Navigating the New Normal: Which firms have adapted better to the COVID-19 disruption?

The COVID-19 pandemic has significantly impacted businesses worldwide by lowering demand, impeding operations, stressing supply chains, and limiting access to finance. Yet we still lack an understanding of how firms can successfully adapt to this disruption. I examine this issue theoretically by combining arguments around dynamic capabilities and managerial cognition and developing several hypotheses concerning firm innovation, knowledge sources, management practices, and gender issues in relation to firms’ adaptation to this crisis. I test these assertions using data from two rounds of surveys involving more than 11,000 firms from 28 countries both before and after COVID-19 was officially declared a global crisis. The empirical results provide prima facie evidence that innovators, in particular those who are younger (i.e. start-ups) and those who rely on internal sources of knowledge, are more likely to adapt to COVID-19 than non-innovators. Moreover, firms with better management practices exhibit also greater ability to adapt to the crisis. I did not find systematic gender differences upon examining firms managed by women versus men. Following these findings, I set out several implications for research and policy.