Within case analysis
The following analysis provides an insight into the individual cases. Table 2 provides an overview of the main components of the cases.
Case 1 - the restaurant
The restaurant was severely affected by the Corona Virus crisis and successive quarantines. During the first quarantine, it had no income due to lack of takeout services. However, during the crisis, successful innovations have been created in the business model, largely by the manager. Working with a local food delivery service not only reduced the cost of human resources for hiring and training, but also generated revenue from the takeout-restaurant service. Moreover, offering discount coupons on each order for the subsequent orders in the takeout services made customers more willing to re-order. After reopening the restaurant, innovation in arranging chairs both in the garden and the indoor space (using cartoon character dolls for indoor tables to maintain the social distance and creating rooms in the shape of ancient Iranian houses for the garden environment for maintaining social distance attracted customers and made it more popular. The restaurant did not lay off its staff after this innovation while during the first quarantine; it forced the all staff to take a leave of absence.
Case 2- the hotel
The hotel was severely affected by the Corona Virus crisis. Because its lucrative period coincided with government-imposed quarantines. This hotel has laid out its entire staff. According to the hotel manager, he has always been trying to create innovation, but the widespread impact of the virus on the tourism industry as well as the hotel’s coastline location and its and distance from urban areas, made the manager lose his hope regarding the impact of innovation. The hotel manager tried to boost his business by collaborating with travel agencies after the reopening of businesses, but due to inter-city restrictions as well as restrictions on visiting the coastal areas of northern Iran applied by the government, the hotel faced its worst critical period and this innovation was not successful. The firm has once used government grants and hopes to revive its business by easing travel restrictions on coastal and interurban areas.
Case 3 – the clothing company
Although the Covid-19 crisis caused a significant reduction in the company's in-person sales, but due to their major activity in the digital space, this reduction did not have much effect on their revenue. By changing the previous business model, the managers of this company were able to increase the income from their online sales by holding some competitions on social media and awarding various prizes (in order to increase interaction with customers and also the number of visits and shares). Moreover, innovation in the content production in cyberspace (creating videos for introducing products and reviewing their quality) was also effective in increasing their revenue and they hired two people to manage online networks better. In order to support the businesses damaged during the Corona, the company interacted bilaterally with other businesses active in cyberspace, so that in addition to fulfilling their social responsibility, they could create an innovation in advertising as well.
Case 4 – the educational institute
The institute was shut down completely with the Covid-19 crisis and nationwide quarantine commencement, forcing all its employees to take a leave of absence. However, in a short time, thanks to some innovations in the business model, not only they continued to hold previous classes, but also they were able to overcome the panic in the community regarding education in that situation and started registering new applicants. This institute created online classes in the web space. In addition, by advertising on the web and creating a culture in the field of online education and its necessity during Corona virus pandemic, the institute was able to continue its activities have not faced any decrease in the number of employees (non-native professors teach remotely).
Case 5- the distribution company
The company has been severely affected by the Corona virus crisis due to restrictions imposed on intercity traffic as well as the closure of sports centers (which are considered as high-risk jobs in Iran). With the closure of sports venues and the consequent sharp decline in demand for sports supplements, the company's manager rejects any innovation and believes in forcing the employees to take a leave of absence and relying on government support designed for small and medium-sized businesses until the crisis is over and the sports venues open. The company uses government loans to pay rentals for the company's venues.
Case 6 – the construction company
Due to its different field of activity in comparison to many other businesses and being away from crowded communications, the company was able to minimize the impact of the Corona crisis by observing hygienic protocols and disinfecting workplaces as well as work tools frequently. By creating innovation in the type of employee services and performing duties online instead of being present in the company (for employees of the software department), the company reduced the number of employees present in the company effectively. Moreover, after the restrictions on intercity traffic, instead of using field advertisements (a method adopted by this company before the crisis) the company created innovations on internet advertisements using influencers, and took part in making health educational teasers about Corona (as a sponsor) to continue its effective advertising.
Table 2
Within-case analysis overview
Business Name
|
BMI
|
Furlough
|
recruit
|
1
|
Yes
|
Yes
|
Direct, No
|
2
|
No
|
Yes
|
No
|
3
|
Yes
|
No
|
Yes, 2
|
4
|
Yes
|
Yes
|
No
|
5
|
No
|
Yes
|
No
|
6
|
Yes
|
No
|
No
|
Cross- Case analysis
The results show that companies had almost the same understanding of the critical situation aroused and wanted to apply the necessary changes and cope with it, except for cases 2 and 5, which were somewhat incapable in crisis management due to the nature of their activities and the effects of government decisions on them. Table 3 provides an overview of the main results of the cross-case analysis.
Table 3
Cross-case overview of essential factors
|
1
|
2
|
3
|
4
|
5
|
6
|
BMI
|
Value Creation
|
Yes
|
-
|
No
|
Yes
|
-
|
No
|
Value Proposition
|
Yes
|
-
|
Yes
|
Yes
|
-
|
Yes
|
Value Capture
|
Yes
|
-
|
No
|
Yes
|
-
|
No
|
Governmental Financial Support
|
-
|
Yes
|
Yes
|
-
|
Yes
|
-
|
Resilience and Recovery Strategy
|
Financial optimization
|
-
|
-
|
Yes
|
-
|
-
|
Yes
|
Flexibility in HRM
|
Yes
|
Yes
|
Yes
|
Yes
|
-
|
Yes
|
Changing the Consumer Network
|
Yes
|
-
|
Yes
|
-
|
-
|
Yes
|
Explore New Markets
|
Yes
|
-
|
-
|
Yes
|
-
|
-
|
The role of an innovative business model in a crisis
Four companies (1, 2, 3 & 4) used an innovative business model to deal with the crisis and reduce its impacts. In two cases (1 & 4), companies coped with the crisis by innovating in a completely new model, different from their previous business model, in contrast to the other two cases (3 & 6) that innovated in their previous model.
The results show that value creation in the two companies (1 & 4) has changed due to the Covid-19 crisis. Instead of a modern garden and lounge, company 1 used traditional rooms and cartoon character dolls or offered various discounts on takeout orders. Company 4 also tried to achieve public acceptance by changing the value from face-to-face classes to online ones and through culture-building strategies. All four companies (1, 3, 4 & 6) have made changes in their value proposition, which in addition to changing customer base, includes new sales methods as well. Value absorption in both cases 1 and 4 must be readjusted due to a large change in the value proposition. Innovation in Business model has revolutionized all four companies in the critical period.
The reasons why these companies innovate in their business model can be related to one of the factors of time, responsibility, crisis or financial pressure.
Since the available time was the same for all cases and only four companies innovated during this time, it can be concluded that the available time is not enough for innovation in the business model. However, being in a critical situation, having financial pressure or being responsible along with time, can be the main factors of innovation in the business model.
Two other companies (2 & 5) that were unable to innovate in their business model during the crisis, decided to use government support to cover rental costs (5) and to wait for reopening sports venues or plan for using the post-corona opportunities (2) to boost coastal tourism. It seems that when there is a crisis, sometimes government decisions to control it can have deeper negative impacts on some businesses than the others, therefore makes it more difficult to be innovative.
In all of these cases, during the first quarantine period, the most important factor that enabled companies to achieve plans for the future was the leave of absence of all employees to lessen concerns about their salary costs. The results show that small and medium-sized businesses are more vulnerable to demand decline in crisis (Cosh et al., 2009; Irvine & Anderson, 2006; Simon-Moya et al., 2016; Phillipson et al., 2004). All of the cases have also estimated the side effects of the Covid-19 crisis on their businesses in future.
How to recover and grow during a crisis
By examining the responses of managers in the interviews and data analysis, it can be inferred that in order to maintain or recover a business or its growth in crisis, much attention should be paid to the consumer network, financial optimization, and flexibility in human resources. In the present study, four out of six cases (1, 3, 4 & 6) tried to strengthen their communicative connection with customers, develop their product or its presentation method to the audience and to discover new markets during the crises or thereafter.
Coping with the critical situation and then innovating in the business model caused four out of six companies to learn from these circumstances to achieve rapid growth during the corona pandemic, which can be due to the strong dynamic environment in small and medium-sized companies as well as their high capacity for innovation (Saunders et al. 2014; Bullough and Renko, 2013).
Given that cases 3 and 6 created innovation and adapted their business to the crisis and dismissed their employees only in the first quarantine for 2 weeks, while carrying out their activities; and items 1 and 4 dismissed their employees for one month to reduce costs and then created innovation; and items 2 and 5 did not created any innovation, although they dismissed all the employees until the preparation of this report, therefore, the cost management and cost reduction cannot be assumed effective in crisis management and Innovation in the business model. However, reducing human resource costs (case 1 through cooperation with the food delivery service) or managing advertising and sales costs (case 3 through advertising exchange) along with innovation can have a direct impact on maintaining and developing the business in crisis.