Determinants of resilience, innovation and export intensity: a strategy-creation and dynamic capability view

Purpose Revisiting the strategy-creation and dynamic capability discourse, this study aims to interrogate the extent to which firm attributes increase resilience, innovation and export intensity. Design/methodology/approach A sample of 1,427 German SMEs was observed form the World Bank Enterprise Survey. Path analysis using Warp PLS software was used to estimate the coefficients of hypothesised relationships. Findings With mainly manufacturing, service and retail firms represented, the findings show that while research and development (R&D) expenditure and cash flow enhance their resilience, tax administration obstacles hinder long-term viability. Furthermore, product innovation is boosted by resilience to the exclusion of process innovation. Yet, process innovation significantly boosts product innovation, while resilience and product innovation have a direct positive effect on export intensity. The findings are nuanced through a fresh knitting of strategy-creation and dynamic capability perspectives. Research limitations/implications A broad sample of German SMEs has been observed without filtering for attributes that define Mittelstand firms. Also, export versus non-export active firms have not been separated for comparison. The data is cross-sectional in nature. Therefore, the findings are reported as associations rather than causal relationships. Practical implications The evidence corroborates the strategy-creation perspective that performance is sustained, not by the resources held, but by the routines adopted by firms facing uncertainty. Exporting SMEs in Germany are encouraged to increase rather than curtail R&D expenditure during crises as a path towards greater resilience. The attention of tax enforcement authorities is also drawn to streamline cumbersome processes that considerably deplete firms’ precious resilience. Once realised, resilience is a potent catalyst for product innovation and export intensity. Social implications Key stakeholders including the Federal Ministry for Economic Affairs, the German Chamber of Commerce Abroad, the Federal Office for Economic Affairs and Export Control and Germany Trade and Invest are apprised. Reflecting on the findings, they can formulate policies to subsidise or bankroll R&D expenditure and alleviate the burden of tax administration during crises. This would boost German SMEs’ resilience, product innovation and export intensity all at once. Originality/value Theoretically, this study advances the corpus by drawing scholars’ attention to the fresh indicators observed. The results suggest that greater R&D expenditure and cash flow are catalysts for resilience which, successively, breeds product innovation and export intensity. This offers food for thought to stakeholders preoccupied with intensifying German exports.