Dynamic Innovation Capabilities and their Impact on Export Performance in Times of Economic Crisis.
| Autor | Ledesma-Chaves, Pablo |
1 Introduction
When a period of deep global economic crisis recently took place, there were firms which opted for a strategy of external growth (Zouaghi et al., 2018). At these times substantial modifications take place in firm behaviour, reacting differently when facing an environment which obliges them to give their best to survive. The research indicates that at times of economic crisis dynamic and strong external sectors mean a source of financing for a sagging internal demand (Beliaeva et al., 2020) and act as a pole of growth and dynamism. There are two different strategies for firms that sell abroad. The first is progressive and gradual internationalisation, in accordance with the gradual knowledge acquisition model (Johanson & Vahlne, 2017). Their internationalisation takes place after a prolonged period in national markets. Another is fast internationalisation, practically from the start of the firm's activity, as is done by the so-called born-global firms (Knight & Liesch, 2016), which from their beginnings have a global view of the markets. In brief, our work is aimed at analysing what type of firm has more international success in times of economic crisis. Analysing recent experiences is a good source of knowledge for decision making in the current scenario caused by COVID-19.
Considering the business problem proposed, from the academic point of view, one of the current trends in strategic management is to know why some firms are systematically capable of maintaining their resources and activities aligned with an environment which is in permanent change and are successful when others are not (Zhou et al., 2019). The process can be considered from the dynamic capabilities viewpoint. These capabilities offer an opportunity for renovation and permanent adaptation from an innovation standpoint. The firm's knowledge is channelled through innovative processes which improve its performance. The main aim of this study is to analyse the relationship between the strategy of increasing the international markets served, innovative dynamic capability, and international performance. To do so, we establish two specific objectives. The first is to analyse if innovative dynamic capability mediates between the strategy of increasing international markets and the improvement of the firm's external results, within a turbulent environment marked by an economic crisis. The second is to determine if there are differences in this relationship between the internationalisation strategic model of firms; that is to say, firms with gradual processes and born-global firms. There is not a consensus in the literature (Zucchella, 2002) about the maximum number of years which must pass for a firm to enter international markets and be considered born-global. We contemplated five years, in accordance with recent studies on the matter (Zonta & Amal, 2018), and this is appropriate based on the Spanish business context (Instituto Nacional de Estadistica, 2018).
There are various aspects of our study's academic contribution. Firstly, we did not find in the extant literature studies about the mediating power of innovative dynamic capabilities with respect to increasing the number of markets and performance (Ribau et al., 2017). There is an important study gap in a matter of significant academic relevance regarding dynamic capabilities (Wu et al., 2016). Secondly, our work is framed within a very complex environment that is a challenge for firm management: a global economic crisis which serves for us to put to the test theories and concepts acquired in times of economic boom. This analysis adds originality due to the difficulty of obtaining the data. This approach provides a view of the results and the use of the resources outside the usual business environment (Calvo-Porral et al., 2016). Related with this, we also add to the study two strategic models of different internationalisation. So, thirdly, we evaluate gradual internationalisation firms and born-global firms to try and find out how the two have faced the economic crisis with their tools from the innovative dynamic capability point of view, going deeper into a necessary differential analysis between the two internationalisation models as required by recent works (Paul & Rosado-Serrano, 2019). Fourthly, the evolving nature of the variables in the data collection method is addressed. This is especially important for dynamic capabilities.
2 Literature review
2.1 Economic crisis and international performance
We define "recession" or "crisis" as "a process of decreasing demand for raw materials, products, services and labour" (Shama, 1978), or as "the state in which the demand for a product is less than its former level" (Kotler, 1973). Firms face new challenges during these periods. Their limited resources do not allow them to maintain their competitive advantage and there are great levels of business destruction (Papaoikonomou et al., 2012). Our study is focused on a sample of Spanish firms during the 2008-2016 global crisis. Our proposal is based on being able to obtain valuable knowledge from the former crisis to apply it to the current crisis caused by COVID-19. Since the end of the 20th century, there have been numerous periods of recessions and economic crises have taken place in different parts of the world, specifically affecting Spain (1980-1982, 1990-1999, 2000-2002, 2008-2016), including the one in which we are currently immersed. The causes of the crises have been diverse, from energy problems to financial crises or public debt. The current crisis is caused by the health effects of COVID-19. However, in all the crises a reduction of demand has taken place. Like each of the former ones, the current COVID-19 crisis has its distinguishing characteristics. It is a global crisis which affects all national economies, although not all of them in the same way. In both the crisis of2008-2016 and in the current one, Spain has been one of the most adversely affected economies. International markets appeared comparatively more attractive than the national market. Gross domestic product hardly grew in that period (0.38%), having at first decreased a good deal, and the unemployment rate went from 11.25% to 19.64%. Nonetheless, exports increased considerably, as did the number of firms which began their international activity, by 35.49% and 52.6%, respectively. That is to say, in spite of the complex international moment for the economy due to the economic crisis, the international operations of Spanish firms rose notably, which leads us to consider what the possible causes of this success were.
The research shows that at times of recession there is very important growth of exports and external sectors (Fernandez et al., 2017). In the case of Spain, during the hardest years the external sector started to grow at levels above 5% annually, something unknown until then, reaching rates above 90% for imports, with even a positive balance if we subtract the effect of energy and its by-products (Instituto Nacional de Estadistica, 2018). Moreover, this boost meant the attainment of historic exports in 2017, as well as the number of export firms in Spain. When faced with the processes of modification or alterations of the environment, such as the stages of economic recession, dynamic capabilities enable a firm to develop and change, but to do so it must first absorb and internalise the new knowledge derived from the situation of the environment (Alves et al., 2017).
The concept of dynamic capabilities is determined to integrate the literature of strategy and innovation and provide a general management framework of the capabilities which a firm needs to maintain its growth capacity and competitive advantage (Teece, 2007). Our work is important to bridge the gap in the literature which tries to specifically investigate the relationship between the type of firm and the development of dynamic capabilities and their effect on performance (Teece, 2018). In our case, this is done via the analysis of gradual internationalisation and born-global firms. Dynamic capabilities, within the perspective of maintaining a competitive advantage, are one of the most recent orientations in the studies on born-globals (Paul & Rosado-Serrano, 2019). Furthermore, this research considers internationalisation within an environment of economic instability. Economic recessions bring about changes in the perceptions of managers of firms, affecting their decisions and their behaviours (Petzold et al., 2019). The conclusions obtained in empirical works about environments of economic instability are altered when the business context is more difficult and complex in the face of reductions in demand and the resulting problems. Survival in international environments is in itself a demonstration of the essence of dynamic capabilities, which express not only that it is paramount to have specific assets, but that their ongoing adaptation and redefinition is necessary to respond to the new market opportunities (Teece, 2007). These characteristics are central to the response to dramatic changes in the environment, such as an economic crisis, as well as serving as an innovation base for the creation of new processes. The literature indicates the existence of a leverage effect of dynamic capabilities on the firm's own strategies (Jeng & Pak, 2016), which leads us to note a better response of those firms which develop them to address the effects of the economic crisis. An alignment of resources takes place with respect to the changing environment (Salvato & Vassolo, 2018).
2.2 Innovative dynamic capability
Innovation seems to originate as a positive logical result of the possession of dynamic capabilities. From this point of view, dynamic capabilities must be driven by innovation. However, this conceptual link is not explicit, as another perspective defines dynamic capabilities as the firm's potential to systematically...
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