[Journal:] Journal of Innovation and Entrepreneurship [ISSN:] 2192-5372 [Volume:] 7 [Year:] 2018 [Issue:] 7 [Pages:] 1-12
Firm response to decline has seen renewed interest based on the impacts of the global financial crisis. Here, we investigate the long-lasting effects of decline on the innovativeness of firms and, ultimately, the performance outcomes of those actions. The study focuses on SMEs in the US forest products manufacturing sector. We analyze the situation within 89 firms with respect to innovativeness in the years 2008, 2012, and 2015. Theory suggests that firms increasing innovativeness in response to the crisis would subsequently decrease innovativeness as US markets improved. With respect to product innovativeness, we find convincing evidence that firms increasing innovativeness subsequently decreased innovativeness. With respect to process and business systems innovativeness, the evidence is weaker, but indicative of a decrease in innovativeness between 2012 and 2015. Expected reduction in innovation efforts and increased focus on producing commodity products is not evident from our responding firms. Based on these findings, it is recommended that firms carefully consider their innovation investments/activities across the business cycle as a more consistent approach may be more productive.