Content area
Full Text
Summary
This paper is concerned with the responses of small firms to the effects of the 2008-9 economic crisis and the implications for post-crisis recovery. The paper throws light on the implications of the different forms of adaptation undertaken by firms in 2008-9 for their medium- and longer-term performance prospects. The methodology employed focuses on longitudinal case studies, based on in-depth interviews in 2011with representatives of 18 small firms previously interviewed in 2009. An on-line survey of a larger group of businesses was also conducted.
Detailed analysis of the cases emphasises the process, rather than one-off, nature of adjustment. Successful adjustment can rarely be equated with a specific strategic response to the economic downturn. It is heavily influenced by management behaviour prior to this, combined with an underlying resilience that stems from resources and experience. There is also evidence in some firms of entrepreneurial learning, adapting their behaviour in the light of experience.
Key words: small firms; resilience; adaptation; recession; UK
INTRODUCTION
This paper is concerned with the responses of small firms to the effects of the 2008-9 economic crisis and the implications for their post-crisis recovery. During 2008-9, the world economy experienced its most severe recession since the 1930s. Most advanced economies experienced falling output, although the crisis was particularly keenly felt in the UK (Weale 2009) because of the degree of dependence on the hard-hit financial services sector and the high level of household indebtedness (e.g. Simpson 2009). Not surprisingly, in such conditions, policy makers under pressure to take steps to assist firms to survive the crisis turned to the existing evidence base to identify any relevant lessons from previous downturns.
In the UK, for example, a report was commissioned by the Department of Business, Innovation and Skills to identify the threats and opportunities facing businesses in difficult economic conditions; the strategies adopted by businesses in response; and an assessment of the effects of these strategies on business performance (Kitching et al, 2009). Based on a broad literature review, it was concluded that the evidence base was patchy with specific gaps, including a failure to link business strategy with performance outcomes, or to explain why some organisational strategies are more successful than others. This paper seeks to address this gap, focusing...