RESILIENT START-UPS: STRATEGIC MANAGEMENT PRACTICES FOR SURVIVING ECONOMIC DOWNTURNS

Abstract

Start-ups are important in creating employment, innovation and economic growth. Yet, such initiatives usually have low resources, great uncertainty and are subject to rapid change and thus are especially sensitive to macroeconomic changes. The recession, be it caused by the world financial crisis, pandemics, geopolitics or market decline is a huge survival challenge to start-ups. The conventional strategy management methods tend to focus on expansion and scaling, but resilience, the capability to endure, adapt and recuperate when circumstances are unfavorable has become an important skill of start-ups in turbulent environments. This paper explores how strategic management practices can help start ups to not only survive, but also to flourish even in the times of economic recession. The research design is mixed methods and incorporates the quantitative survey data of 1, 200 start-up founders and executives in varied industries and geographies and qualitative data of 60 in depth interviews of entrepreneurs, venture capitalists, and business advisors. Quantitative variables include scrutiny of financial performance, strategic turn points, resource repositioning, capacity to innovate, and learning within the organization prior to, throughout and following periods of downturns. Qualitative narratives are context-rich, delving into the way leaders make strategic decisions in ambiguous times, use networks, and develop adaptive cultures.