might have considered local effects but only gradually understood the severity of the global challenges. Due to the greater attention on local challenges, managers’ overconfidence lingered over a longer period. For example, the ongoing lockdowns, health issues, and virtual work relationships brought about several shortages of human resources, physical resources, and market demands. Managers largely ignored the scale and scope of these challenges.

The overconfidence and emphasis on local challenges seems to have parallels in its effects as the war in Ukraine. We propose that the energy and food supply shortages will even enfold more in the future. Yet, with the effects of the pandemic still lingering (e.g., shortage of Solar Panels), there are limited ways out of the energy shortage.

While the pandemic and the war occurred more suddenly, the climate change crisis is still evolving. Even Government policies (see Paris climate agreement) seem to have been overheard or downplayed by managers. Managers also seem to underestimate the necessary moral and identification changes needed to cope with the climate changes. In addition, climate change has very strong global and long-term effects. The typical focus on local challenges and overconfidence in mastering long-term and global problems worsen the inactivity. Overconfidence and managers’ ignorance might worsen the situation because alternative paths that demand long-term investments out of the crises have not been taken, for example, by fostering technology and necessary organizational innovation that could make an organization more sustainable.

3.3 Gaps of knowledge and experience

Previous research reveals that managers are often not cognitively equipped to sense the seeds related to the crisis because they lack knowledge and experience for perceiving and are crucial for the global and long-term effects of the global crises. The two sudden crises today, the pandemic and the war, indeed show situations in which managers naturally lacked knowledge and experience. The most significant gaps in knowledge and experiences were associated with the pandemic. Hence, guesswork and gut feeling essentially needed to substitute similar problem solutions from the past for management during the pandemic. A bit different are the effects related to the war. Managers might have experience and knowledge in dealing with areas affected by war or where their supply chain partners are located in an area affected by war. Yet, while there have been wars constantly in the world, the Ukrainian war is different because it involves a major nuclear player and because Ukraine was a powerful supplier of food and industry parts. Yet, changes associated with uncertainty might be smaller than those of the pandemic.

A different matter is the slowly progressing climate change. While there are numerous models of how climate change plays out and who will be affected in which ways, we see great ignorance and overconfidence so that managers do not use their potentially useful experiences and knowledge. Firms might use much more of their established innovation search and implementation routines to find ways to reduce energy consumption, reduce pollution, etc. Yet, the low financial and economic incentives and the often insufficient levels of environmental solidarity limit those options. In addition, there are organizations that take advantage of holes in environmental regulations and routines, and the insolidarity might motivate other organizations to care less about climate change for now.

3.4 Lack of independent thinking

Previous research shows that managers’ insufficient independent thinking slowed the development of creative ideas, missing proactivity, and risk-taking (Merendino and Sarens 2020 ). The lack of formal independence is defined as managers’ ability “to make strategic decisions consistent with the concerns and evaluations of a broader set of stakeholders” (Rindova 1999 , p. 966). Interestingly, managers might be formally independent but prioritize their personal interests over the firm’s (Merendino and Sarens 2020 ). Hence, a lack of independence defines that even when managers can recognize and understand the seeds of a crisis, they do not react at all or sufficiently because they prioritize their personal interests (Brown et al. 2020 ). For example, they ignore signs in the environment about the development and increase of a crisis, and the cognitive processes about solutions and the subsequent severe changes in the firm will not be activated (Merendino and Sarens 2020 ). However, the COVID-19 pandemic has demanded increasing solidarity. Still, in some countries, this crisis has initiated extensive discussions about the government’s role in implementing policies that reduce economic inequality and better protect health (Cappelen et al. 2021 ). Hence there is an interesting ambivalence.

On the one hand, the existence of a common enemy – the virus – might bring individuals together. On the other hand, high levels of stress and fear can activate an individual’s or group’s selfish impulses. Researchers claim that the pandemic has made salient the selfless behavior of some individuals and groups while also showing the heroism of others, such as health workers (Brandt et al. 2020 ). People-to-people solidarity has been witnessed, such as assisting elderly people through voluntary shopping services and volunteering in health care institutions (Cappelen et al. 2021 ). Selfish behavior became visible by hoarding and individuals not respecting the need for social distancing (Cappelen et al. 2021 ).

Related to a lack of independent thinking, managers but also boards or organizations might be subject to short-termism. On the individual level, short-termism shapes a constraint as a single manager might prioritize temporal focus towards the short term and conservatism, and this often or more strongly occurs during times of great uncertainty (Flint 1999 ; Merendino and Sarens 2020 showed that boards prioritized short-term solutions while making decisions to enhance immediate results. Especially the great uncertainties related to the pandemic might have needed short-term and immediate solutions. Yet, the war and the climate crises should motivate long-term visions, scenarios, and strategies to cope with the challenges. Perhaps, increasingly occurring threats of climate change might trigger perceptions of (localized) challenges and drive greater levels of solidarity that are needed to cope with the global climate crisis.

3.5 Complexity and its underestimation

Global crises are complex, especially in the negative effects they incur over time. Typically, the greater a crisis becomes, the more complex the influences and the more difficult it becomes to find ways out of the crisis.

Generally, there are unclear relationships and hard to estimate causes and effects when complexity is extremely high. While the complexity adds a threat of its own, managers might even underestimate the complexity of crises. In this, managers tend to pursue too simple actions that cannot cope with the multifaceted and fuzziness of the crises (Henning Reschke et al., 2010 ). In addition, in underestimating the complexity, managers tend to postpone crucial decisions, and this either ignorance or underestimation becomes more severe when the seeds of a crisis become more evident step by step (Merendino and Sarens 2020 ). The complexity of the pandemic became greater and greater over the course of the pandemic. However, some managers chose the right focus and proactively implemented solutions. Yet most firms and governments were confronted with unanticipated multifaceted challenges. In dealing with the pandemic, the Government initiated actions that increased the complexity for firms. Potentially, the current War bears fewer complex issues but demands hardly achievable solutions, for example, a shortage of energy supply. The severe global effects of climate change and many managers seem to underestimate the complexity. With every week passed, the magnitude of climate change increases, and so does the complexity and difficulty of finding ways out of it. Still, the crises might stimulate proactive, risk-taking, and innovative behavior of individuals and organizations towards innovation and entrepreneurship that reduces the challenges (Covin et al. 2020 ; Hughes et al. 2018 ).

3.6 A glimpse of how crises affect entrepreneurship and innovation

While we experience a slowing down of economic factors, additionally, it has been shown that the pandemic has negatively affected entrepreneurship (Galindo-Martín et al. 2021 ). One might believe that a crisis mobilizes creativity and entrepreneurship (Peris-Ortiz et al. 2014 ; Dejardin et al. 2022 ). Still, these positive triggers have mostly been related to vaccination development, testing services, virtual work delivery services, and home and garden solutions. Negative effects of entrepreneurship, in general, have been put forward, stating lowered demand imposed by confinements and other limitations on mobility (Galindo-Martín et al. 2021 ). Accordingly, El-Erian (2010) argued that firms have been less apt to take risks during the financial crisis. Risk-taking is a precondition to innovation and entrepreneurship (Bouncken et al. 2014 ). In addition, firms were less open to investments in innovative firms as they evaluated the risks as too high in terms of capital loss. In particular, it has been shown that the great financial crisis limited the emergence of a dominant design. The crisis developed fewer innovations, especially a lower amount of disruptive ones (Brem et al. 2020 ). The COVID-19 crisis again showed different levels of creativity in dealing with the crisis, often only at a medium innovative level but technology-facilitated (Wendt et al. 2021 ). Just this − technology − could be the trigger for turning crises into opportunities for entrepreneurship and innovation.

Different views on a problem might also trigger innovation and entrepreneurship (Lv et al. 2021 ). In this vein, researchers have remarked that a crisis can bring people into a moral conundrum, which might facilitate the development and articulation of opposing intuitions and perspectives (Kluger 2020 ). Hence, diverse needs and opposing views related to the emergence of a global crisis might stimulate diverse thoughts over this course of entrepreneurship. However, perhaps the digitalization, artificial intelligence, the solidarity of family firms, specific business incubators, entrepreneurial strategies, new forms of knowledge work, novel shared value systems, and new digital platforms might reveal solutions to the crises and build up resilience (Hillmann 2021 ).

Still, one might argue that especially the issues related to climate change will encourage innovation and entrepreneurship in the form of technological progress. Including metrics for sustainable development might stimulate innovation and entrepreneurship toward new business opportunities for dealing with the new metrics (Galindo-Martín et al. 2021 ).

4 Overview of the papers

This special issue includes eight contributions on specific solutions to crises, offering a wide overview of strategies from different perspectives. Two contributions examine business models (AI business model innovation, create shared value). Three papers investigate knowledge and information transfer (information asymmetries, knowledge worker, and email marketing). And three contributions draw on more contextual perspectives and topics, studying innovation ecosystems, business incubators, and notions in entrepreneurial strategies.

Åström et al. ( 2022 ) provide a work on “ Value creation and value capture for AI business model innovation: a threephase process framework” . They explain how AI providers integrate value-creation and value-capture elements to develop commercially viable AI business models. Against the growing adoption of AI technology, this study used an in-depth single-case study to understand firms’ AI business model innovation toward commercializing the value of the technology. They identified three stages AI suppliers must go through: identifying AI value creation prerequisites, matching value capture methods, and establishing an AI business model. They also suggest that AI providers must develop and experiment with a wide range of AI business models to achieve economic success.

Camisón et al. ( 2022 ), in their article on “ Asset tangibility, information asymmetries and intangibles as determinants of family firms leverage” examine the capital structure decision in small and medium-sized family firms. Drawing on a mix of theories: agency theory, the behavioral theory of the firm, and strategic theory, they look at how family control, publicly available information and tangibility affect financial structure based on survey data from 543 companies in the Spanish tourism industry. Their findings show that family ownership and leverage have a more complicated and variable relationship than conventional financial and behavioral models suggest. Their empirical evidence reveals that the relationship between family ownership and leverage capacity is also contingent on information transmission strategies, asset investment decisions, and ownership arrangements on debt capacity.

Deyanova et al. ( 2022 ), in “ Hatching startups for sustainable growth: a bibliometric review on business incubators” conduct bibliometric performance analyses and science mappings to present a systematic overview of the scholarly knowledge base relating to business incubators. Their findings are based on reviewing and analyzing relationships between 194 published articles in this field. The performance analyses show the literature and publishing practice of researchers and organizations, including the characteristics of publications and their citations over time. The science mappings comprise keyword co-occurrence analysis and bibliographic coupling, which identify leading research topics in this field, uncovering its framework and dynamics.

In their paper entitled “Examining subjective career success of knowledge workers” , Gaile et al. ( 2022 ) suggest a novel model for evaluating career success by considering universal personal values, behavioral factors, and sociodemographic factors. On the fundament of theoretical implications suggested by protean career orientation, they collected data from 384 specialists and managers in Latvian organizations across 20 different industries. The results show that self-direction and power are the most impactful personal qualities on subjective career success. Even though some career behaviors, including confidence behaviors and attitudes toward incentives and relationships, significantly contribute to subjective job success, curiosity habits and educational levels present negative influences. Besides, gender shows no significant impact on their perceived professional success.

Rapp ( 2022 ) on “ Predictive vs. nonpredictive entrepreneurial strategies: What’s the difference, anyway?” offers a novel perspective on the role of prediction and adaption in entrepreneurial action. The author argues that the two essential conceptions of how entrepreneurial activity could progress, one being the predictive approach (causation) and the other being the non-predictive or adaptive method (effectuation), should be unified rather than distinct and mutually exclusive. Through reasoning the overlaps and concurrency of the two features, this research suggests that prediction and adaptation invariably co-occur, proposing a judgment-based unified idea of predictive-adaptive entrepreneurial activity.

Rubio-Andrés et al. ( 2022 ) offer a piece on “ Driving innovation management to create shared value and sustainable growth a metric and governance model for evaluating the advantages of creating shared value in small and medium-sized enterprises” . They draw on current discussions on the importance of creating shared value for SMEs and collected data from 1136 Spanish SMEs. This study suggests innovation management as a critical driver for creating shared value through cultural transformation processes. Furthermore, the findings also show that creative businesses may promote the development of social and economic value with reputation mediating the relationship. They propose a strategic management model to achieve shared value and sustainable growth considering innovation management, social value, and reputation.

The article “Gaming innovation ecosystem: actors, roles, and co-innovation processes” by Klimas and Czakon ( 2022 ) looks into innovation ecosystems and the co-innovation process among various actors. They conducted a longitudinal investigation into the Polish gaming innovation ecosystem over three years. The findings identify four co-creation roles: direct value creation, supporting value creation, encouraging entrepreneurship, and leadership. This study further suggests a five-stage co-innovation process: co-discovery, co-development, co-deployment, co-delivery, and co-dissemination.

Data availability

Our manuscript has no associate data.

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Bouncken, R.B., Kraus, S. & de Lucas Ancillo, A. Management in times of crises: reflections on characteristics, avoiding pitfalls, and pathways out. Rev Manag Sci 16 , 2035–2046 (2022). https://doi.org/10.1007/s11846-022-00580-2

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Building apartments for sale becoming less viable as costs rise, pre-Budget papers show

Research suggests state unlikely ever to be more than minority provider of development capital for homes.

The Department of Finance calculates €13.6 billion is needed each year to build 33,000 units. An accompanying chart suggests a cost of more than €20 billion to deliver 50,000 homes. Photograph: Gareth Fuller/PA Wire

The viability of building apartments for sale to owner-occupiers has worsened in recent years as building and financing costs have grown, according to papers setting the scene for the National Economic Dialogue next week.

A paper on housing, written by Department of Finance officials before the annual pre-budget consultation and discussion forum in Dublin on Monday, highlighted that the cost of developing an average two-bed apartment is now €450,000-€550,000. However, the median price for existing apartments is €330,000 in Dublin and €265,000 nationally, it said.

The paper highlighted that the economics of the build-to-rent sector are different, as institutional investors can pay a premium as they look to make returns over an extended period, typically of about 25 years.

[  Two-thirds of developers say Government’s housing plan is not achievable  ]

However, it noted that commercial residential investment fell 75 per cent to below €500 million last year, as larger schemes in particular were affected by rising interest rates.

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The document also pointed out that the State can only remain a minor player in the funding of home delivery in Ireland, especially as the Government’s new target for 250,000 new units to be built by the end of the decade will cost more than €20 billion a year,

It said that that a total of about €5 billion was allocated by the State for home construction this year. This includes exchequer funding, investment by the Land Development Authority (LDA) and loans issued by the Housing Finance Agency (HFA).

“The Department of Finance estimates that annual development financing of €13.6 billion is required to produce 33,000 units. Should the national housing supply target increase, as expected, that funding requirement will grow,” it said. An accompanying chart pointed to a cost of more than €20 billion to deliver 50,000 homes.

[  The Irish Times view on the Housing Commission report: a call to action for policymakers  ]

“In other words, notwithstanding the significant increase in public funding, the scale of housing need means that the State is likely to only ever be a minority provider of development capital,” it said. “Accordingly, tens of billions of euro will need to be invested by the private sector over the coming decade.”

Elsewhere, the papers bring attention to analysis from the Departments of Finance and Enterprise, Trade and Employment, which estimates that the Irish labour market is “marginally more exposed” to the advent of artificial intelligence (AI) than the average advanced economy.

“Nevertheless, while many jobs may be exposed to AI, relatively few are at risk of disappearing completely,” it said. “Indeed, as a ‘digital frontrunner’ with Ireland’s comparative advantage in this sector, the AI rollout may create opportunities for the Irish economy.”

This year’s pre-budget forum – where Taoiseach Simon Harris will deliver the opening address – is focusing on challenges and opportunities for the Republic in a “more shock-prone world”.

[  Costs of social housing construction in Dublin are double those elsewhere  ]

The Government currently forecasts that modified domestic demand – a measure of the underlying Irish economy – is expected to grow by 1.9 per cent this year and accelerate to 2.3 per cent in 2025. It sees headline inflation falling back to 2.1 per cent this year from 5.2 per cent in 2023.

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Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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