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BUSINESS STRATEGIES AND PERFORMANCE
DURING DIFFICULT ECONOMIC CONDITIONS



For the Department of Business Innovation and Skills
(BIS)




John Kitching
Robert Blackburn
David Smallbone
Small Business Research Centre, Kingston University
Sarah Dixon
School of Management, Bath University




June 2009




URN 09/1031





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Contents
EXECUTIVE SUMMARY
1. INTRODUCTION, RESEARCH OBJECTIVES AND METHODS
2. RESEARCH CONTEXT
2.1 Defining Difficult Economic Conditions
2.2 The Current Crisis
3. ANALYTICAL FRAMEWORK
4. THE BUSINESS STRATEGY AND MANAGEMENT LITERATURE
4.1 Business Strategy: General Considerations
4.2 Strategic Adaptation to Environmental Jolts, Turbulence and Radical Institutional
Change
4.3 Strategic Adaptation…

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EXECUTIVE SUMMARY


Introduction and Research Objectives


This report reviews the available literatures in order to: (i) identify the
pressures, threats and opportunities facing businesses operating in difficult
economic conditions such as those currently being experienced in the UK and
globally (ii) identify the strategies adopted by businesses that have
experienced…

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The increasing globalisation of economic activity ­ the interconnectedness of
economic activity across national frontiers renders the current crisis different
from previous recessions.


The current recession may well constitute a `structural break' or `phase shift' in
the economy, in which the previously held assumptions about how it functions
and economic…

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appropriately to environmental shocks. Conversely, the `pitstop' theory of
business behaviour in recession treats firms as more willing to innovate
because the opportunity costs of not undertaking such action are lower than
during more buoyant times. Both UK and international data, for example, from
Japan and Russia, suggests that recession…

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o `Ambidextrous' strategies combine retrenchment and investment. It is
likely that most firms adapt under recession conditions through judicious
cost/assetcutting behaviour and through investment in product innovation
and market development. Choosing the appropriate investments to make
and costs to cut takes on additional importance during recession when
market selection pressures…

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more likely to create, or take advantage of, market opportunities during
recession.


Business size can affect how recession conditions impact on businesses and
their ability to respond. The more limited resource base of small enterprises
compared with larger firms, particularly in terms of finance and management
capabilities, can affect their…

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might involve promoting crosssector and crossspecialism linkages and
dialogues with organisations in order to spark ideas for innovation.
Proppingup outmoded business models or industries in structural decline, a
process accentuated by recession, may be less desirable than more
experimental forms of intervention.


Assessment/interpretation


Studies of business adaptation under recession conditions…

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nonUK actors. The literature focusing on organisational responses to
recession conditions rarely takes such global influences explicitly into account.
Perhaps this relates, at least in part, to the previous UK recession occurring
nearly 20 years ago when globalising tendencies were less prominent than
they are today.
There are several major…

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