Performance in Recessions: the Roles of Opportunity Recognition and Improvisation

While most firms suffer severe impacts from recessions, other firms are less affected or even prosper in these moments. Nevertheless, strategic management has made little progress in understanding the reasons for these differences in performance. We build on the Resource-based view of the firm (RBV) and its relationships with theories on entrepreneurship, improvisation and flexibility to create an integrative model that identifies resources, in a broad sense, which enable superior performance in recessions. We surveyed the characteristics and capabilities of Brazilian firms in various industries during the 2008-2009 recession and analyzed our data using Partial Least Squares (PLS). Our findings indicate superior performance for those firms that have a propensity to see opportunities, rather than only threats, and improvisation capability for fast and creative actions. Entrepreneurial orientation and flexibility also have indirect effects on performance.