The dynamics of crisis response strategies in software SMEs: Variations in the degree and scope of business model change, and effects on firms’ financial performance

Building on existing crisis response strategies, innovation management research, and business model framework, this paper examines how firms’ responses to crises evolve over time and their effects on firms’ financial performance. To address these questions, the study examined the responses of 13 software SMEs to the COVID-19 pandemic. Based on interviews with senior executives in these companies conducted at three points over 18 months during the crisis, the study develops a composite classification of crisis response strategies that accounts for the dynamics in the degree and scope of change involved in these responses. Furthermore, the findings also point to tentative patterns to explain the success of these temporal-bound crisis response strategies by examining the association between these strategies and firms' financial performance. We find that firms pursuing incremental change tend to exhibit positive financial performance through the crisis, while firms pursuing response strategies that expand their degree of change tend to be associated with negative financial results.