Crisis-driven innovation of products new to firms: the sensitization response to COVID-19

Journal article, 2022

How firms address pressing societal needs during crises is not well understood. The COVID-19 pandemic disrupted societies worldwide, and many firms quickly developed new product innovations in personal protective equipment – an area outside of their core businesses and with uncertain profitability but demanded by stakeholders. We conducted inductive case studies of eight firms to understand why firms pivot from shareholder- to stakeholder-oriented innovation of product categories new to the firm and how they satisfy new stakeholder needs during crises. The findings suggest a three-stage process model that explains how firms (1) internalize information signalling a lack of product supply that leads to urgent innovation needs, which in turn triggers a shift, (2) how the firm’s extant resources are understood and (3) thus how the capability assembly of new product innovation is initiated. We theorize that the increase in responsiveness to societal crises is a sensitization process. This process explains how for-profit product innovation prior to the pandemic led to the crisis-driven innovation of products new to the firm by temporarily suspending a profit orientation to respond quickly to calls for help. Implications for theory and practice are discussed.