A Process Model of Leveraging Survival Crisis Towards Building Innovation as Core Competence: Theorization from the Journey of a Textile Firm

Although the extant research in entrepreneurial innovation shows how organizational challenges could enact such innovations, the relationship between organizational challenges and organizational innovation under the small and medium enterprise (SME) context requires attention. Especially considering that SMEs face supply chain challenges, we need to know whether such challenges consistently enact supply chain innovations. Moreover, although those innovations can address the immediate SME challenges, extant research does not capture the life cycle of the innovations efficiently. To find an answer to this theoretical quest, we conduct participatory case research at Saha Textile, India. The founder of Saha Textile started his journey as a small garment shop owner in a Bazar. Within two decades, Saha Textile became one of the most prominent vertically integrated organizations in the Indian textile sector. Our reflexive process study reveals that the organization faced multiple survival threats throughout its journey. The uniqueness of the organizational crisis enacted sensemaking in the organization. The organization looked at unusual and unconventional resources within its access and creatively converted those into valuable resources to address the challenges. If successful with the creative attempts in addressing the pressing challenges—the organization further strengthened those resources into core competence. Over time, the organizational learning in converting crisis to core competencies through creative utilization of resources became rational heuristics and acted as a (higher-order) dynamic capability. Our inductive theorization makes a significant academic contribution as it proposes a generalizable dynamic capability process model of converting crisis into innovation and capitalizing such innovations as a core competence. Our research points out the possibility of standardizing and leveraging innovations-as-crisis-responses as core competence towards a sustainable competitive advantage for practice.