Government support, regional well‐being, and the pivots of UK SMEs during a crisis

Abstract Pivoting—a substantive transformation of the established business model (e.g., reformulation of goods, services, processes, or organizational methods in a new or significantly improved manner)—has emerged as a crisis response strategy of small‐ and medium‐sized enterprises (SMEs). However, SMEs often lack internal resources to make pivots during a crisis; therefore, external resources from the government or regional communities become essential. This study examines how government financial and knowledge support, along with regional subjective well‐being (SWB), are—separately and jointly—related to UK SMEs' pivots during the recent crisis of Covid‐19. Examining 5894 UK SMEs between September 2020 and April 2021 and using a multilevel approach, we find that SMEs' pivots are positively associated with government knowledge support and, to a lesser degree, with government financial support and that SMEs in regions with higher SWB are likely to make fewer pivots in times of crisis. The positive relationship between government support and pivots is strengthened when SMEs are embedded in regions with higher SWB.