Innovation, digital technologies, and sales growth during exogenous shocks

We investigate how the introduction of different types of innovation and the adoption of various digital technologies during exogenous shocks, influence firms' sales growth. By drawing from a sample of 1979 firms from the Caribbean small island developing states (SIDS) during the COVID-19 pandemic, we show that although some innovation types enhance sales growth, others are not as important and can even reduce revenue over time. Moreover, by examining the interrelationship between innovation and digital technologies we unveil situations where the simultaneous introduction of certain types of innovations with specific digital tools further enhances sales growth and other instances where rigidities arise that impair sales growth. This study furthers our understanding of whether and how innovation, digital technologies, and their interaction, enable firms to positively respond to the challenges of exogenous shocks.

Expanding into new product lines in response to COVID-19: The interplay between firm age and performance aspirations

Unprecedented environmental shocks, like the outbreak of COVID-19, sometimes trigger firms to adjust to the new environment, by expanding quickly into new—relevant to the shock—product lines, as a means to capitalize on the booming demand of urgently needed supplies. This study examines the role of firm corporate liabilities, as the ones enclosed to firm age, in influencing the number of new product lines a firm introduces in response to the pandemic, and its reaction time to the shock. The way in which performance aspirations interfere in these managerial decisions is also examined. In testing hypotheses, we employ a novel multivariate matching approach, namely entropy balancing, which allows researchers to create balanced samples and accounts for the existence of non-random factors influencing the results. Using a sample of 973 manufacturers that introduced new product lines in response to COVID-19, our hypotheses, positively linking firm age to product line introductions, and negatively to response time to the environmental shock, are supported. Our results indicate that for firms with higher levels of performance above industry average, the positive influence of firm's age on the number of new product lines introduced is weaker than for firms with lower levels of performance above industry average.