Preparedness shapes tomorrow: crisis preparedness and strategies among SMEs amid external crises

Abstract

Prior research on crisis management focuses on crisis strategies used by small- and medium-sized enterprises (SMEs), predominately without considering their initial state of preparedness–how these SMEs stepped into the crisis in the first place. This study examines the effects of financial, organizational and cultural crisis preparedness on the strategic choices SMEs make during crises, specifically whether they retrench, persevere, or innovate. Utilizing a unique longitudinal representative dataset of SMEs spanning from 2015 to 2020, we test hypotheses related to the first COVID-19-related lockdown in Denmark. Our findings contribute significantly to the literature by showing that crisis preparedness is critical to SME’s strategic choices during crises. We demonstrate that the nature of SME’s pre-crisis preparedness–across financial, organizational, and cultural dimensions–distinctly shape their during-crisis strategic approach.