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Vulnerability and adaptability: post-crisis resilience of SMEs in Denmark

Entrepreneurship, Growth and Development in Uncertain Times

Christian Kjær Monsson

The chapter examines different perspectives on resilience in small and medium-sized enterprises (SMEs). SMEs are often argued to be sensitive to shocks, but have likewise been suggested to be a source of economic resilience owing to their flexibility and their ability to change after a shock. The chapter argues that one must distinguish between the ability of SMEs to resist to external shocks and the ability of SMEs to recover from such shocks. These two abilities are labelled as the vulnerability and adaptability of SMEs. Both abilities can be managed through strategic and operational actions, but SMEs face several trade-offs, as they must balance concerns over short-term profits with the need for robustness and flexibility as well as innovation and learning. The chapter further includes an analysis of a sample of Danish SMEs in the period following the recession of 2009. The analysis demonstrates that, while SMEs may be vulnerable, many SMEs are also able to recover from a major shock to their economy. It is thus suggested that the vulnerability of SMEs to shocks should not be seen by policymakers as a sign of permanent decline. Recovery and renewed growth may follow at a later stage.

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Rachel Doern

This chapter examines the recovery strategies of small businesses in the aftermath of a crisis, specifically, the England riots of 2011, and the resources integral to such. Drawing on qualitative interviews with owner-managers of 15 businesses affected by the rioting in London, this chapter builds on resilience research and draws from Conservation of Resources Theory to highlight the importance of devising strategies that both utilise existing resources and invest in new resources. Recovery strategies were found to be social, economic and personal in nature.

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Jennifer Clark

Resilience, and particularly the resilience of urban and regional economies, depends on underlying innovation capacities in those cities and regions. In an era of rapid technological change and devolved governance, innovation occurs in policy design and implementation as well as in the more familiar domains associated with new products, processes, materials, and markets. Innovation is a factor in how resilient firms, intermediaries, and supply chains face shifting market conditions and absorb new technology. This chapter describes two key intersections between resilience and innovation: innovative governance characterized by policy diffusion networks, and regional economic ecosystems characterized by open innovation. The discussion of policy diffusion networks is based on an analysis of the scope, character, and geographic distribution of such networks since 2011. The discussion of open innovation and regional economic ecosystems relies on an industry case study of “smart cities” as an enabling industry defined by the integration of information and communications technologies with urban infrastructure deployment. The combination of these two empirical cases of evolving mechanisms of and for technology diffusion into cities—as places and as institutions—highlights the intersections between resilience and innovation.

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The resilience of growth strategies

Entrepreneurship, Growth and Development in Uncertain Times

Lee Pugalis, Nick Gray and Alan Townsend

Particularly marked since the onset of the global credit crunch, a pervasive economic growth narrative has inflected political and policy rationalities as nations, regions and cities have attempted to ‘bounce back’ from recessions as well as contend with other crises. This has engendered new conceptual debates at the interface between those concerned with economic resilience and economic growth. In England, voluntaristic public–private partnerships operating in the field of local and regional development have recently prepared Strategic Economic Plans. These plans are part strategic and part bidding documents, motivated by a boosterist policy of ‘going for growth’. Derived from a comparative analysis of growth plans and attendant empirical research, this chapter provides an examination of the manner with which these growth strategies reflect different understandings of resilience. Our findings reveal that while contemporary economic development practice often evokes the notion of resilience, this tends to be a ‘conservative’ reading of the objective utilised to get back to growth and/or maintain prevailing growth levels.

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The resilience of entrepreneurs and small businesses in the depths of a recessionary crisis

Entrepreneurship, Growth and Development in Uncertain Times

Nick Williams and Tim Vorley

This chapter examines how changes to the institutional environment in a crisis-hit economy impact on entrepreneurial activity. Drawing on in-depth interviews with entrepreneurs in Greece, the findings suggest that changes to institutions have served to limit entrepreneurial activity rather than enhance it, and that this has worsened in the midst of the crisis. We argue that this will detrimentally impact Greece’s ability to navigate out of the crisis and regain competitiveness in the longer term. The chapter provides a number of theoretical and policy implications that are focused on improving institutional environments so that entrepreneurship can play an appropriate role in recovering from economic crises.

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Gill Bentley, David Bailey and Daniel Braithwaite

The chapter explores the notion of sectoral resilience in context of the discussion about the resilience of regions. The case study of the automotive industry sector shows that the UK auto industry has the capacity to recover after economic shocks and firms undertake a range of avoidance and adaptive actions in remaking and remodelling themselves in order to survive. It notes, however, that sectoral resilience is a contestable concept; being seen as the outcome of the actions of individual firms in the sector is not sectoral resilience per se. It suggests that sectoral resilience needs to be conceptualized rather in terms of the complexities in the interactions in the development of multi-scalar patterns of relational geographies of production in industrial sectors and that it is this that shapes regional resilience. It requires a policy response to match this complexity: a holistic approach to regional and industrial policy.

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Regional resilience: the critique revisited

Entrepreneurship, Growth and Development in Uncertain Times

Huiwen Gong and Robert Hassink

One of the most intriguing questions in economic geography is why it is that some regional economies manage to renew themselves, whereas others remain locked in decline. In addition to evolutionary concepts, the idea of resilience is derived from ecology, psychology and disaster studies to tackle this question. After a strong critique of the regional resilience concept in 2010 pointing at three fundamental shortcomings, namely the focus on equilibrium and multi-equilibriums, the neglect of state, institutions and policy at several spatial levels and, the neglect of culture and social factors affecting adaptability, a burgeoning conceptual and empirical literature on regional resilience has emerged. This chapter therefore aims at revisiting the early critique on the basis of a review of this recent literature. It concludes that although most critique has been taken seriously, other, new challenges have recently emerged, such as the fuzziness of the concept, both among academic researchers and policy-makers, the way how to measure resilience and the way how evolutionary analysis should be carried out.

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References

Entrepreneurship, Growth and Development in Uncertain Times

Edited by Nick Williams and Tim Vorley

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Cédric Brunelle and Ben Spigel

Resource-driven regional economies have experienced significant growth over the past decade due to increasing prices of raw materials such as oil and the need for customized and site-specific technologies to increase production and reduce risk. As a result, significant amounts of human and financial capital have built up in these regions. However, there are few examples of resource-dependent economies using these regional assets to successfully diversify away from their dependence on extractive industries, leading to profound declines as resource prices decline globally as they did in 2015. This paper examines the evolutionary lock-in and lock-out processes of resource economies and the potential of technology entrepreneurship to initiate path creation in these regions. Based on interviews with entrepreneurs, investors, and policymakers in St. John’s, Newfoundland, we explore the processes through which firms both inside and outside the resource industry are locked-in to existing economic trajectories and the ability of technology entrepreneurs to break out of these limitations and diversify into new industries and markets. We find that the relationships between the region’s culture, its investment environment, and global changes in the oil and gas industry combine to create and reproduce industrial lock-in within the region. If long-term regional diversification and path creation appears to be the exception rather than the rule for resource-driven economies, entrepreneurs stand out as the central drivers of change shaping the path-enabling potential generated through resource booms.

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Local economic resilience in Italy

Entrepreneurship, Growth and Development in Uncertain Times

Paolo Di Caro

This chapter analyses the resilience of local labour markets in Italy by providing evidence on the resistance and the recoverability of the Italian provinces over the years 2004–2015. The relationships between economic resilience and local development are studied to understand the competitiveness and growth patterns of particular areas in an evolutionary perspective. Three main results derive from the empirical analysis. Local economic resilience presents place-specific patterns, with the provinces located in the Centre-North of the country registering higher resilience than those located in the South. The Great Recession contributed to amplifying differences in local resilience, particularly with respect to female occupations. The quality of local institutions plays a relevant role for explaining the asymmetric distribution of resilience on a territorial level. The summary of the findings and policy implications are conclusively discussed.