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Exploration or Exploitation: Innovation Behavior of SMEs and Large Firms during the COVID-19 Crisis

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  • Jessica Birkholz
  • Jarina Kühn
  • Mariia Shkolnykova

Abstract

This paper contributes to the discussion on exploration and exploitation by analyzing the innovation behavior of SMEs and large firms during the first year of the COVID-19 pandemic in Germany. It provides a novel way to measure the type of firm innovation behavior in a dynamically changing environment. After collecting news articles about innovation activities conducted by firms, we applied text mining techniques to identify the positioning of each firm on the continuum from exploitation to exploration. The results of our analyses indicate three main dynamics: 1) all studied firms tend to conduct more explorative innovation activities during the COVID-19 crisis, 2) large and "technology-intensive" firms are more prone to perform explorative innovation activities than SMEs and firms that are not "technology-intensive", and 3) technology intensity is associated with explorative innovation behavior during the crisis. Our results suggest that considering technology intensity and the size of firms is important for designing effective policies during crises.

Suggested Citation

  • Jessica Birkholz & Jarina Kühn & Mariia Shkolnykova, 2022. "Exploration or Exploitation: Innovation Behavior of SMEs and Large Firms during the COVID-19 Crisis," Bremen Papers on Economics & Innovation 2203, University of Bremen, Faculty of Business Studies and Economics.
  • Handle: RePEc:atv:wpaper:2203
    DOI: https://doi.org/10.26092/elib/1489
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    More about this item

    Keywords

    COVID-19; Crisis; Innovation; SME; Text Mining; News Data; Exploration; Exploitation;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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