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STRATEGIES FOR SUPERIOR PERFORMANCE IN RECESSIONS: PRO OR COUNTER-CYCLICAL?

Authors :
Claudio Ramos Conti
Rafael Goldszmidt
Flávio Carvalho de Vasconcelos
Source :
RAE: Revista de Administração de Empresas, Vol 55, Iss 3, Pp 273-289 (2015)
Publication Year :
2015
Publisher :
Fundação Getulio Vargas, Escola de Administração de Empresas de São Paulo, 2015.

Abstract

Recessions are recurring events in which most firms suffer severe impacts while others are less affected or may even prosper. Strategic management has made little progress in understanding such performance differences. In a scenario of decreased demand, intensified competition, and higher uncertainty, most firms try to survive by pro-cyclically cutting costs and investments. But firms could take advantage of undervalued resources in the market to counter-cyclically invest in new business opportunities to overtake competitors. We survey Brazilian firms in various industries about the 2008-2009 recession and analyze data using PLS-SEM. We find that while most firms pro-cyclically reduce costs and investments in recessions, a counter-cyclical strategy of investing in opportunities created by changes in the market enables superior performance. Most successful are firms with a propensity to recognize opportunities, an entrepreneurial orientation to invest, and the flexibility to efficiently implement investments.

Details

Language :
English, Spanish; Castilian, Portuguese
ISSN :
00347590 and 2178938X
Volume :
55
Issue :
3
Database :
Directory of Open Access Journals
Journal :
RAE: Revista de Administração de Empresas
Publication Type :
Academic Journal
Accession number :
edsdoj.f70c2044b3d4edfbff1b47a6404858f
Document Type :
article