Entrepreneurship Research: Developing New and Emerging Patterns in the Post COVID-19 Pandemic Era 9819944511, 9789819944514

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Vanessa Ratten Editor

Entrepreneurship Research Developing New and Emerging Patterns in the Post COVID-19 Pandemic Era

Entrepreneurship Research

Vanessa Ratten Editor

Entrepreneurship Research Developing New and Emerging Patterns in the Post COVID-19 Pandemic Era

Editor Vanessa Ratten La Trobe University Bundoora, VIC, Australia

ISBN 978-981-99-4451-4 ISBN 978-981-99-4452-1 (eBook) https://doi.org/10.1007/978-981-99-4452-1 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Acknowledgements

I dedicate this book to my mum, Kaye Ratten. The world has changed very much in the past decade including more technological innovations occurring within mobile and electronic commerce. It is thus, interesting to think about what will happen in the future with regarding to innovation and where the world is heading. I hope this book will provide some knowledge about innovations and entrepreneurship. I also thank my dad David Ratten, brothers Hamish Ratten and Stuart Ratten, niece Sakura Ratten and sister-in-law Tomomi Ratten. One of my mums’ favourite singers was Louis Armstrong and thus I finish this acknowledgements section with the words: ‘What a wonderful world’. A good song to listen to and remember as we continue to be more innovation in our global society.

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Contents

Adversity Breeds Innovation: The Essential Role of Necessity-Preneurs in the COVID-19 Era . . . . . . . . . . . . . . . . . . . . . . . . . . Thivashini B Jaya Kumar, Thanuja Rathakrishnan, Feranita Feranita, and Yong Jing Yi Silent Killer or Silent Success: The Double-Edged Sword of Viral Marketing on Entrepreneurship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thanuja Rathakrishnan, Thivashini B Jaya Kumar, Feranita Feranita, and Yong Jing Yi Pedagogical Innovation Triggered by the Covid-19 Pandemic . . . . . . . . . . Sérgio Jesus Teixeira, Daniela V. A. Gomes, and Igor M. J. Ferro

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A Split Korea and a Divided Martial Art: How Politics and Tense International Relations Have Impacted Taekwon-Do . . . . . . . . . . . . . . . . . . James M. Crick

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Managing Intangible Resources on e-Commerce Msme Embracing Digital Era in Surabaya: A Test of Business Adoption as Mediation . . . . Wiliam Santoso, Hadi Kusuma Sunyoto, and Petrus Usmanij

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March Towards Innovation: Case of Singapore . . . . . . . . . . . . . . . . . . . . . . . 103 Esha Thukral Crisis Management and Innovation in Indian Manufacturing MSMEs Amidst COVID-19 Pandemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Deepak Kumar, B. V. Phani, and Suman Saurabh

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List of Figures

Pedagogical Innovation Triggered by the Covid-19 Pandemic Fig. 1 Fig. 2 Fig. 3 Fig. 4 Fig. 5

Fig. 6

Approaches for defining innovation (Source Siauliai [2013] as cited in Timur and Antanas [2017]) . . . . . . . . . . . . . . . . . . . . . . . . Schematic definition of innovation (Source Baregheh et al. [2009]) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pedagogical innovation cycle (Source Walder [2014]) . . . . . . . . . . . Number of graduates in the three academic years studied, according to gender (Source Adapted from DGEEC [2023]) . . . . . . Variation (in %) in the number of graduates in the three academic years studied, according to gender (Source Adapted from DGEEC [2023]) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Percentage of graduates in each year compared to the total (Source Adapted from DGEEC [2023]) . . . . . . . . . . . . . . . . . . . . . . .

41 41 42 44

45 46

Managing Intangible Resources on e-Commerce Msme Embracing Digital Era in Surabaya: A Test of Business Adoption as Mediation Fig. 1

Research model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Crisis Management and Innovation in Indian Manufacturing MSMEs Amidst COVID-19 Pandemic Fig. 1 Fig. 2 Fig. 3

Firm innovation (Oslo Manual, 2005) . . . . . . . . . . . . . . . . . . . . . . . . . Research Design, Young et al. (2018) . . . . . . . . . . . . . . . . . . . . . . . . . Crisis induced firm innovation in MSMEs . . . . . . . . . . . . . . . . . . . . .

117 118 120

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List of Tables

Silent Killer or Silent Success: The Double-Edged Sword of Viral Marketing on Entrepreneurship Table 1

Interview guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Pedagogical Innovation Triggered by the Covid-19 Pandemic Table 1 Table 2 Table 3 Table 4

Definitions of “innovation” presented by several authors . . . . . . . . Number and percentage of graduates in the three academic years studied, according to gender . . . . . . . . . . . . . . . . . . . . . . . . . . Number of graduates from institutions selected for the sample . . . Variation (in %) of the number of graduates in the sample in the three academic years studied . . . . . . . . . . . . . . . . . . . . . . . . .

40 45 46 47

Managing Intangible Resources on e-Commerce Msme Embracing Digital Era in Surabaya: A Test of Business Adoption as Mediation Table 1 Table 2 Table 3 Table 4

Respondent classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mean and deviation standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Validity test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reliability test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93 93 94 94

Crisis Management and Innovation in Indian Manufacturing MSMEs Amidst COVID-19 Pandemic Table 1 Table 2 Table 3 Table 4 Table 5

Literature on MSMEs strategies during different crises . . . . . . . . . Summary of firm and owner/manager characteristics . . . . . . . . . . . Summary of cross-case analysis: key challenges for MSMEs during COVID-19 Pandemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary of cross-case analysis: Key crisis responses by MSMEs during COVID-19 pandemic . . . . . . . . . . . . . . . . . . . . . Summary of SEMs’ crisis response strategies . . . . . . . . . . . . . . . . .

114 119 123 126 127

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Adversity Breeds Innovation: The Essential Role of Necessity-Preneurs in the COVID-19 Era Thivashini B Jaya Kumar , Thanuja Rathakrishnan , Feranita Feranita , and Yong Jing Yi

Abstract This book chapter explores the emergence of entrepreneurs during the pandemic, with a particular focus on necessity-driven entrepreneurs and the challenges they face in sustaining their businesses for the longer-term. The COVID19 outbreak and government-imposed restrictions severely disrupted daily life and economic activity, leading to a surge in startups around the world. People who were comfortable in salaried jobs suddenly found themselves wondering about the source of the next paycheck. This resulted in a spike in startups, as the number of new businesses around the world has significantly surpassed the indicators (Census Bureau, 2021; McKinsey, 2022). The number of applications for starting a business reached an all-time high, with an increase of 95% in the United States, 20% in France, and 14% in Japan. Such a surge in entrepreneurship is being attributed by individuals who explored their interests in a new way and became either accidental entrepreneurs as they turn their passions into professions or necessity-driven entrepreneurs as they are forced to do it against their will as a result of the situation (Álvarez-Sousa, 2019). Accidental entrepreneurs are individuals dissatisfied with their current work situation who strive to find new means of income. This could be their passion in baking cakes and starting a business. On the contrary, necessity-driven entrepreneurs are those who turn to entrepreneurship due to unemployment or financial difficulties. For instance, amidst COVID-19 aviation industry was badly affected (e.g. layoffs). This has caused the affected employees to run a business for survival. However, at the same time, some of the newly formed businesses may not be able to withstand competition or find an application and are likely to quickly go bankrupt. Although some studies have T. B. J. Kumar (B) · T. Rathakrishnan · F. Feranita · Y. J. Yi School of Management and Marketing, Taylor’s University Lakeside Campus, Subang Jaya, Malaysia e-mail: [email protected] Digital Economy and Business Transformation Impact Lab, Taylor’s University, Subang Jaya, Selangor, Malaysia F. Feranita e-mail: [email protected] Y. J. Yi e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 V. Ratten (ed.), Entrepreneurship Research, https://doi.org/10.1007/978-981-99-4452-1_1

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examined the factors contributing to necessity entrepreneurs (Cervelló-Royo et al., 2020; Dencker et al., 2021; Jafari-Sadeghi, 2020), lack of attention has been given to investigate the challenges faced by the necessity entrepreneurs to sustain the business for longer-term. Additionally, most studies have focused on individuals with an intention to be an entrepreneur who are equipped with business skills, which may not be the case for necessity-driven entrepreneurs (Nasiri and Hamelin, 2018; Nikiforou et al., 2019; Smallbone and Welter, 2019). Hessels et al. (2008) indicated that the motive for entrepreneurship has an impact on business survival. Individuals with intention to be an entrepreneur might stay longer in self-employment than necessity entrepreneurs (Elifneh, 2015). The author then argued that entrepreneurs who start their venture voluntarily have more knowledge and/or knowledge of a higher quality than necessity entrepreneurs. These entrepreneurs are likely to have prepared more systematically for their entry into self-employment and are likely to have invested more in the specific human capital necessary to succeed as a business owner. In this chapter, the focal point is on necessity entrepreneurs. By focusing on the unique challenges faced by necessity-driven entrepreneurs, we review the factors that contributed to the rise of necessity entrepreneurs and the challenges faced. We then closed the book chapter by providing recommendations into how these entrepreneurs can be supported in the longer-term. Keywords Necessity-driven entrepreneurship · Accidental entrepreneurship · COVID-19 · Challenges

1 Introduction The term “necessity entrepreneur” refers to people who launch their own enterprises out of sheer necessity, frequently as a result of a dearth of employment possibilities in their local area or the inability to land a standard job for a variety of reasons. Entrepreneurs driven by a sense of necessity frequently seek to increase their income and open up new employment prospects. In this chapter, the focal point is on necessity entrepreneurs. By focusing on the unique challenges faced by necessity-driven entrepreneurs, we review the factors that contributed to the rise of necessity entrepreneurs and the challenges faced. We then closed the book chapter by providing recommendations into how these entrepreneurs can be supported in the longer-term. Necessity entrepreneurs (necessity-preneurs) are those who found themselves “with no other options for work than self-employment” (Acs, 2006) and therefore decided to start their own businesses. According to the Global Entrepreneurship Monitor, necessity-preneurs make up a sizeable fraction of global entrepreneurial activity, including more than half of all entrepreneurs in developing nations and around one-fifth in industrialised nations. Individuals will feel greater levels of need as well as growing distress as being unemployed denies them essential psychological needs that employment satisfies (Paul & Moser, 2009). Additionally, they will feel

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pressure as their human, financial, and social capital is depreciated. As a result, a significant implication is that short-term unemployed necessity-preneurs will likely act similarly to opportunity entrepreneurs when starting their businesses, whereas long-term unemployed individuals are likely to act very differently (Boyce et al., 2015). For businesses and people worldwide, the COVID-19 outbreak has brought forth never-before-seen difficulties and challenges. The COVID-19 outbreak and government-imposed restrictions severely disrupted daily life and economic activity, leading to a surge in startups around the world. People who were comfortable in salaried jobs suddenly found themselves wondering about the source of the next paycheck. This resulted in a spike in startups, as the number of new businesses around the world has significantly surpassed the indicators (Census Bureau, 2021; McKinsey, 2022). The number of applications for starting a business reached an all-time high, with an increase of 95% in the United States, 20% in France, and 14% in Japan. Such a surge in entrepreneurship is being attributed by individuals who explored their interests in a new way and became either accidental entrepreneurs as they turn their passions into professions or necessity-driven entrepreneurs as they are forced to do it against their will as a result of the situation (Álvarez-Sousa, 2019). As the world shifted towards remote work and e-commerce, the pandemic gave rise to a new cohort of entrepreneurs. Such a surge in entrepreneurship is being attributed by individuals who explored their interests in a new way and became either accidental entrepreneurs as they turn their passions into professions or necessity-driven entrepreneurs as they are forced to do it against their will as a result of the situation (Álvarez-Sousa, 2019). Accidental entrepreneurs are individuals dissatisfied with their current work situation who strive to find new means of income. This could be their passion in baking cakes and starting a business. On the contrary, necessity-driven entrepreneurs are those who turn to entrepreneurship due to unemployment or financial difficulties. For instance, amidst COVID-19 aviation industry was badly affected (e.g. layoffs). This has caused the affected employees to run a business for survival. However, at the same time, some of the newly formed businesses may not be able to withstand competition or find an application and are likely to quickly go bankrupt. Whereas opportunity entrepreneurship refers to individuals who start businesses based on available opportunities in the market, such as recognising a gap in the market or a demand for a particular product or service. According to Fairlie and Fossen (2020), understanding the differences between these types of entrepreneurships is important for policymakers and entrepreneurs alike in order to create effective policies and support programmes. In short, necessity entrepreneurs start businesses due to a lack of alternatives for earning a livelihood, while opportunity entrepreneurs do so to take advantage of a perceived market opportunity (Belda & Cabrer-Borrás, 2018).

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2 Literature Review 2.1 Definition of Necessity-Preneurs The term “Necessity-Preneurs” refers to individuals who launch their own business out of necessity rather than out of personal inclination or want (Puente et al., 2019). The idea of necessity entrepreneurship acknowledges the possibility that certain individuals may not have access to traditional employment opportunities or may have major entry-level labour market hurdles. Necessity-preneurs is rooted in the idea that individuals become entrepreneurs due to their necessity circumstances, such as a lack of jobs opportunities or job security, economic or financial hardships, limited educational background, or other challenging circumstances (Djankov & Zhang, 2021). Necessity-preneurs are driven to create their own source of income or employment opportunities and are often motivated by the desire to improve their living standards. According to Van der Zwan et al. (2016) individual factors such as age, gender, education, and income, as well as contextual factors such as the level of development and institutional quality of a country, play important roles in influencing entrepreneurial engagement. Necessity-preneurs frequently engage in activities or launch their business in industries with low startup costs. Sometimes these entrepreneurs may start small or home-based business due to their limited financial means. Street vendors, hawkers, and individuals who run from their own houses are examples of this form of enterprise. A study by Nikiforou et al. (2019) explored the relationship between necessity entrepreneurship, industry choice, and performance in new firm creation. The study finds that necessity entrepreneurs are more likely to start businesses in low-tech and labour-intensive industries, while opportunity entrepreneurs are more likely to start businesses in high-tech and knowledge-intensive industries. Industry choice also affects the relationship between necessity entrepreneurship and performance, with necessity entrepreneurs in low-tech industries having better performance than those in high-tech industries. Additionally, the technical and business skills necessary for the success of their firms are lacking in necessity-preneurs, who frequently have low levels of education. Besides, necessity-preneurs may face additional challenges, such as lack of skills and resources, which can impact their long-term prospects (Belda & Cabrer-Borrás, 2018). While necessity entrepreneurship may not be the best approach to start a firm, it is frequently a feasible alternative for those who want to improve their financial status and take more control over their lives. While necessity entrepreneurship may not be the best approach to start a business, it is frequently a feasible alternative for those who want to improve their financial status and take more control over their lives.

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2.2 Importance of Necessity-Preneurs Necessity-preneurs are essential for many economies worldwide. A significant segment of the population in many developing nations is made up of necessitypreneurs. By offering products and services that are affordable and accessible to lowincome populations, necessity-preneurs support, and contribute to local economies. As a result of their businesses, they are able to provide for their families and the neighbourhood, which eventually increases consumer spending power and spurs economic growth. Necessity-preneurs also create job and income-generating opportunities for themselves and local neighbourhood. They make a substantial contribution to the creation of jobs and, as their businesses grow, they may become vital members of the formal sector, which is a key driver for economic development and progress. According to Dencker et al. (2021), necessity entrepreneurship is a valid form of entrepreneurship as it can contribute to improving the basic needs of individuals and communities. The authors proposed a new framework for understanding necessity entrepreneurship, which occurs when individuals start a business out of necessity rather than opportunity. The framework emphasises the importance of contextual factors, such as local economic conditions, basic needs, cultural norms, and institutional constraints, in shaping the entrepreneurial processes of necessity entrepreneurs. Lastly, the authors also highlighted the iterative and interactive nature of entrepreneurial processes, where necessity entrepreneurship continuously adjusts their strategies based on feedback from stakeholders and the environment. A study from Kuk and Simba (2021) argued that entrepreneurs who adopt the necessity effectuation mindset are better equipped to overcome challenges and seize opportunities during times of crisis. Necessity effectuation is a mindset that focuses on leveraging available resources and opportunities to create innovative solutions in uncertain environments. The authors provide several examples of entrepreneurs who used necessity effectuation to successfully pivot their businesses during the pandemic, including one who shifted from producing leather goods to manufacturing face masks.

2.3 The Rise of Necessity-Preneurs During COVID-19 Pandemic The pandemic created a range of problems that entrepreneurs were well-positioned to solve. As an illustration, the demise of brick-and-mortar stores sparked a surge in online business. Online shopping became necessary since individuals were unable or unwilling to leave their homes. As a result, throughout the epidemic, e-commerce platforms experienced substantial development. These platforms allowed small business owners to reach a wider audience with their offerings, and some of them succeeded in growing their side businesses into full-time businesses.

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The COVID-19 pandemic has brought unprecedented challenges to entrepreneurs worldwide, affecting their ability to engage with customers, access capital, and manage their operations. According to Lungu et al. (2021), entrepreneurs need to shift their focus from traditional decision-making paradigms to survival strategies that prioritise cash flow management, risk mitigation, and strategic agility. Additionally, as lockdowns limited individual’s ability to leave their homes and interact with others, sectors like mental health and well-being gained fresh significance. Entrepreneurs were aware of the expanding need and high demand for services supporting individual’s well-being during this challenging period. Yoga and fitness sessions were relocated online and have become more popular, while meditation and mindfulness apps have seen a sharp increase in downloads. Some entrepreneurs found innovative ways and novel solutions to tackle specific pandemic-related problems (Kuk & Simba, 2021). For instance, entrepreneurs stepped in to produce 3D-printed masks, face shields, and other essential equipment when hospitals were low on personal safety equipment (PPE). Besides, some managed to employ technology to support businesses in operating effectively despite the pandemic. For example, one startup developed a platform that enabled staff members to report COVID-19 symptoms and alerting management to their health concerns. In short, the COVID-19 pandemic has posed hitherto unheard-of obstacles for both individuals and businesses. A wave of invention and entrepreneurship, however, has also been inspired by it. Entrepreneurs have come up with creative solutions to the issues that arose during the pandemic, including e-commerce, mental health services, and PPE production. The entrepreneurial spirit that rose in response to the pandemic has demonstrated the resilience and creativity of individuals in the face of adversity.

2.4 The Challenges of Necessity-Preneurs During COVID-19 Pandemic Entrepreneurship during a pandemic certainly comes with its challenges. Given the scarcity of capital, obtaining investments can be more challenging. It is more difficult to obtain raw materials and deliver finished goods when there are supply chain interruptions (Boro, 2022). However, entrepreneurs have displayed impressive adaptability and tenacity. Many of them have prospered despite the pandemic, despite having to change their business structures and marketing tactics. In fact, some experts believe that the present entrepreneurial boom brought on by the epidemic may herald a long-term shift in the labour market towards more independent, creative, and distant work. Although some studies have examined the factors contributing to necessity entrepreneurs (Cervelló-Royo et al., 2020; Dencker et al., 2021; Jafari-Sadeghi, 2020), lack of attention has been given to investigate the challenges faced by the necessity entrepreneurs to sustain the business for longer-term. Additionally, most

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studies have focused on individuals with an intention to be an entrepreneur who are equipped with business skills, which may not be the case for necessity-driven entrepreneurs (Nasiri & Hamelin, 2018; Nikiforou et al., 2019; Smallbone & Welter, 2019). Hessels et al. (2008) indicated that the motive for entrepreneurship has an impact on business survival. Individuals with intention to be an entrepreneur might stay longer in self-employment than necessity entrepreneurs (Elifneh, 2015). Hence, this study explores the emergence of entrepreneurs during the pandemic, with a particular focus on necessity-preneurs and the challenges they face in sustaining their businesses for the longer-term.

3 Methodology The study is structured as a qualitative investigation, entailing a thorough examination of the participants’ individual experiences. For researching complex and multifaceted human experiences that are best understood from the perspective of the participants, qualitative research is particularly well suited (Creswell & Poth, 2018). The use of qualitative research in this study will allow for an in-depth exploration of the entrepreneurs’ experiences and provide a depth of information that is not possible with quantitative techniques. Ten entrepreneurs who established their enterprises during the pandemic and either successfully ran them or withdrew from the market make up the sample for this study. Purposive sampling is used to select participants, making it possible to choose people with experience and knowledge that are pertinent to the study’s goals. The participants in this case are chosen based on their pandemic startup and their capacity to offer in-depth insights on their decision-making processes and approaches to dealing with uncertainty.

3.1 Data Collection The primary data collection method used in this study is in-depth, semi-structured interviews with the participants. The interviews were conducted in person or online and audio-recorded with the consent of the participants. The interviews conducted lasted between 45 min to an hour. These interviews were conducted based on an interview guide that is developed based on the research objectives of the study. The questions were designed to encourage participants to reflect deeply on their experiences and to elicit rich descriptions of their entrepreneurs’ personal motivations, experiences, and challenges related to starting and running a business during the pandemic. The interview questions were open-ended and allowed for elaboration and follow-up responses. The researchers adhered to strict ethical procedures throughout this study. The researchers obtained informed consent from all participants and assured them that

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their participation was voluntary, and they could withdraw at any time without any consequence. Besides, the researcher ensured that participants’ confidentiality and privacy were protected at all times by removing all identifiable information from the transcripts and ensuring that only the researchers had access to the data.

3.2 Data Analysis Thematic analysis was used to examine the information gathered from the interviews. Finding patterns in the data, coding the data, and interpreting the data are all steps in the qualitative research process known as thematic analysis (Braun & Clarke, 2006). In this study, the researcher manually transcribes, codes, and analyses the data before having it reviewed by another researcher. The researchers performed thematic analysis to find patterns and themes in the data after verbatim transcription of every interview. Then, the researchers familiarised themselves with the data in the first stage of analysis by reading the transcripts again. Creation of initial codes occurred in the second stage depending on the meaning of each sentence or paragraph. In the third phase, the researchers organised the initial codes into more general groups, enabling them to spot developing themes. Themes were then further developed and given names, resulting in a final list of themes that perfectly encapsulated the data. Validity and reliability are critical elements of any research study. Triangulation was used to confirm the study’s validity. Data is gathered from various sources using triangulation to ensure accuracy and consistency. The validity of the research is improved in this study by the use of data collection techniques such in-depth interviews, document reviews, and observations.

4 Findings and Discussion The data collected was analysed using thematic analysis, which resulted in the identification of key themes and sub-themes. Based on the interviews with ten necessitypreneurs the findings are divided into three parts, namely factors contributed to starting a venture during pandemic, challenges faced to sustain the business and lastly solution for longer-term.

4.1 Factors Contributed to the Rise of Necessity-Preneurs The findings of this study contribute to a better understanding of the unique circumstances and motivations that drive necessity-preneurs during times of crisis. The participants in this study cited several motivations for starting their own businesses.

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Job Losses and Reduce Income

The most common motivation was a loss of income due to job loss or reduced income. Due to widespread shutdowns and economic downturns, many businesses had to close, resulting in a massive wave of layoffs. This left many individuals without a steady income and forced them to look for alternative sources of income. Even for those who managed to keep their jobs, the pandemic led to reduced hours and wages, making it difficult to make ends meet. Starting a business, even on a part-time basis, became a viable option for many. As one of the participants stated: Everything went dark when they told me I was laid off while I was working as a consultant for a well-compensated worldwide corporation. I went through a depressive episode for almost three months, trying to figure out how to support my family, before I bounced back with my little venture. (Necessity-preneur 2)

One of the participants also indicated that they had always dreamed of starting their own business and that the pandemic provided the motivation they needed to take the leap. I’ve always believed that the beauty industry is where I’ll end up. However, I was limited in what I could do to further my dream due to job commitment. Pandemic gave me the chance to start my business. I made the bold choice to quit my job and launch my business because I was burnt out from working in a stagnant position with declining pay. (Necessity-preneur 8)

4.1.2

Economic Downturns and Lack of Alternative Employment

Some participants stated that they were forced to start a business because they needed to provide for their families. Economic hardships such as recessions, job losses, and economic downturns have resulted in increased unemployment rates, leaving individuals with limited job opportunities. As a result, some individuals become entrepreneurs out of necessity. In some areas, there may be limited job opportunities and individuals may not have access to alternative employment options. In such cases, individuals may opt to start their own business as a means of earning a livelihood. Due to the pandemic, my partner and I both lost our jobs. Considering my interest in baking, we also considered opening a bakery. Additionally, that was the most practical choice for a job alternative. (Necessity-preneur 5)

4.1.3

Remote Work and Technological Advancements

Besides, two participants stated that remote work during pandemic was also a motivation to start a business. With many people working from home (WFH), there was more time and flexibility to explore new opportunities and start their own businesses. Furthermore, advancements in technology have made it easier and less expensive for individuals to start and run their own businesses. Online platforms have made it possible for people to start businesses without requiring a physical storefront or office space.

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T. B. J. Kumar et al. Im a teacher by profession but also an entrepreneur. I had more free time during the pandemic since schools were off, so I tried my hand at entrepreneurship. Creating my own jewellery has always been something I’ve been interested in; therefore, I launched my business. (Necessitypreneur 10)

The most common motivation for starting a business was a loss of income, but other factors such as a desire to provide for one’s family and lifelong ambitions also played a role.

4.2 Challenges Faced by Necessity-Preneurs to Sustain the Business Findings from the qualitative interviews reveal that necessity-preneurs faced a range of challenges during the COVID-19 pandemic. According to a report published by the Small Business Administrative (SBA), necessity-preneurs often face significant challenges and have a higher risk of failure. The report found that necessity-preneurs have a lower survival rate than other entrepreneurs.

4.2.1

Financial Challenges

One of the main challenges faced by necessity-preneurs during the pandemic was the financial burden of running a business. Having insufficient funding for ongoing operations and growth makes it difficult for them to maintain their business. This theme includes the keywords “limited access to capital,” “financial constraints,” and “financial management”. Due to declining demand and earnings, several respondents said they were having trouble keeping their businesses solvent. Small companies in particular that depended on foot traffic reported a considerable drop in sales as a result of social distanceinducing policies. In addition, several respondents reported having trouble obtaining government relief aid, loans, or grants. As one of the respondents stated: Because my small business was not registered, lacked the essential papers or documents to submit an application, and lacked the required financial records, I was not eligible for government assistance. (Necessity-preneur 1)

Another respondent also mentions that “Since banks and other financial organizations tightened their lending standards in the wake of the pandemic, I find it challenging to get loans.” (Necessity-preneur 3).

4.2.2

Support Systems

Lack of resources or support systems is another issue faced by necessity-preneurs. The resources needed to launch a firm are numerous and include cash, machinery,

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supplies, and labour. Because they sometimes have few resources, necessity entrepreneurs may find it challenging to launch and maintain a firm. Necessitypreneurs may have a fantastic idea, but without the right tools, such as the right materials, equipment, and technology, they will not be able to carry it out effectively, which could cause them to become frustrated and give up. I was unable to continue my business because I lacked the infrastructure or technological know-how required to move to online platforms, particularly when handling orders and deliveries. (Necessity-preneur 10) My demand kept growing daily, but I had to limit it because I didn’t have enough staff. It was challenging to find the ideal staff because my little business couldn’t afford to provide them competitive rates and perks. (Necessity-preneur 7)

Necessity-preneurs may not have access to support systems, such as mentors or business networks that can help them navigate the challenges. As one of the respondents stated: I needed a research lab where I could work on making my product. I got in touch with a business network and we came to an agreement. But once the business network turned down my offer, I began to feel that all of my previous efforts had been in vain. For me, it seemed like a dead end. (Necessity-preneur 8)

4.2.3

Personal Health and Safety

The pandemic’s effects on business owners’ personal safety and health were another important concern they noted. Concerns about their own health and other people’s safety were expressed by respondents. They also said it was hard to adjust to the new laws that the government put in place to stop the virus’s spread. Numerous small enterprises also lacked the funding necessary to provide their workers with safety gear, endangering their health and well-being. In order to meet with physical distance limitations, I had to alter the internal processes and procedures, which added to the cost of supplies, equipment, and labour. (Necessity-preneur 4) The pandemic continued disrupting my business. I had to discontinue my business as each person tested positive, including me and my spouse a few weeks later. At this point, I take both my customers’ and my own health and safety into account. However, as a result of my inability to fulfil orders, I end up losing my customers. (Necessity-preneur 9)

4.2.4

Emotional Well-Being

Respondents described the difficulties of managing their mental well-being and personal stress while operating a business during the pandemic. Due to the different difficulties, they encountered, many business owners reported feeling overburdened and exhausted. The findings also showed that due to the unpredictability of the pandemic and the difficulty of running their enterprises in such uncertain times, individual’s experienced personal challenges such increased stress, anxiety, and weariness. According to one of the respondents:

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T. B. J. Kumar et al. It was difficult to balance my business and my family responsibilities. As a mother to four kids, higher demand created additional stress and made it harder for them to focus on their business. (Necessity-preneur 6)

4.2.5

Limited Market Opportunities

Necessity-preneurs are frequently compelled to launch their businesses in markets with little room for growth or with fierce competition. Due to this, it could be more difficult for them to earn income and establish a long-lasting company. Respondents stated that established players in the market present them with fierce competition. Due to their inexperience, they may struggle to compete. Establishing a competitive advantage that sets the business apart from its rivals is essential for long-term business sustainability. This can be difficult, particularly in congested or oversaturated markets. The rivalry was fierce since so many entrepreneurs during the pandemic ended up operating in the same industry. I was unable to continue as a result because my demand had reduced, and customers had many other options available. (Necessity-preneur 9)

Despite the many benefits of necessity-preneurs, these entrepreneurs often face significant challenges. For instance, financial challenges, lack of support systems, personal health and safety, emotional well-being, and limited market opportunities, necessity-preneurs often struggle to manage and grow their businesses effectively. As a result, their businesses may fail, leading to financial losses. Necessity-preneurs may also encounter obstacles in the form of laws and regulations. Their operations may be targeted by fines, merchandise confiscation, or harassment by law enforcement since local authorities may regard them as operating in an illegal or unofficial manner. For those that run businesses out of necessity, this may make it difficult to run them continuously.

4.3 Solution for Necessity-Preneurs to Have Longer-Term Success Many necessity-preneurs are successful in overcoming these obstacles thanks to their inventiveness, fortitude, and eagerness to learn and adapt. Firstly, necessity-preneurs need to develop a clear value proposition. A clear value proposition will help the entrepreneur to communicate their business offering and unique selling point to potential customers. According to necessity-preneur 2, “I am aware of my goals and how I intend to create various things. Due to the uniqueness and value proposition of my firm, I have developed a distinct brand today. Therefore, I encourage other Necessity-Preneurs to concentrate on their unique selling proposition.”

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Secondly, establishing a solid customer base is important. Long-term business viability depends on attracting and keeping customers. Therefore, it is critical to cultivate trusting relationships with customers and maintain their interest. “One lesson I learned from my demise as an entrepreneur and would like to advise others is to be transparent with our customers. Maintaining contact with them and engaging with them can support you even in difficult circumstances” (Necessity-preneur 9). Thirdly, success and survival depend on constant innovation and development. To keep ahead of the competition in the fast-paced business world of today, it is critical to constantly innovate and develop. Three respondents said that necessity-preneurs can keep innovating by embracing technology. Technology can assist business owners in streamlining their operations, expanding their consumer base, and gaining an advantage over rivals. The necessity-preneurs overcame these obstacles, though, by being inventive and resourceful. As an illustration, some participants used online platforms to reach customers and make money during the pandemic. The next solution that participants cited is having a strong support system, whether that was family, friends, or mentors. A strong support system is highly crucial for a necessity-preneurs to run their business successfully. It can provide moral support, networking opportunities, feedback, mentorship, emotional support, and collaboration possibilities, which can help them navigate the challenges of running a business successfully. It’s important to have a solid support network that inspires and motivates us because starting a business can be a lonely road. A solid support network can inspire, build self-esteem, and assist in overcoming obstacles. In my case, I have my sister and my mother to help me out. For example, my sister is an expert in social media marketing and online setting hence she helps me on that. Whereas my mom is an accountant by nature thus she helps me with my financial management. (Necessity-preneur 8) Necessity-preneur 6 says that “in order to develop our goods or services, we (entrepreneurs) need feedback. We may be able to improve our business methods and expand it with the aid of a support network that offers mentorship and constructive criticism.” Managing a business may be difficult, and business owners frequently encounter circumstances that make them question their choices. To manage stress and bounce back from setbacks, you need a solid support network that you can lean on emotionally. (Necessity-preneur 7)

According to necessity-preneur 1, “Necessity-Preneurs frequently need to work together with individuals from other areas in order to expand their businesses. Entrepreneurs can locate partners or staff with complimentary abilities by using a support system that comprises experts from diverse industries.” Finally, the respondents emphasised the importance of risk-taking, adaptation, and resilience. They emphasised the significance of maintaining motivation, taking prudent risks, and having the flexibility to quickly adjust when confronted with unforeseen difficulties. For example, necessity-preneurs must be able to change their business plan as needed in response to shifting market conditions. This necessitates keeping an eye out for changes in consumer preferences, market trends, and other outside influences that can have an impact on the business.

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5 Implications The results of this research offer a greater comprehension of the circumstances and goals of necessity-preneurs. The importance of developing specialised support programmes to help enterprises deal with the pandemic’s challenges is highlighted by these findings, which have significant consequences for policymakers, academic researchers, and businesspeople themselves. From the study, some theoretical conclusions might be drawn. Firstly, the findings demand a more nuanced understanding of necessity-preneurs, as the prevalent categorisation obscures significant variations in necessity entrepreneurship. This straightforward description has been helpful for preliminary research on the subject, but now that researchers are more aware of its importance, they must adapt their thinking and apply a more precise lens to the phenomenon—a lens that enables researchers to fully appreciate its richness and heterogeneity. Secondly, the study emphasis on necessity-preneurs can be seen as a logical continuation of the expanding body of entrepreneurial literature. Entrepreneurs who start their businesses while employed may not be all that different from those who come from the ranks of the temporarily unemployed. The findings provide two crucial insights in this regard: (a) Necessity-preneurs is rooted in the idea that individuals become entrepreneurs due to their necessity circumstances, such as a lack of jobs opportunities or job security, economic or financial hardships, limited educational background, or other challenging circumstances (Djankov & Zhang, 2021); (b) Necessity-preneurs frequently engage in activities or launch their business in industries with low startup costs. Sometimes these entrepreneurs may start small or homebased business due to their limited financial means. A study by Nikiforou et al. (2019) explored the relationship between necessity entrepreneurship, industry choice, and performance in new firm creation. The study finds that necessity entrepreneurs are more likely to start businesses in low-tech and labour-intensive industries. From a practical perspective, the study’s findings will assist governments in creating employment and entrepreneurship programmes that are specifically geared at necessity-preneurs and will help them make the most of the current business climate. According to the study, authorities should put their attention on promoting entrepreneurship through programmes like funding, mentoring, and legal and regulatory frameworks that encourage innovation and expansion. First, the study recommends the creation of policies that specifically target entrepreneurs driven by necessity in order to foster their development and growth. This is because, usually speaking, necessity is viewed by public and private decisionmakers as a problem rather than an opportunity. The findings confirm the importance of fostering growth aspirations among necessity-preneurs (Puente et al., 2019). It is crucial to assist innovative enterprises while also exposing them to global business innovations through the implementation of plans and policies to advance technology and innovative capabilities. New customers can be attracted by necessity-preneurs using digital tools and platforms. For these business owners, investing in digital infrastructure such as online marketplaces and payment systems might create new

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opportunities. Lungu et al. (2021) state that necessity entrepreneurs’ survival strategies include changing to new business models, utilising digital technology, working with partners, and developing new goods and services. As a result, these emphasise the significance of social and environmental responsibility in entrepreneurship and emphasise the need for necessity-preneurs to strike a balance between economic aims and social and environmental sustainability. Second, necessity-preneurs frequently have trouble obtaining finance to launch and expand their businesses. Giving them access to affordable loans, grants, and other forms of financial aid can help them launch and maintain their businesses. Such tactics would enable necessity entrepreneurs to transform their conventional self-employment or low value-added new companies for local markets into robust, inventive, and networked businesses that can compete globally (Usman & Sun, 2022). To stimulate entrepreneurial activity through financial incentives and other support measures, authorities in particular should play a crucial role. Additionally, governments ought to support access to financing for business owners, especially those who belong to underprivileged and marginalised groups who could experience more difficulties getting funding (Liñán & Jaén, 2022). Third, necessity-preneurs often work in isolation and lack access to networks and mentors. They may overcome these obstacles and prosper by building a supporting ecosystem that links them with other business owners, investors, and industry professionals. In especially in the context of necessity entrepreneurship, Dencker et al. (2021) emphasises the significance of social capital and networks in enabling entrepreneurial processes. Additionally, necessity-preneurs might gain from partnerships with bigger companies that can give them access to resources, knowledge, and markets. Building a more equitable and robust economy can be facilitated by encouraging larger companies to collaborate with necessity-preneurs and foster their expansion. Finally, we advise that governments create plans to ensure economic stability, foster the expansion of enterprises focused on necessities, and have an impact on education and training. Because many necessity-preneurs lack business knowledge and skills, it is crucial to offer specialised training and coaching. A focus on women who start businesses out of necessity is also essential because these women make up one of the entrepreneurial populations that are expanding the quickest and contribute to wealth development in countries (Boro, 2022). Typically, these women raise their kids by themselves and launch enterprises to make ends meet. However, effective regulations that support their expansion through innovation-based business models can turn female entrepreneurs into a powerful economic force. In the wake of catastrophes like the COVID-19 epidemic, necessity entrepreneurship can be a potent weapon for economic recovery and growth and encouraging it can aid in economic empowerment and poverty reduction (Usman & Sun, 2022).

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6 Conclusion An important component of entrepreneurship that needs to be acknowledged is necessity entrepreneurship. Despite confronting numerous obstacles, necessity entrepreneurs support the creation of new jobs and have a good impact on the economy. Entrepreneurs driven by necessity have always contributed significantly to the world economy. These are the people who, rather than starting businesses voluntarily, do so out of necessity. They can be underemployed, have lost their employment, or just be having financial difficulties. These entrepreneurs frequently struggle with a lack of money and confront formidable challenges when starting their enterprises, but they persevere out of a strong desire to succeed. Due to the COVID-19 pandemic’s severe effects on the world economy and the resultant need for many people to launch their own firms, necessity entrepreneurs now face new hurdles. Due to the millions of people who are losing their employment and the faltering businesses, many people now see entrepreneurship as a necessity. Numerous new enterprises have formed as a result of the pandemic, motivated by necessity. For instance, the demand for home-based services like tutoring, web design, and other business support services has surged as a result of the rise in remote work and learning. Demand for online marketplaces has increased as more business owners sell their goods and services on social media platforms and other online marketplaces. At the same time, many necessity entrepreneurs have continued to face significant hurdles. Access to markets, networking opportunities, and financial resources are a few of these. The pandemic has brought attention to existing disparities in the entrepreneurial ecosystem, where minority and women business owners frequently face the most difficult obstacles. Despite these difficulties, entrepreneurs that operate out of necessity have shown to be very resilient, inventive, and adaptable. Many people have come up with creative ways to deal with the problems they encounter, such as turning their companies around to suit the shifting consumer expectations, using their networks to obtain finance and resources, and forming powerful alliances with other companies and organisations. It is likely that necessity entrepreneurship will continue to be essential to the economic recovery and growth as we enter the post-pandemic era. Necessity entrepreneurs will be crucial in fostering innovation and generating new jobs and opportunities as a result of the shifting economic landscape and the demand for new industries and services. However, more funding for the entrepreneurial ecosystem is required in order to properly support and realise the potential of necessity entrepreneurs and the businesses they found. This comprises policies and programmes aiming at lowering the constraints that frequently prevent the success of necessity entrepreneurs from succeeding, as well as improved access to financing, mentorship, and networking opportunities. In conclusion, the COVID-19 pandemic has presented new difficulties and chances for need entrepreneurs. Even though they confront huge obstacles, these business owners have shown incredible fortitude and inventiveness, and they will continue to be crucial in promoting economic growth and recovery in the post-pandemic era.

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Silent Killer or Silent Success: The Double-Edged Sword of Viral Marketing on Entrepreneurship Thanuja Rathakrishnan , Thivashini B Jaya Kumar , Feranita Feranita , and Yong Jing Yi

Abstract Viral marketing has become a popular strategy for businesses to promote their products and services in today’s digital world. By leveraging social media platforms, businesses can gain viral attention that can translate into increased brand awareness, customer engagement, and sales revenue. However, viral marketing can also result in negative consequences if businesses fail to meet the expectations of their customers during the sudden influx in sales. This study aims to explore how customers react to their experiences when visiting a business that has gained viral attention, identify the key factors that contribute to negative emotions and dissatisfaction, and investigate how businesses can proactively manage customer expectations during the viral phase. The study utilized a qualitative interview methodology to gather data from customers who have visited businesses that have gained viral attention. From the interview, seven main standpoints emerged from the data, including parking, crowd management, worker’s attentiveness and communication, quality of the product, service, customer understanding, and customer advocacy. These standpoints are crucial in understanding the factors that contribute to customer satisfaction and dissatisfaction during the viral phase. The study also drew on the social influence theory to explain customers’ behaviour in the context of viral marketing. According to the social influence theory, customers’ decisions and behaviour are influenced by their peers, which can have a significant impact on their perceptions and experiences when visiting a business. In conclusion, viral marketing can be a double-edged sword T. Rathakrishnan (B) · T. B. J. Kumar · F. Feranita · Y. J. Yi School of Management and Marketing, Taylor’s University Lakeside Campus, Subang Jaya, Malaysia e-mail: [email protected] Digital Economy and Business Transformation Impact Lab, Taylor’s University, Subang Jaya 47500, Malaysia T. B. J. Kumar e-mail: [email protected] F. Feranita e-mail: [email protected] Y. J. Yi e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 V. Ratten (ed.), Entrepreneurship Research, https://doi.org/10.1007/978-981-99-4452-1_2

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for businesses, as it can bring significant benefits but also negative consequences if not managed effectively. Lastly, this study provided practical recommendations to optimize their operations and ensure that customers have positive experiences and reaffirm the positive online reviews. Keywords Business hype · Business virality consequences · Business virality readiness · Customer satisfaction · Social influence theory · Unmet customer expectations · Unexpected virality · Viral marketing

1 Introduction In the contemporary era of social media marketing, entrepreneurs regardless novices or experts must brace themselves for the prospect of going viral on social media. Viral marketing is one of the marketing techniques that disseminates information about a product or service through electronic word-of-mouth (E-WOM) or online sharing. The aim of such technique is to generate buzz or excitement around the brand or a business and has the potential to escalate brand awareness, website traffic, and sales (Puriwat & Tripopsakul, 2021; Zhang & Huang, 2022). The benefits of viral marketing, including speed, breadth, and lower financial costs have led to many individuals and businesses attempting to create viral contents in order to earn likes, comments, and followers for their accounts. Nevertheless, viral marketing is an unpredictable form of marketing strategy, as it is difficult to anticipate which campaigns or contents will go viral (Krishnan et al., 2022). While businesses have been working on creative contents and endorsements from celebrities, these viral marketing strategies are intended to reach a vast audience, increase engagement, and exposure. However, the same cannot be said for unsuspecting businesses or brands that go viral due to content created by other people. Further exploration has uncovered that the topic on businesses that went viral due to other content creators’ posts are under-discussed. The latest discussions concerning viral marketing centre predominantly on the effectiveness of viral marketing for businesses (Motoki et al., 2020; Segev & Fernandes, 2023; Wen et al., 2023), given the intricacies involved in generating popular content to achieve business success. While these research findings would be advantageous to many business practitioners in utilising viral marketing to their advantage, it is crucial to not overlook the potential downsides of viral marketing, especially for new, growing, or small businesses. This is because small or novice businesses may not be well-equipped to handle the sudden attention and influx of customers that comes with becoming viral. The term “accidental” or “sudden” virality in business refers to situations where businesses attain viral status due to content created by others that unexpectedly gains popularity. The business owner may or may not be aware of this, which can result in a lack of preparedness for the consequences that unfold (Kumar & Rathakrishnan, 2022). When businesses are unaware of their virality on social media and unprepared with the influx of customers, it can damage their reputation, leading to premature

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business failure. However, if handled adeptly, unexpected virality can open up opportunities for entrepreneurs to elevate their businesses to greater heights (Puriwat & Tripopsakul, 2021). Such situation allows entrepreneurs gaining popularity with low costs, less work on marketing, and the potential for collaborations with other businesses (Lins & Sunyaev, 2022). Therefore, in this chapter, we explore the impact of viral marketing on small businesses, as well as the experiences and behaviours of customers who were attracted to these businesses through viral marketing posts on social media. We contribute to the existing literature and add insights to practitioners on how small businesses can proactively manage customers’ expectation during the sudden influx during the viral phase.

2 Methodology Despite the plethora of studies on the viral marketing success (Hendijani, & Marvi, 2020; Huang et al., 2019; Quesenberry & Coolsen, 2019), the repercussions of viral marketing on small businesses remain less known. To uncover the black box, this chapter adopts a qualitative approach to conduct in-depth interviews with customers who have travelled or visited a business after discovering it through viral marketing in the context of Malaysia. Malaysia is a suitable context to study the topic as the food and beverage industry consists of mainly small businesses and Malaysian consumers rely on social media to seek out places to visit. Through these interviews, the chapter aims to gain insights into the impact of viral marketing on small businesses, as well as the experiences and behaviours of customers who were attracted to these businesses through viral marketing contents. One of the key objectives of the chapter is to provide insights into the actions that small businesses should take if they become viral. To ensure the validity of the data collected, the interviews were captured, transcribed, and synthesized using qualitative data analysis techniques, thematic analysis. The analysis involved identifying recurring themes and patterns in the data, as well as exploring the connections between these themes. Additionally, this chapter addresses the potential negative consequences of the hype surrounding viral marketing and the pressure it can place on small businesses when adopted or embraced without adequate planning or preparation. As these can result in poor execution of the viral marketing content and may even lead to reputational damage for the business.

3 Interview Questions As part of the research protocol, we explained to the respondents on the objectives of the study. We also clarified how the interview process will be and that their personal details and the name of the business will be kept confidential. Hence, pseudo names

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will be used in this chapter to protect the respondents as well as the identity of the business. In this way, respondents would be more willing to share and disclose information regarding their experience.

4 Procedure Previous research has identified a gap in the literature regarding consumers’ perceptions of businesses that have achieved viral success and the potential outcomes of such success. To address this gap, we conducted an exploratory study using a qualitative approach with an inductive design. We employed non-probability purposive sampling techniques where the customers selected are: (1) Those who became aware of the business through viral marketing methods, such as social media platforms, online forums, and E-WOM and (2) Did not have much positive experience upon visiting the establishment. During the study, we conducted face-to-face semi-structured interviews with a total of eight respondents between April and May 2023. Each interview lasted on average 30 min and was recorded with the interviewee’s authorization. The interviews were based on a common interview guide (Table 1), which included openended questions to allow participants to share their experiences and opinions in their own words. The questions covered topics such as how they came across the business, their initial perceptions, their overall experience with the business, and whether they would recommend the business to others. To ensure the confidentiality and protection of the businesses involved in the study, we have used pseudo names instead of real names. We also removed or modified any identifying information, such as location or specific details about the business to ensure anonymity. We also informed the participants of the anonymity measures taken to protect their privacy and the confidentiality of their responses.

5 Data Analysis The data were analysed using thematic approach. Following Braun and Clarke (2006), we associated the themes with the codes based on the space within each interview and across the interviews. The audio interviews were then transcribed into text to gain a better understanding and clarity. Subsequently, the responses were then categorized into codes by highlighting and labelling the data. After coding the data, we identify the various patterns and grouped them into themes. To ensure we captured all the relevant information, we compare the themes with the data. Upon this step, we then move to labelling and identifying the themes.

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Table 1 Interview guide Topic area

Question(s)

Opening question 1. Can you think of a place that was viral on social media? 2. What inspired you to travel to the business that went viral? Expectations

3. How did you initially react when you first heard about this viral business? 4. What were your expectations of the business that went viral?

Reality

5. Did you feel that the business lived up to the hype generated by its viral status? If yes, how? If no, why? 6. Were there any aspects of the business that exceeded your expectations? If so, which ones and how? 7. Were there any aspects of the business that did not exceed your expectations? If so, which ones? 8. Did you wait in long lines or experience any other challenges due to the business’s sudden popularity? How did you feel about this?

Past experience and perceptions

9. How do you think of this business compared to its competitors in terms of quality, price, and customer service? 10. Were you happy with their service, etc.? If yes, how? If no, why? 11. Would you recommend this business to others? If so, why?

Wrap up

12. If the business were to make changes or improvements, in what ways would you suggest they focus on? 13. How important do you think it is for a business to manage customer expectations, especially during a viral period? 14. Would you like to share any other insights about your experience with this particular business that was viral?

Source Created by Authors

6 Sample Profile The participants in this research were recruited through purposive sampling based on their relevant experiences. The sample consists of eight Malaysian consumers, comprising of six females and two males. The age range of the respondents is between 30 and 50 years old, with one participant between 30 and 35, five participants between 36 and 40, and two participants between 46 and 50. Among the respondents, six of them reported having a negative experience when visiting a business that went viral, while two respondents had a mixed review of their experience.

7 Findings and Discussions The analysis of identifying the key factors that contribute to negative emotions and dissatisfaction and proactively managing customers’ expectations during sudden influxes in sales is essential for businesses that want to provide a positive customer experience, build customer loyalty, and ultimately achieve long-term success. Rather than treating the business virality as a short-term success, businesses could leverage

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on the sudden popularity presented to them, thereby gaining other opportunities, reputation, and credits in ensuring long-term success and growth. In particular, seven main standpoints emerged: parking lot, crowd management, worker’s attentiveness and communication, quality of the product, service, customer’s understanding, and customer advocacy.

8 Parking Lot Parking lot is not just an important factor, but it is also a critical aspect that can make or break a business’ success. The importance of parking availability is more so in the Malaysian context as driving own car is the main mode of transportation. A convenient parking facility can greatly enhance the customer experience and encourage them to visit the business again. On the other hand, a lack of parking lots or inadequate parking options can frustrate customers, leading to negative reviews and decreased patronage. Therefore, businesses that are proactive and attentive to their customers’ needs can take additional steps to provide parking assistance. For instance, they could provide information on the location of nearby parking lots, offer valet parking services or shuttle services, or even reserve parking spots for customers. Providing such assistance can greatly improve the customer experience, reduce stress, and increase the likelihood of customers returning. “Almost three hours to be honest, and the parking (getting a parking lot) was an issue because it’s just a small site” (Michelle, 35 years old). Another customer stated, “Once we arrived, we noticed that the place was crowded and we had to wait for a parking spot… I do want to share about another restaurant that went viral, also in Putrajaya. They have ample parking space and a nice restaurant, but the food is so-so. Yet, people still come to the place to eat” (Yana, 43 years old). “We would expect a large crowd during peak hours or lunch hours or dinner hours. But even after 2–3pm, about that time, we were actually surprised that the place is still crowded. We had difficulty for a while to get a parking spot” (Tasha, 39 years old). The respondents’ comments emphasize the significance of convenient parking for businesses, particularly during peak periods. A lack of parking space can lead to frustration for customers and discourage them from visiting a business, even if the quality of the product or service is good. On the other hand, ample parking space can be a key decision factor for visitors when choosing where to dine or shop. This is especially true during a viral phase or other periods of high customer volume when competition for parking spots can be intense.

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9 Crowd Management Most businesses strive to attract a large number of customers and generate high sales volumes. However, it is essential for businesses to consider whether they are equipped to manage a high volume of customers effectively. Consider a situation where an individual encounters challenges in finding a parking spot. After successfully parking their vehicle, they are faced with a long queue, resulting in a prolonged waiting period before gaining access to their intended store or restaurant. This experience can be frustrating for customers, and it may result in negative feedback or reviews: “We had to wait again for a table as there were no empty ones since the restaurant was full of customers. We waited for half an hour because it was packed at that time” (Yana, 43 years old). Another respondent expressed concerns and disappointment with their experience due to the short opening hours and long queues. They mentioned that the business did not have any privileges in place to help manage the crowd, such as a fast-track pass or efficient crowd control system. This highlights the importance of having systems in place to expedite the customer experience during periods of high volume. The respondent also added on the possibility to enjoy the event and getting their money’s worth if the opening hours are short and the queue is long. They suggested that the business should have a system in place to expedite the situation, such as a fast-track pass or an efficient crowd control system. This shows that customers are willing to pay for a quality experience, but they also expect the business to provide effective solutions to manage crowds during busy periods. “…it was a little disappointing because the opening hours are shorter, and the lines were very long. They didn’t have the privileges like how we can have this fast-track pass, or privileges of crowd controlling” (Kris, 35).

10 Worker’s Attentiveness and Communication It is crucial for businesses to ensure that their staffs are trained to attend to customers promptly and provide clear guidance on the processes involved. When customers experience delays in being attended to or have unclear instructions, this can lead to bottlenecks and congestion, causing frustration and inconvenience for both customers and staff. Businesses should invest in training their staffs to handle high volumes of customers efficiently. This may involve providing them with the necessary tools and resources to streamline processes, such as point-of-sale systems, mobile ordering apps, and customer service software. Additionally, businesses should ensure that they have enough staff on hand to manage busy periods, and that staff are trained to communicate with customers effectively. Customers who bring along young children and toddlers can face particular challenges during long waiting times. It is crucial for businesses to train their staff to serve

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families with young children quickly and efficiently to prevent them from becoming restless or upset. This can help to ensure that the overall experience remains enjoyable for everyone. By being attentive to families with young children and implementing effective service strategies, businesses can build a reputation for being family-friendly and accommodating. This can help to attract more customers, particularly those with young children, and build long-term customer loyalty. “It was about 10 or 15 min before we actually got a waiter to come to our table. So, this was to give us the menu, but to take our orders we actually had to wait longer. Like I said, we actually got their attention, but one of them told us to wait for a while. So, we did, and it was a little uncomfortable in a sense because I actually went there with my two children. I was with my toddler and she was getting restless, and we were kind of looking around, trying to see if anybody would come and take our orders. So, we felt a little unpleasant at that point in time” (Tasha, 39 years old). This respondent’s experience highlights the importance of staff training and clear communication in busy restaurant environments. When a restaurant is crowded, it can be difficult for customers to find a waiter and place their orders. In this case, the restaurant had instructed customers to approach any waiter for assistance, but the lack of clear identification for wait staff made it challenging for the customers to know who to approach. “… since the restaurant was so crowded, we were instructed to approach any waiter for assistance. However, when we were ready to order, we had trouble finding a waiter. Some of the staff were wearing uniforms while others were not, so it was easy to identify the ones in uniform. We had to wait for quite a while for a waiter in uniform to come by our table. Most of the time, when they passed by, their attention was not on us, and they were quickly walking to serve or busy looking in another direction. It took quite a while for us to get the attention of a waiter to place our order” (Ryan, 38 years old). Additionally, businesses should consider implementing clear identification for staff members, such as uniforms or badges, to make it easier for customers to identify who to approach for assistance. This can help to reduce wait times and improve the overall customer experience, which can lead to increased customer loyalty and positive reviews. Another respondent expressed their frustration pertaining to the duration taken for their meals to arrive: “If only the owner or the staff were able to explain the situation to us because they kept us waiting for so long, you know. The only thing that made us frustrated was the waiting time and the fact that the food did not meet our expectations. We saw a lot of people dining and waiting, so we thought the food should be served quickly. But somehow, they left us waiting for an hour without any explanation” (Zahra, 52 years old). Another respondent emphasized the importance of managing wait times throughout the entire customer journey. From finding a parking spot to being seated, ordering, and receiving their food, customers expect to be attended to in a timely

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manner. Any delay or bottleneck in the process can negatively impact the customer experience. “Finally, we got a table, but then we had to wait again for the waiters to come and take our orders. Okay, so we waited for 10 min before another customer sitting next to us informed us that we had to go to the counter to place our order. We didn’t know that, so my husband went to the counter and ordered two nasi lemak and beverages— coffee and tea. Again, we had to wait in line to place the order, which took about 5 to 15 min. After my husband came back to our table, we waited until 11. Then the waiter informed us that the nasi lemak had finished. The person who took our order should have mentioned it to us or informed us that the nasi lemak was about to finish. They should have let us know about the situation. Maybe they did not realize or they did not know how to manage it” (Yana, 43 years old). Businesses should invest in efficient processes and technologies to manage wait times, such as online reservations and ordering systems, digital menus, and automated queuing systems. This can help to streamline the customer journey and reduce wait times, leading to a more positive customer experience. In addition, businesses can communicate estimated wait times to customers to manage expectations and provide updates throughout the process. This can help to reduce frustration and improve overall customer satisfaction.

11 Quality of the Product Maintaining the quality of service or product is crucial for businesses, especially during a viral phase where customers may have high expectations. Customers tend to be more critical and analytical, particularly when there is a buzz around a particular business or product. Therefore, businesses should ensure that they are consistently meeting or exceeding customer expectations by delivering high-quality products and services. Customers may flock to a particular business premise due to positive reviews or word-of-mouth recommendations. However, failing to meet these expectations can lead to customer frustration and negative feedback. This can have a detrimental impact on a business’s reputation, leading to a decline in sales and customer loyalty. “In fact, I would say that the food was quite good. So, we were actually happy to say that the whole situation was compensated by the food” (Tasha, 39 years old). “After we placed our orders, the food arrived, but unfortunately, it was cold. It was not hot, which was a major turn off. We were expecting sizzling hot dishes, but somehow the food was not hot, and neither was the rice. Most of the dishes were cold. Also, it seemed that we had to order drinks from one person and food from another person, so it was a bit confusing. One person could have taken our orders, and they could have sorted it out on the back end. Additionally, the portion size was not really that much. The rice was just a small portion” (Ryan, 38 years old). “Normally when we go to grill fish restaurant, the freshness of the fish stands out even though it’s a simple dish. You can taste the juiciness and freshness, but in

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this particular restaurant, the fish was not fresh. I think that’s why we were so upset, especially after waiting for an hour for the food to arrive. When the food finally arrived, it wasn’t fresh, which made the situation worse” (Zahra, 52 years old). Another customer mentioned that the pictures that they saw on the social media were different from what was portrayed in real: “From the pictures on Instagram, the food looked very nice because of the colour or the filter they used, but when I got there, the food looked very normal, the colour was only okay, and the colour and taste of the coffee were also just okay” (Yana, 35 years old). It is important to be aware that these photos may not always accurately represent the reality of the experience. Customers may use filters or edit their photos to make them look more appealing, which could potentially misrepresent the actual experience. Businesses should strive to provide a consistent and high-quality experience for all customers, regardless of whether or not they will be sharing their experience on social media. To help ensure that the customer experience is accurately represented, businesses can encourage customers to leave honest reviews on their social media pages and other review platforms. This can provide a more balanced view of the customer experience and help potential customers make informed decisions.

12 Service Providing exceptional customer service is critical for businesses, particularly during a viral phase. During such phases, businesses may experience a sudden influx of customers, and it is essential to ensure that each customer is attended to promptly and provided with personalized attention: “Oh, perhaps the decoration or the table setting was impressive. I would say it was nice and clean. Staff were friendly, but of course, they were quite busy as well. The food and drinks were good. Generally, it was alright, except for the waiting time” (Tasha, 39 years old). Another customer faced an unfortunate situation where they were served cold dishes and the complaints were not handled well. “We were irritated and kind of hungry, so we expected to be served promptly, but our order was not taken at all. So, it definitely took time. After our order was taken, I don’t know whether the kitchen was busy or not because there were a lot of people there. And even when we asked for water, it took quite a long time to arrive, so we were waiting for a while. “… it seems quite a senior person took the order for a meal, he came by the table, and then he asked us, “hey, how’s the food?” So, I told the truth to him, “yes, good but however most all the dishes, uh, kind of cold.” But I think he didn’t expect me to tell him, but he got quite surprised, and he didn’t know what to reply. However, he said that he was going to check and see what’s happening, so I said OK, and then he left the table, he went to the place where they prepare the food, and all I saw

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him speaking with the staff there. After that, he didn’t come back to me to update or apologize for the bad experience. You just ask, and then you just leave, and they were like doing nothing, it’s not professional” (Ryan, 38 years old). The same respondent added that the staff should be knowledgeable about the restaurant’s bestselling dishes to assist customers in making their decisions. The respondent recalled an incident where they asked the waiter for recommendations but received a vague answer without any indication of the popular or special items in the restaurant. This made it difficult for them to make an informed decision and resulted in a disappointing experience. “.… I asked the waiter to recommend the food, he simply told me that all the food is good, but that was something disappointing. Usually, some restaurants have a thumbs up or a chef’s head on the menu to indicate that it’s one of the special or popular items in the restaurant. There wasn’t such an indication, so we couldn’t go through the items. The waiter gave us a very general answer like “all is good” but it wasn’t helpful in that sense. So, in the end, we just decided to choose on our own. That was something that kind of didn’t go well with me.” Customers may have a positive overall experience with a business, but without any standout specialties or unique features, they may not feel compelled to return in the near future. “Generally… yes, but if I would revisit the place? Maybe not… not at this point of time with the hyper crowd” (Michelle, 35 years old). Other respondents mentioned that friendly and accommodating staffs are important for a good service: “The staff at the cafe were very nice and easy to talk to, and the food was prepared very fast so I didn’t need to wait for a long time” (Yana, 35 years old). “Yes, overall, the experience was great. The customer service staff were always helpful, even during the rain, and tried to accommodate us under the shade. They also informed us about the longer wait times for the rides. So, I’m always satisfied with the service and the environment” (Kris, 35 years old).

13 Customer’s Understanding While businesses should be prepared to manage the influx of customers during a viral phase, it is also crucial for customers to be understanding of the impact of such periods. During a viral phase, businesses may experience crowds, slightly delayed services, and other issues that can impact the overall customer experience. Customers should understand that businesses are doing their best to manage these challenges, and minor delays or issues may be unavoidable. It is essential to approach such situations with patience and a positive attitude. Being too nit-picky about every single aspect of the service can lead to unnecessary stress and frustration for both customers and staff. “Maybe I think phases or like, you know, phases that went viral and people would like to visit it and all that. I will not just focus on the sellers themselves, but I think as

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a person, maybe our behaviours, like, you know, how do you approach the sellers or like, you know, experiencing the crowd? I think it goes hand in hand from the seller or the people actually visiting the place. I think that’s one of the problems even in this particular shop, that it’s not the seller, but the people who are in the queue. You know, like, started to have some arguments and stuff like that while waiting in the queue. … you should know what to expect when you’re going in such a long period, and it’s just a small stall preparing a certain amount of food. So, you queuing up, you should like I said, should know beforehand that you will not be able to get what you want at the end of the day when you reach there. So, yeah, do not make (…) that isn’t a problem, because it happens when you go to viral places or places with a lot of crowds. So, I think it’s just the standard behaviour of the person themselves who’s going to such viral places” (Michelle, 35 years old). “For example, out of ten items, not all of them may be bad. It could be that only one or two items are subpar, and customers should not overlook the other items that are good. So sometimes we have to be fair to these businesses. They are struggling to do the business, and we should not just look at one factor or area, but also consider other aspects as well. I think we have to be fair to the business, and the business also has to be fair to themselves” (Zahra, 52 years old).

14 Customer Advocacy Customer advocacy is a critical aspect of building a strong brand reputation, especially in the age of social media. Positive reviews and recommendations from customers can help businesses attract new customers, increase sales, and establish themselves as trusted and reliable brands. When customers advocate for a business, they not only reconfirm the positive reviews posted online but also provide personal recommendations to their friends and family. This is because, people tend to trust recommendations from their friends and family more than those from strangers online. Therefore, customer advocacy can be a powerful tool for businesses to reach new customers and build a loyal customer base. “No, haha... I would just let them decide for themselves given the hype” (Ryan, 38 years old). “If somebody is willing to go through such a queue, then yes, please go. But like I said, you can always find similar taste elsewhere in any other businesses” (Michelle, 35 years old). “No, I don’t think so. I cannot. It would be such an embarrassment. My reputation will be at stake. My friends will question, What am I thinking? Why did I recommend this restaurant if it’s not good?” (Zahra, 52 years old). “No, not exactly, absolutely no. Maybe because I don’t want to take the responsibility” (Yana, 43 years old).

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“No, I don’t think so. I worry that if I recommend this cafe to others, they might not be satisfied with the quality of the food. However, if they are more interested in an Instagrammable place to take pictures or just have a cup of coffee, then they can visit this cafe” (Yana, 35 years old). However, despite some drawbacks in their experience of visiting a viral business, some respondents expressed their willingness to give the benefit of the doubt and revisit the business again. “Yes, I would still recommend this to others although I would actually mention that they might need to wait a little so perhaps maybe try to see the timing you know if they would like to be served faster yeah” (Tasha, 39 years old). “Definitely, I would suggest people to go. However, with a few caveats, they need to plan properly, make sure they’re hydrated, have raincoats beforehand, and, most importantly, mentally prepare themselves. Friends and colleagues need to be prepared for the crowds, so they don’t go there with the expectation that there won’t be any” (Kris, 35 years old). Another respondent said, they would recommend the business as a one-time experience only: “Yes, but mostly as a once-in-a-lifetime experience” (Ray, 31 years old).

15 Significance of the Study The analysis of identifying the key factors that contribute to negative emotions and dissatisfaction and proactively managing customers’ expectations during sudden influxes in sales is crucial for businesses that want to provide a positive customer experience, build customer loyalty, and achieve long-term success. This paper will discuss the theoretical and practical significance of this chapter.

16 Theoretical Significance This study contributes to the existing literature on the relationship between customer satisfaction and business success. As discussed in the introduction, much of the extant literature have explored the benefits viral marketing bring to a business, but studies focusing on customers’ poor experiences of a business that attained viral are lacking. Therefore, this study aims to contribute to the under-discussed aspect of viral marketing by examining the potential downsides of viral marketing for businesses and their customers. The use of customer reviews on social media is a critical aspect of modern marketing strategies. One relevant theoretical framework for understanding how businesses can leverage customer reviews on social media is the social influence theory. According to this theory, people are influenced by the opinions, attitudes, and behaviours of those around them, including their friends, family, and peers on

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social media (Kalia et al., 2022). By proactively managing customer expectations specifically on what has been praised by other customers on social media, the businesses can enhance and reaffirm other positive reviews, leading to increased loyalty, repeated sales, and positive E-WOM marketing. In the context of business marketing, social influence theory suggests that customer reviews on social media can significantly impact the attitudes and behaviours of other potential customers. Positive reviews can create a perception of trust, credibility, and social proof, which can encourage potential customers to try a product or service (Haudi et al., 2022; Lins & Sunyaev, 2022). On the other hand, negative reviews can damage a business’s reputation, decrease trust, and deter potential customers from trying a product or service. This theory posits that satisfied customers are more likely to return to a business, recommend it to others, and provide positive reviews and feedback—for free. On the other hand, dissatisfied customers are more likely to switch to a competitor, write negative reviews, and discourage others from using/visiting the business. Therefore, ensuring customer satisfaction and managing their expectations as per the reviews on social media is an essential aspect of a business’s success and long-term growth. The seven main standpoints identified in this study provide a framework for businesses to understand and prioritize these factors in the context of viral marketing.

17 Practical Significance The practical significance of this study is substantial, as it provides managerial solutions for businesses to improve their operations and enhance the customer experience. By prioritizing the seven main standpoints, businesses can improve customer satisfaction, leading to increased customer loyalty, repeat business, and positive E-WOM marketing. The following implications are not only relevant for businesses that have gone viral, but also for those that have not yet achieved viral success in order to be prepared. During sudden influxes could lead to an increase in foot traffic and a higher demand for parking lot, businesses can offer additional parking spaces, creating a valet parking system, or partnering with nearby parking garages to offer discounted rates to customers. Additionally, guiding customers to a parking spot would ease the traffic flow, minimizes frustrations and avoid customers to double park or causing inconvenience to other drivers on the road. As one of the respondents (Michelle) mentioned that since the location of the business is around the residential area, the customers parked their cars in a disruptive manner and caused bottleneck in the traffic flow. This can be done by ensuring enough parking attendants available to direct traffic and manage parking spaces. Yana also voiced out on the importance of providing ample parking space to customers and that the business should consider changing their location with parking facilities. Crowd management is another critical factor that businesses should prioritize to enhance the customer experience. Effective crowd management is important to ensure

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the safety of customers and employees, maintain order, and prevent overcrowding. This can be achieved by creating clear signage, providing crowd control barriers, and implementing a queue management system. For example, if there are long lines, the business can implement virtual queuing systems to reduce wait times. As expressed by Tasha on the usage of technology to expedite the process “…they could use technology in order to cater to customers’ needs or to receive orders faster. Right now, there are a lot of technologies that could streamline the process instead of using paper and pen. They could come up with some other initiatives so that, you know, maybe they could get more manpower.” Ryan added that “Instead of calling them to make orders, customers can do it online. Everybody is going online now. They can scan the QR code to order, and then if customers have questions on the food items, they can call (the staff).” Ryan believes that by doing so, this would reduce the engagement of the staff and the customers at the same time, the staff can work on the food/drinks preparations. Additionally, employees should also be trained to manage crowds, handling their requests and ensure that fairness in servicing the customers (e.g., first come, first served). Worker’s attentiveness and communication are essential for creating a positive customer experience. Businesses can train their workers to be more attentive to customers’ needs and to communicate effectively with them to enhance their satisfaction. Active listening is important to ensure that they understand customers’ needs and can provide appropriate solutions. This can include techniques such as repeating back customers’ concerns to ensure clarity. Workers should be trained on techniques to handle difficult situations and prevent conflicts with customers. This can include staying calm and professional, using empathy, and identifying potential triggers. Zahra mentioned that “they (the staff) should be sensitive to the body language of their customers. If they notice that the customers are starting to become restless and upset, they should act quickly to address the situation.” Zahra suggested that if the waiting time is too long, the business could consider providing drinks on the house or if that is not feasible, to at least communicate on the waiting time duration so the customers can decide if they are willing to wait. Additionally, workers should receive product knowledge training to ensure that they are able to answer customers’ questions with clarity and confident and provide accurate information. As Ryan mentioned that “get them (the staff) to try the dishes out so they know what to recommend.” He added that by doing so, the staff will know what or how they can recommend based on the customers’ preferences (i.e., spicy or non-spicy and sweet or less sweet) rather than just going by the book. Teamwork training is also important to ensure that they can collaborate effectively with colleagues to provide a positive customer experience. For instance, if they noticed that their staff is busy handling orders, they could immediately attend to another waiting customer to smooth the waiting process. The quality of the product and service is a crucial factor that can significantly impact customer satisfaction. Businesses should focus on delivering high-quality products and services consistently to enhance the customer experience. For example, having suppliers who can meet customer demands promptly and deliver high-quality produce. As Yana said businesses should have ensured that they had enough supplies

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to cater to the influx of customers. This was also agreed by Zara that businesses with a high demand should not rely on the same supplier, and they must find ways to get more suppliers who are able to cater to the demand. Zara also added that businesses must change their processes and accommodate the high increase of customers. Understanding customer needs and preferences is crucial for creating a positive customer experience. Businesses should prioritize customer understanding by conducting customer surveys, collecting customer feedback, and using customer analytics tools to gain insights into customer behaviour. Additionally, certain metric systems can be adopted by the business. For instance, businesses should constantly monitor the social media platforms, reviewing customers’ feedback and replying to good and poor reviews accordingly, monitoring likes, followers and the number of clicks. Lastly, customer advocacy is a powerful tool for businesses to attract new customers and retain existing ones. Businesses can encourage customer advocacy by offering loyalty programmes, providing incentives for referrals, showcasing positive customer feedback. The business can also use customer data (e.g., analysing purchasing patterns) to better understand their needs and preferences. In return, this information can be used to make predictions and informed decisions regarding hot-selling items, supplier numbers, sales forecasting, and more.

18 Limitations and Suggestions for Future Studies To fully understand the findings of this study, it is important to recognize its limitations. One limitation is that the study focuses solely on businesses that experience sudden increases in sales and may not be applicable to businesses with a consistent level of customer traffic. Additionally, the study was conducted in a specific geographic area and may not be representative of other regions or industries. The study also relied on self-reported data from customers, which could be subject to inaccuracies or bias. External factors, such as weather or economic trends, were not taken into consideration, and their impact on customer satisfaction was not analysed. Furthermore, this study did not examine the cost-effectiveness of implementing the identified solutions for businesses. Implementing changes to prioritize the seven main standpoints may require significant resources, and businesses may need to evaluate the return on investment of such changes. This suggests that future studies could examine the cost-effectiveness of implementing the solutions suggested in this study and evaluate the return on investment for businesses. This could help businesses determine the feasibility of making changes to prioritize the factors mentioned. Finally, the study interviewed from the customers experience. Future studies could consider interviewing business owners whose business faced sudden popularity and what are the challenges they have face during the viral phase.

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19 Conclusion Viral marketing has become an essential part of social media marketing, with the potential to escalate brand awareness, website traffic, and sales for businesses. However, the unpredictability of viral marketing strategies coupled with potential risks especially when businesses are unprepared, highlights the need for more discussions and research in this area. While the existing literature mainly focuses on the benefits of viral marketing for businesses, this chapter aims to examine the impact of viral marketing on small businesses and the experiences of customers attracted to these businesses through viral marketing posts. Understanding the impacts of viral marketing on small businesses will enable entrepreneurs to make informed decisions when planning and implementing their marketing strategies, ultimately leading to long-term success. Based on the lens of the viral business customers, this study identified seven main standpoints that businesses should prioritize to improve the customer experience during sudden influxes in sales and customers. These standpoints include parking lot, crowd management, worker’s attentiveness and communication, quality of the product and service, customer understanding, customer advocacy, and proactive management of customer expectations. In general, the importance of providing a positive customer experience cannot be overstated. With the ease of netizens posting online reviews and images, customers have a powerful platform to express and share their experiences with others, including negative comments of the business. A negative experience would essentially lead to negative reviews and refute previous good reviews of the business, which would deter potential customers from choosing a business. On the other hand, a positive experience can lead to positive reviews and attract new customers as well as encouraging current customers to visit their business premises.

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Pedagogical Innovation Triggered by the Covid-19 Pandemic Sérgio Jesus Teixeira, Daniela V. A. Gomes, and Igor M. J. Ferro

Abstract Innovation, due to its multidisciplinary properties, favors its application in different areas of human activity. Pedagogy, in turn, with its role in the development of the next generations, takes the place of reference in this study. Thus, the image of pedagogical innovation goes back to an innovation in the educational field that intends, through the transformation and alteration of traditional teaching methodologies, to improve the quality of education through more relevant, engaging and efficient negotiation. In this way, the need to look at pedagogical innovation and its effects in the short and long term is highlighted, and this act attributes tangibility to the effects of innovation in this science, which allows validating its performance and importance in the vicissitudes of the present. Given that the Covid-19 pandemic came to launch the need for change and adaptation in the school environment, pedagogical innovation was driven, and the education system adjusted and fine-tuned its posture in the face of the new reality experienced with the use of distance learning apprenticeship. This application of new distance learning processes, on a scale never seen before, erected doubts regarding their effectiveness, thus raising the issue to be studied in this article. With this, it is sought to verify the effects of e-learning and increase the benefits of this shock on the education system and the very performance of teachers, and the change in these should not be seen as a disease of the pandemic. On the other hand, by understanding whether this pedagogical innovation had a positive impact on student learning, it is intended to open a window of investigation into this topic in the future. Keywords Innovation · Pedagogy · Covid-19 · E-learning · Education system S. Jesus Teixeira (B) · D. V. A. Gomes · I. M. J. Ferro Faculty of Social Sciences - UMa, University of Madeira, 9020-105 Funchal, Portugal e-mail: [email protected]; [email protected] D. V. A. Gomes e-mail: [email protected] I. M. J. Ferro e-mail: [email protected] S. Jesus Teixeira NECE Research Unit, Covilhã, Portugal © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 V. Ratten (ed.), Entrepreneurship Research, https://doi.org/10.1007/978-981-99-4452-1_3

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1 Introduction In recent years, innovation has been increasingly recognized as a crucial factor for the success and survival of organizations. Considering that the society of the century, XXI is globalized and that, due to the innovative character of producing advances in various dimensions of human life, as much importance is attributed to the capital of a cognitive nature as to conventional capital; pedagogical innovation is one of the possible innovations to be targeted (Vieira & Silva, 2021). As such, university students, in the role of future members of organizations, are assets capable of developing long-term innovation behaviors, in the context of Higher Education, likely to be employed in the labor market (Martín et al., 2017). In this sense, the quality of Higher Education has become a recurrent concern all over the world, and pedagogical innovation is one of the necessary constructs for the quality of teaching, as it emerges as a means to update and adapt the system. Education to the current reality, preparing students for the challenges that emerge from it (Larson & Miller, 2011, as cited in Avidov-Ungar & Forkosh-Baruch, 2018; Major et al., 2020). One of the challenges that Higher Education has faced is related to the digital transformation that originated, mainly, by the Covid-19 pandemic where, not being possible to attend face-to-face classes, technology has proved to be essential for its sustainable development, thus imposing new dynamics (Deroncele-Acosta et al., 2023). In this follow-up, it was verified that there are few studies revolving around this theme of pedagogical innovation in Higher Education, more specifically distance learning that emerged as an obligation of the pandemic, thus identifying a research gap. With the aim of unveiling this theme and arousing curiosity for future investigations, this article focuses, firstly, on the definitions of innovation, pedagogical innovation, digital transformation, and e-learning, demonstrating its importance in this context. In the methodology section, the methods to be adopted in the procedure of this study are explained, as well as the databases used for this purpose. Subsequently, the results found are presented and a discussion of the themes is asked, relating them. Finally, a summary of the most relevant conclusions is presented, highlighting the limitations of the study and suggestions for future investigations.

2 Literature Review In this chapter, the concepts of innovation, pedagogical innovation, digital transformation and e-learning will be explored, in the light of different authors, to provide a contextualization of the interposed study.

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2.1 Innovation With the current dynamization of markets, processes and management of innovation have gained new relevance, with organizations capitalizing on the opportunities offered by technology and markets in constant change, through the use of innovation as a means to respond to growing diligence of customers (Baregheh et al., 2009). However, the question that remains open is: what is meant by “innovation”? According to Nandal et al. (2020), “Innovation is an indefinable, vibrant and lane concept that is hard to define” (p. 1277). In this sense, the definitions presented by different authors were grouped in chronological order in Table 1. Through the analysis of Table 1, it appears that the definitions presented mainly involve three approaches: process, change and result, as shown in Fig. 1. On the other hand, in an attempt to capture the essence of innovation, regardless of context, Baregheh et al. (2009) identified six attributes common to the various disciplines that provide definitions of innovation, schematizing them in Fig. 2 and warning that they presented flow does not reflect a real, ideal or even linear flow. Therefore, Baregheh et al. (2009) infer that “Innovation is the multi-stage process whereby organizations transform ideas into new/improved products, services or processes, in order to advance, compete and differentiate themselves successfully in their marketplace” (p. 1334). It is also worth highlighting the concept of “open innovation” which, as the name implies, refers to “(…) the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and to expand the markets for external use of innovation, respectively (…)” (Chesbrough et al., as cited in Huizingh [2011, p. 2]), highlighting the existence of the concepts “inbound open innovation” and “outbound open innovation”. The first term refers to the internal use of external knowledge, while the second implies the external exploration of internal knowledge (Huizingh, 2011). In short, although each author presents a definition of the concept of innovation that they consider complete, and several authors try to bring them together in a single multidisciplinary definition, the truth is that, according to Varadarajan (2018), it is highly unlikely that this single definition will be become accepted by the community at large.

2.2 Pedagogical Innovation Major et al. (2020) identified, through a literature review, five factors that lead to pedagogical responses, namely: 1. Changes in skills, knowledge and understanding needed by graduates in the twentieth century. XXI, which guide universities to reassess the ways of teaching, as well as the existence of greater demand for relevant professional courses and that improve the level of employability.

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Table 1 Definitions of “innovation” presented by several authors Author

Concept

Schumpeter (1949) as cited in (Distanent & Khongmalai, 2020)

“(…) defined innovation as similar to new directions in exploiting the existing resources of a business for new things such as new products, new production methods, (…), the utilization of new markets, and new methods in business management” (p. 17)

Schumpeter (1950) as cited in Baregheh et al. (2009)

“(…) argued that organisations should innovate in order to renew the value of their asset endowment” (p. 1323)

Evan (1966) as cited in (Distanent & Khongmalai, 2020)

“(…) defined innovation as a process of developing new ideas” (p. 17)

Damanpour (1987) “(…) defined innovations as new things developed for use in an as cited in (Distanent organization that are well received by personnel within the organization” & Khongmalai, (p. 17) 2020) Zahra and Covin (1994) as cited in Baregheh et al. (2009)

“Innovation is widely considered as the life blood of corporate survival and growth” (pp. 1323–1324)

Drucker (1994) as “(…) innovation is an important tool of the entrepreneur in creating cited in (Distanent & competitive potential in business and wealth by utilizing existing Khongmalai, 2020) resources or by creating new ones, including development using new knowledge” (p. 17) Freeman and Soete (1997) as cited in (Distanent & Khongmalai, 2020)

“(…) an innovation is a new product or process that has been improved and used commercially for the first time” (p. 17)

Distanent and Khongmalai (2020)

“(…) a new thing different from what already exists that has been developed using existing knowledge and that responds to the needs of the market” (p. 17)

Aziz and Samad (2016) as cited in (Distanent & Khongmalai, 2020)

“Innovation is a strategy that companies use to create a competitive advantage, producing things that nobody else can, doing things better than everyone else, or introducing superior, cheaper, and faster services” (p. 18)

Source Adapted from Baregheh et al. (2009), Distanent and Khongmalai (2020)

2. International Coverage of Higher Education, Which Increases the Number and Diversity of Enrolled Students, Demanding Diversified Teaching Responses. 3. The demand for equal treatment and positioning as partners in the institution makes students see them as consumers, which may even be beneficial for their personal development and employability. 4. The accelerated development of technological advances creates new expectations and opportunities for Higher Education, requiring digital fluency on the part of teachers and students and making learning place and time, at the student’time, at the student’s pace.

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Fig. 1 Approaches for defining innovation (Source Siauliai [2013] as cited in Timur and Antanas [2017])

Fig. 2 Schematic definition of innovation (Source Baregheh et al. [2009])

5. The development of teaching and learning scholarship as a new area of research in Higher Education reflects a growing expectation that teachers have effective pedagogical skills and that they are able to cooperate with other members of the educational community, in order to transform themselves into a dynamic learning community. Like the concept of innovation presented in the previous chapter, pedagogical innovation can be even more difficult to characterize, taking into account that there is no explicit definition for the term, which makes the discussion of the nature and scope of the pedagogies adopted in Teaching challenging. Superior that can be identified

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as innovative (Fullan, 2000, as cited in Mioduser et al. [2003]; Major et al., 2020). According to Avidov-Ungar and Forkosh-Baruch (2018), pedagogical innovation is defined as “(…) a planned set of educational activities that presents new ideas in a defined context aiming to extensively improve the ability to learn within a situation of interaction” (p. 184). Fullan (2007, as cited in Avidov-Ungar & Forkosh-Baruch, 2018) further argues that learning activities should ideally be based on projects and focused on real problems. In order to characterize pedagogical innovation, Walder (2014) divided this concept into seven distinctive notions (“novelty, change, reflection, application, improvement, technology and pedagogy, and human relations”) and subsequently inserted them into a cycle “(…) in recognition of the fact that today’s novelty could become tomorrow’s confusion and need” (p. 201). In this way, the end of a cycle is innovation, which tomorrow will become something “normal”. If each of the distinctive notions previously referred to as this “normal” is repeated, a second cycle will begin that will regenerate a pedagogical innovation and so on Walder (2014) see Fig. 3). Therefore, pedagogical innovation is not just about introducing new didactics but has the duty of “promoting students’ cognitive development, intellectual autonomy, cooperation capacity and metacognitive skills, while allowing them to recognize and

Fig. 3 Pedagogical innovation cycle (Source Walder [2014])

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affirm themselves. themselves as subjects within a community that shares a common cultural heritage with them” (Vieira & Silva, 2021, p. 70).

2.3 Digital Transformation and E-Learning As previously mentioned, one of the major current gaps in education is the modernization of the system, which must be adapted to the new digital world through digital transformation mechanisms (Voronin et al., 2020). In this follow-up, “Digital transformation is understood as the process of disruption and change where organizations use strategic responses to create value” (Vial, 2019, as cited in Deroncele-Acosta et al., 2023), with the teacher presenting himself as the central element in this process of integrating technologies into learning (Hidalgo Cajo & Gisbert-Cervera, 2022, as cited in Deroncele-Acosta et al., 2023). It is in this sequence that e-learning methods emerge, the adoption of new methods of understanding,knowledge development and learning (Sangrà et al., 2012). In more detail, this mode of learning will further facilitate internationalization, promoting critical dialogue between students and teachers (Alves et al., 2012). In addition, the study by revealed that online collaborative asynchronous learning is a more effective method than most face-to-face contexts, considering that it provides adaptation to the specific needs of each student, namely in terms of which concerns learning rhythms, time management and study strategies (as cited in Alves et al., 2012).

3 Methodology In order to fulfill the proposed objectives, it was decided to adopt a mixed methodology. In a first instance, and in a quantitative way, an attempt was made to observe the effect of the new reality of e-learning through the notes of Higher Education students, but since these data are not available; the closest alternative was sought, namely, the annual number of graduates in Portugal. The database used was obtained through the institutional website of the Directorate-General for Education and Science Statistics (DGEEC), which contains data on graduates in Portugal, among other statistics, since the academic year 2002/2003. It should be noted that this teaching method was implemented in the 2019/2020 school year, so it is relevant to analyze the data referring to students who graduated or graduated in Higher Education in the period in which this type of teaching was adopted, being considered for the purpose of comparing the school year prior to the pandemic, namely 2018/2019, followed by the school years that it lasted, 2019/ 2020 and 2020/2021. Next, the population of Portuguese universities was restricted to a mere sample of eight, including regional and continental institutions of different sizes and nature (small, medium and large; public and private education), in order to

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ascertain the different situations that may arise and provide some kind of explanation for the phenomena. On the other hand, the use of a qualitative methodology is considered insofar as the technical literature will be reviewed, which includes books, newspapers, congress documents, research and theoretical works, to support the results obtained in the quantitative aspect. Therefore, the data used will be secondary, relying on data obtained from the Directorate-General for Education and Science Statistics, and theories from various researchers to draw their own conclusions, in an attempt to compare different results, reduce subjectivity and ensure that they have been previously validated.

4 Results In this section, the obtained data are exposed, as well as the worked results, to facilitate the observation and comparison of the same, which will help the weaving of conclusions in the next chapter (Fig. 4) (Table 2). It is possible to verify that, in absolute terms, 257,857 people graduated in these three school years, of which around 41.69% are men and 58.31% are women (Fig. 5). The results confirm a positive trend after the application of e-learning, representing, in quantitative terms, a positive variation in the number of graduates from the 2019/2020 school year, amounting to 5.745% compared to 2018/2019, and in turn, of the 2020/2021 school year in the amount of 5.969% when compared to the 2019/2020 school year. In global terms, there is also a positive variation in the number of graduates of 10.759% when comparing the academic years 2018/2019 and 2020/ 2021. To investigate the presence of this positive trend in the entire population, a 100 000 90 000 80 000

Quantities

70 000 60 000 50 000 40 000 30 000 20 000 10 000 0 2018/2019 2019/2020 2020/2021

Men 33 869 35 952 37 691

Women 47 269 49 847 53 229

Total 81 138 85 799 90 920

Fig. 4 Number of graduates in the three academic years studied, according to gender (Source Adapted from DGEEC [2023])

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Table 2 Number and percentage of graduates in the three academic years studied, according to gender School year

Men

Women

Total

% Men

% Women

2018/2019

33,869

47269

81,138

41,74

58,26

2019/2020

35,952

49,847

85,799

41,90

58,10

2020/2021

37,691

53,229

90,920

41,46

58,54

107,512

150,345

257,857

41,69

58,31

Total

Source Adaptado de DGEEC (2023) 12.000% 10.000% 8.000% 6.000% 4.000% 2.000% 0.000% 2018/19 VS 2019/20 2019/20 VS 2020/21 2018/19 VS 2020/21 2018/19 VS 2019/20

Men 6.150% 4.837% 10.140%

Women 5.454% 6.785% 11.197%

2019/20 VS 2020/21

Total 5.745% 5.969% 10.759% 2018/19 VS 2020/21

Fig. 5 Variation (in %) in the number of graduates in the three academic years studied, according to gender (Source Adapted from DGEEC [2023])

survey was carried out on a sample of four teaching establishments operating in the Autonomous Regions and four in mainland Portugal (Fig. 6) (Tables 3 and 4). In this sequence, it is possible to observe a positive global variation in most institutions in the sample, with the exception of the Escola Superior de Enfermagem de S. José de Cluny, which revealed, through the data, a negative global variation. On the other hand, it is possible to see a negative variation in four establishments, when comparing 2018/2019 with 2019/2020.

5 Results Discussion At this stage, it becomes clear the need to list what the integration of the e-learning system into the educational scope entails. Thus, according to El-Seoud et al. (2014), several studies on e-learning proved its effectiveness in increasing motivation,

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Comp. for the total of 3 years

40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% University of Madeira 2018/2019 2019/2020 2020/2021

29.17% 32.90% 37.93%

Higher Institute of Administr ation and Languages 31.58% 30.77% 37.65%

S. José de Cluny School of Nursing 35.67% 32.75% 31.58%

University New University Coimbra University of the University of Porto University of Lisbon Azores of Lisbon 32.42% 32.25% 35.32%

33.00% 33.51% 33.49%

30.89% 32.93% 36.18%

32.47% 33.73% 33.81%

33.47% 31.78% 34.75%

Fig. 6 Percentage of graduates in each year compared to the total (Source Adapted from DGEEC [2023])

Table 3 Number of graduates from institutions selected for the sample Institutions University of Madeira Higher Institute of Administration and Languages S. José de Cluny School of Nursing University of the Azores

2018/19

2019/20

2020/21

Grand total

563

635

732

1930

78

76

93

247

61

56

54

171

581

578

633

1792

University of Porto

7447

7563

7557

22.567

Coimbra University

4801

5119

5624

15.544

University of Lisbon New University of Lisbon Sample Grand Total

11.099 4583 29.213

11.529 4351 29.907

11.557 4757 31.007

34.185 13.691 90.127

Source Adapted from DGEEC (2023)

involvement, class attendance, participation, behavior and performance of students. In addition, the role of the teacher is equally relevant, since he/she must master the available technology, understand the motivations of the students and restructure the way of teaching the curricular unit, considering that “(…) classroom needs to be rethought” (Feyfant, 2016, as cited in de Carvalho et al., 2021) so that it is suitable for this type of online teaching. This also explains that one of the crucial factors for the success of this typology is the intrinsic motivation of each student and the fight against difficulties from the perspective of users of information technologies, both students and teachers.

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Table 4 Variation (in %) of the number of graduates in the sample in the three academic years studied Institutions

18/19 VS 19/20

19/20 VS 20/21

Total Variation (18/19 VS 20/21)

University of Madeira

12.789%

15.276%

30.018%

Higher Institute of Administration and Languages

−2.564%

22.368%

19.231%

S. José de Cluny School of Nursing

−8.197%

−3.571%

−11.475%

University of the Azores

−0.516%

9.516%

8.950%

University of Porto

1.558%

−0.079%

1.477%

Coimbra University

6.624%

9.865%

17.142%

University of Lisbon

3.874%

0.243%

4.126%

New University of Lisbon

−5.062%

9.331%

3.797%

Total Sample Variation

2.376%

3.678%

6.141%

Source Adapted from DGEEC (2023)

On the other hand, this stresses that more technology does not mean better education. In this situation, two themes were addressed in the study by Carvalho et al. (2021). First, both students and teachers must recognize the need to innovate and, second, the need for teacher training to improve the implementation of these innovations. With this, it becomes evident that the use of technology requires, in any aspect, planning and understanding of its nuances and the difficulties and social issues that may arise from its application should not be neglected. As an example, this practice can marginalize and negatively affect the lower classes, considering that their purchasing power is small, so they may not have access to the necessary technology. Problems like this must be taken into account when designing the implementation plan, and in turn, mechanisms must be developed to ensure support for these families. It is known that the Covid-19 pandemic in Higher Education has made it imperative to adapt the school environment to the circumstances. Thus, the Portuguese education system adjusted and fine-tuned its posture in the face of the new reality with the use of distance learning on a scale never seen to date, with the analysis of this phenomenon being useful to verify its effects. In the results obtained from the population regarding graduates, it is possible to verify a trend toward an increase in the number of graduates after the adoption of this regime. This trend may indicate that the application of this innovation in teaching methodology actually had a positive effect. In the sample of eight institutions, there were some negative trends, when the school year in which the Covid-19 pandemic emerged (2019/2020) is called into question and which, in turn, the adoption of e-learning occurred, can be explained by the fact that it is a testing period for this mechanism. When observing the global variation of the sample, it is proved that this is mostly composed of positive global variations. With regard to the result of the Escola Superior de Enfermagem de S. José de Cluny, it is assumed that the negative variation is explained by the fact that

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it is a small institution whose courses are longer than most and require an even more practical approach for integrating in the e-learning methodology. On the other hand, given that these data do not directly represent the academic performance of students, but rather the result of several years of study, this assumption should actually be contemplated with due caution.

6 Final Considerations The act of innovation, due to its characteristics, is transversal to the various instances of human activity, which makes clear the need to study its effects. In the previously presented rhetoric, an attempt was made to validate this effect and an attempt was made to further increase its preponderance as a determining factor for development in the educational field. The Covid-19 pandemic, despite its associated negative vicissitudes, opened the window of innovation that had long been ajar and was disruptive in a good way for many activities. According to Rapanta et al. (2021), proclaiming the words of Pope Francis, “Peggio di questa crisis c’è solo il dramma di sprecarla—the only thing worse than this crisis is the tragedy of wasting it, in the sense of failing to learn from it” (p. 738). Thus, the procedures were changed and the processes adapted, being a relearning of how the activities should be developed, requiring perseverance and, above all, innovation. Through this study, there was a positive trend that accompanied the implementation of e-learning in Higher Education during the pandemic, which may indicate the validation of the assumption of the positive effect of distance learning. Despite this, this study, like many others, has its limitations, as it focused on all graduates, followed by a sample of four regional teaching establishments and four in mainland Portugal in conjunction with data and conclusions obtained by another author, which may not be transmutable to the context in which it was intended to be applied, but in the first instance everything indicates the existence of a correlation. For future research, it is proposed to focus on applying this study at a lower educational level to see if this trend continues to be positive. On the other hand, it would be equally relevant to investigate the effects of the inclusion of artificial intelligence mechanisms, such as the GPT chat, in innovation and the educational field as a complement to learning. Acknowledgements The authors would like to thank NECE—Research Unit in Business Sciences funded by the Multiannual Funding Program of R&D Centers of FCT—Fundação para a Ciência e a Tecnologia, under the project “UID/GES/04630/2023”.

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References Alves, M. P., Morgado, J. C., Lemos, A. R., & Susana Cruz Rodrigues, S. O. (2012). Innovative practices in higher education. Institute of Education. University of Minho. Avidov-Ungar, O., & Forkosh-Baruch, A. (2018). Professional identity of teacher educators in the digital era in light of demands of pedagogical innovation. Teaching and Teacher Education, 73, 183–191. Baregheh, A., Rowley, J., & Sambrook, S. (2009). Towards a multidisciplinary definition of innovation. Management Decision, 47(8), 1323–1339. Carvalho, A., Teixeira, S. J., Campanella, L. O., & Costa, T. (2021). Pedagogical innovation in higher education and active learning methods—A case study. Education + Training, 63(2), 195–213. Deroncele-Acosta, A., Palacios-Núñez, M. L., & Toribio-López, A. (2023). Digital transformation and technological innovation on higher education post-COVID-19. Sustainability, 15, 2466. Distanent, A., & Khongmalai, O. (2020). The role of innovation in creating a competitive advantage. Kasetsart Journal of Social Sciences, 41, 15–21. El-Seoud, M. S., Taj-Eddin, I. A., Seddiek, N., El-Khouly, M. M., & Nosseir, A. (2014). E-learning and students’ motivation: A research study on the effect of e-learning on higher education. International Journal of Emerging Technologies in Learning (iJET), 9(4), 20–26. Huizingh, E. K. (2011). Open innovation: State of the art and future perspectives. Technovation, 31(1), 2–9. Major, J., Tait-McCutcheon, S. L., Averill, R., Gilbert, A., Knewstubb, B., Mortlock, A., & Jones, L. (2020). Pedagogical innovation in higher education: Defining what we mean. International Journal of Innovative Teaching and Learning in Higher Education, 1(3). Martín, P., Potoˇcnik, K., & Fras, A. (2017). Determinants of students’ innovation in higher education. Studies in Higher Education, 42(7), 1229–1243. Mioduser, D., Nachmias, R., Tubin, D., & Forkosh-Baruch, A. (2003). Analysis schema for the study of domains and levels of pedagogical innovation in schools using ICT. Education and Information Technologies, 8(1), 23–36. Nandal, N., Kataria, A., & Dhingra, M. (2020). Measuring innovation: Challenges and best practices. International Journal of Advanced Science and Technology, 29(5s), 1275–1285. Rapanta, C., Botturi, L., Goodyear, P., Guardia, L., & Koole, M. (2021). Balancing technology, pedagogy and the new normal: Post pandemic challenges for higher education. Postdigital Science and Education, 3, 715–742. Sangrà, A., Vlachopoulos, D., & Cabrera, N. (2012). Building an inclusive definition of e-learning: An approach to the conceptual framework. International Review of Research in Open and Distributed Learning, 13(2), 145–159. Statistics/Higher Education/Graduates. (2023). General directorate of statistics for education and science. Retrieved on April 11, 2023. https://www.dgeec.mec.pt/np4/EstatDiplomados/ Timur, K., & Antanas, M. (2017). The definition and classification of innovation. Holistica, 8(1), 59–72. Varadarajan, R. (2018). Innovation, innovation strategy, and strategic innovation. Innovation and Strategy, 15, 143–166. Vieira, I., & Silva, A. F. (2021). The knowledge society and the meanings of pedagogical innovation in higher education: A retrospective analysis. Voronin, D., Saienko, V., & Tolchieva, H. (2020). Digital transformation of pedagogical education at the university. Advances in Social Science, Education and Humanities Research, 437, 757–763. Walder, A. M. (2014). The concept of pedagogical innovation in higher education. Education Journal, 3(3), 195–202.

A Split Korea and a Divided Martial Art: How Politics and Tense International Relations Have Impacted Taekwon-Do James M. Crick

Abstract Taekwon-Do is one of the world’s most popular martial arts (despite being a non-mainstream sport). Concurrently, it has been affected by the major international political differences between the communist North Korea and the capitalist South Korea. This has led to the formation of multiple break-away Taekwon-Do organisations. In turn, the sport has expanded, but at the cost of dividing it members to the extent where unification is highly-unlikely. Recently, however, there have been some improvements in the diplomacy between North Korea and South Korea (and its allies), making Taekwon-Do an interesting sport to observe during this uncertain time (e.g., considering the rising threat of atomic strikes from North Korea’s nuclear weapons programme). Thus, guided by the wider themes of resource-based theory (i.e., regarding the macro-level environment and stakeholder issues), the purpose of this book chapter is to shed light on how volatile international relations and geopolitical conflicts can have damaging effects on sports. In doing so, these complex factors are unpacked to delve deeper into the role of politics in global sporting environments. Keywords Taekwon-Do · International relations · Politics · North Korea · South Korea · Nuclear weapons · Resource-based theory · Geo-political conflicts · Sports management

1 Introduction Taekwon-Do is one of the most popular martial arts in the world, with millions of members training across various countries (Crick & Crick, 2021a). Taekwon-Do was originally developed to teach soldiers in the South Korean military hand-tohand combat to supplement their weapons training (Bowman, 2016; Hong, 2011). J. M. Crick (B) School of Business, University of Leicester, Leicester, UK e-mail: [email protected] The Telfer School of Management, University of Ottawa, Ottawa, ON, Canada © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 V. Ratten (ed.), Entrepreneurship Research, https://doi.org/10.1007/978-981-99-4452-1_4

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Although Taekwon-Do is a relatively young, and non-mainstream, sport (established in April 1955), it has been caught-up in the tense international relations on the Korean Peninsula (Merkel, 2008). Specifically, after the Korean War (1950–1953), TaekwonDo was formed on the backdrop of the volatile international relations between the communist North Korea and the capitalist South Korea (Kim et al., 2009; Nam-Gil & Mangan, 2002). Despite the founding members of Taekwon-Do being passionate about unifying these two countries, peace has not yet been established (Gillis, 2011). Interestingly, North Korea has also claimed the founding rights to certain divisions of Taekwon-Do—there being evidence to suggest that it originated from South Korea (as noted by Ahn et al., 2009). Therefore, several complex macro-level environmental forces surround Taekwon-Do over just a handful of decades.1 The North Korean regime is one of the most secret governments in the world, with limited information into its economy, culture, and social well-being—apart from state-fuelled propaganda (Armstrong, 2011; Becker, 2005). In late 2017, the North Korean regime claimed to have acquired the capabilities to deliver a nucleartipped intercontinental ballistic missile that could reach the mainland United States, as well as Japan and South Korea (Daily Mail, 2017). Indeed, the subsequent rhetoric has signified that North Korea is now a nuclear-armed state, alongside the likes of the United Kingdom, India, France, Pakistan, China, potentially Israel—let alone the world’s superpowers of the Russian Federation and the United States (The Conversation, 2023; The Guardian, 2023). Hence, the diminishing international relations between North Korea and the rest of the world are arguably at an all-time low, with the rising threat of nuclear war between the world’s superpowers (CNN, 2017; Sky News, 2023). Yet, there have been more key developments in North Korea’s international diplomacy, which suggests positive changes to this global security threat. These include North Korea’s Supreme Leader, Kim Jong-Un, having a seemingly warm meeting with the South Korean President, Moon Jae-In, in early 2018 (on South Korean soil) and the former meeting with President Donald J. Trump of the United States in Singapore in June 2018 and in Hanoi, Vietnam in February 2019—with varying degrees of political productivity (BBC, 2018a; Fadli, 2020). In the world of sports, the two countries have agreed to form a combined team to submit a joint bid for the 2032 Olympic Games (BBC, 2018b). Therefore, with the improving (albeit uncertain) international relations between North Korea and the western world, it is of interest to investigate how Taekwon-Do (a sport that has been affected by such turbulent political climates) has been influenced by the changing international political environment. In doing so, light can be shed on the prominent role that certain sports play in geo-political conflicts—not least of which how sporting organisations can be adversely affected by these forms of politics and 1

As a crucial matter, there are some sketchy historical details pertaining to the history and evolution of Taekwon-Do—owing to its involvement with this geo-political conflict (Gillis, 2011; Kim et al., 2016; Moenig & Kim, 2017). To that end, the author strived to as hard as possible to retrieve, and report on, accurate historical (and contemporary) facts. Nevertheless, these sketchy details are embraced because they signify the volatile political roots of this non-mainstream (but global) sport. The author encourages future research to comment and debate on these matters—with other (and new) pieces of evidence.

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tense international relations. Henceforth, guided by the wider themes of the resourcebased view (Barney, 2001; Crick, 2018a; Crick et al., 2021; Priem & Butler, 2001), the objective of this book chapter is to highlight how adverse political environments can yield damaging effects on global sports.2 In doing so, the following four novel contributions are made to enhance the existing body of knowledge: 1. An overview of the history of Taekwon-Do is provided to highlight how sporting organisations can be affected by changing and volatile international relations and geo-political disputes (building upon Crick & Crick, 2016a; Lo, 2011; Merkel, 2008). 2. Stronger insights emerge on how sporting organisations manage political turmoil in their complex environments (extending Jones et al., 2020; Miragaia et al., 2017; Ratten, 2011; Ratten & Babiak, 2010; Ratten & Ferreira, 2017; Ratten et al., 2021). 3. Improved conceptualisations are offered on the wider elements of the resourcebased view, namely how volatile environmental conditions and stakeholder networks can help or hinder organisations’ successes (following Cadogan et al., 2012; Crick & Crick, 2020; Crick et al., 2020b; Priem & Butler, 2001). 4. Debates can be facilitated, with respect of how global sports (mainstream and non-mainstream) can be used as a population of interest to shape commercial research—that influences scholarship and practice (consistent with Crick & Crick, 2021a; Ratten, 2016; Ratten & Ciletti, 2011). To make these four contributions, the remaining sections of this book chapter are divided as follows. First, explanations are offered on the ways that the sourced material was generated. Second, the pertinent aspects of resource-based theory are reviewed. Third, an overview of the Korean War is described. Fourth, the formation and development of Taekwon-Do is discussed. Fifth, the evolution of Taekwon-Do in the years to come is evaluated. Sixth, some conclusions are outlined.

2 Generation of the Sourced Material This historical overview of Taekwon-Do involves drawing upon material originating from scholarly and practical sources. In terms of scholarly work, the broader sporting literature was reviewed to include work published in the area of the history of sport, as 2

This book chapter acknowledges the current conflict between Ukraine and the Russian Federation, including the prospect of the use of nuclear weapons (Bollfrass & Herzog, 2022). Nonetheless, the core focus remains on the political volatility surrounding the Korean Peninsula—and its implications for global sports. In other words, the ongoing situation between North Korea and South Korea (and the ramifications for Taekwon-Do) served as an ideal historical overview, with contemporary themes, for this investigation. It is hoped that the themes of this book chapter are transferrable to other geopolitical conflicts, like those between Israel and the Palestinian Territories, Serbia and Kosovo, and China and Taiwan.

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well as political issues affecting sporting organisations (similar to Crick, 2023, 2023a, 2023c). Such outlets included The International Journal of the History of Sport, the Sport Management Review, and the International Journal of Sport Policy and Politics. In this review of the literature, a combination of seminal and recent publications was examined to understand how such theoretical insights have evolved over time.3 Regarding the practical sources, this book chapter utilised material published in newspapers and websites to obtain information pertaining to historical and recent issues linked with Taekwon-Do (comparable with Crick, 2015). Please note that a common theme throughout this investigation is that Taekwon-Do has a politicallycharged history (Ahn et al., 2009; Gillis, 2011; Lo, 2011; Merkel, 2013). Thus, some scholarly and practical sources will be referred to more frequently than others, as few authors have written on certain topics that are explored within this study. The broader themes of the resource-based view are covered as follows.

3 The Wider Elements of Resource-Based Theory The resource-based view is a theoretical lens that examines how organisations (of different sizes) can utilise their resources and capabilities to boost their performance (Barney, 1991; Crick, 2022a; Crick et al., 2022a). Resources are tangible assets, such as hardware, manufacturing equipment, and cash—as opposed to intangible assets, namely capabilities, which include education and industry experience (Crick, 2019a; Crick & Crick, 2020; Hamzah et al., 2023; Morgan et al., 2009). Traditionally, the resource-based view concentrated on inside-the-firm issues, like the orchestration of firm-wide assets to boost business performance—e.g., operationalised via sales and

3

This book chapter is designed to serve as a historical perspective on global sports (manifesting through Taekwon-Do). Yet, owing to the strategy-oriented aspects (e.g., the use of resource-based theory), work pertaining to sports entrepreneurship was utilised, namely the implementation of entrepreneurially-oriented behaviours (i.e., innovativeness, proactiveness, risk-taking, autonomy, and competitive aggressiveness) within sporting settings (Ratten, 2021a; Ratten & Ratten, 2011; Ratten & Tajeddini, 2019; Rexhepi et al., 2018). Indeed, the sports management domain (and its entrepreneurial elements) captures various topics, like the education of sports entrepreneurship (Ratten & Jones, 2018), regional development in sports entrepreneurship (Ratten, 2012), sports team performances (Ratten, 2009), big data and managing business intelligence in sports (Ratten & Dickson, 2020), technological issues in sports management (Ratten, 2020a; Ratten & Thompson, 2020), the impact of the COVID-19 pandemic on sports (Ratten, 2020b; Ratten & Li, 2021; Thukral & Ratten, 2021), innovation in sports (Ratten, 2016), family businesses in sports (Ratten, 2021b), sponsorship in sports (Koronios et al., 2022), policy issues in sports entrepreneurship (Ratten, 2019), sustainability and non-profit sporting organisations (Miragaia et al., 2016), the interplay between cooperation and competition (coopetition) in sports (Crick & Crick, 2019), internationalisation in sports (Ratten & Tsiotsou, 2010), and beyond. Hence, wider commercial outlets (and sources) were used within this study.

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other financial outcomes4 (Barney, 1991; Crick, 2020; Crick & Crick, 2021b; Crick et al., 2023a). Yet, over the last few decades, this perspective has highlighted that volatile environments can distort the performance consequences of organisational resources and capabilities, but also, activities and strategies (see, e.g., Barney, 2001; Cadogan et al., 2012; Crick, 2018b; Crick & Crick, 2021c; Crick et al., 2023b; Priem & Butler, 2001). In doing so, the external environmental encapsulates a vast array of macro-level forces—not least of which the political environment (Crick, 2021a; Crick & Crick, 2022a; Sheng et al., 2011). Indeed, the resource-based view covers how certain firms establish networks with key stakeholders to survive and prosper within their volatile sectors and environments (Barney, 2018; Crick, 2019b; Crick & Crick, 2023a). To take a closer look at this matter, it may be that some enterprises (especially those that possess limited resources and capabilities) need to cooperate with other players within their industries to stay afloat, or even, yield higher-levels of company performance (extending Crick & Crick, 2022a; Crick et al., 2021). Henceforth, this book chapter uses these extended aspects of the resource-based view to evaluate how environmental-level forces (and networking-related issues) have impacted Taekwon-Do as a global sport. This was designed to unpack the nuances of resource-based theory, as opposed to depending on its seminal roots—which have far fewer applications to the complexities of how organisations (sports or otherwise) operate within rapidly changing settings. Thus, this theoretical lens was useful for delving deeper into the complexities of such aspects of the international sporting environment (here, geo-political conflicts). An overview of the Korean War follows in the next section.

4 An Overview of the Korean War 4.1 The Origins of the Korean War After the United States dropped atomic bombs on Hiroshima and Nagasaki at the end of the Second World War (1939–1945), the Empire of Japan was forced to surrender its territories as part of the Potsdam Declaration (Caprio, 2009; Walker, 2016). Between 1910 and 1945, Japan had occupied the entire Korean Peninsula (Yim, 2002). After the Japanese surrender, Korea was split at the 38th Parallel into two sections, for which the Soviet Union controlled North Korea—while the United States controlled South Korea (Matray, 1981). The goal of the United Nations was to merge North Korea and South Korea, with the Soviet Union and the United States

4

It is important to recognise that not all businesses measure organisational performance through financial metrics, like sales. That is, some entrepreneurs are lifestyle-oriented—and seek to maintain a work/life balance (see Crick et al., 2018; Ratten, 2018). Nevertheless, under the central themes of resource-based theory, company performance is typically assessed in financial capacities (Crick et al., 2021; Hamzah et al., 2023; Morgan et al., 2009).

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having established a somewhat truce in their ideological differences between communism and capitalism (Armstrong, 2003). That is, after Nazi Germany invaded the Soviet Union in June 1941 (Operation Barbarossa) (roughly sixth months before the bombing of Pearl Harbour—which drew the United States into the Second World War), General Secretary Joseph Stalin switched allegiances, which meant that by the end of the Second World War, the United States and the Soviet Union fought on the same side against the Axis Powers (of predominantly Germany, Italy, and Japan) (Stolfi, 1982). After the Second World War, the international relations between the Soviet Union and the United States soon deteriorated, with the commencement of the Cold War (1947–1991) (Merkel, 2013). Across the second-half of the twentieth century, there was a war of words between the Soviet Union and the United States over their opposing political regimes (communism versus capitalism) and their control over, and development of, nuclear weapons (Greenberg et al., 1997). In terms of the two Koreas, Syngman Rhee was elected as the Head of State of the Republic of Korea (now South Korea) and Kim Il-Sung became the President (albeit different titles have been adopted over the years) of the Democratic People’s Republic of Korea (or North Korea) (Foot, 1991). However, both leaders did not accept the 38th Parallel as a permeant border that was dividing the Korean Peninsula (Greenberg, 2004). By the end of 1949, all armed forces from the Soviet Union and the United States had withdrawn from the Korean Peninsula (Matray, 1981). Yet, the Chinese and Soviet Union governments provided large volumes of weapons and ammunition to North Korea, whereas, the United States supplied far fewer weapons and ammunition to South Korea, making them weaker if war was to occur (Chung & Choi, 2013). As history has shown, this was the case, as in June 1950, the North Korean military crossed the 38th Parallel and invaded South Korea (Merkel, 2008). Soon after, the United States (and other allied nations, like France, Australia, New Zealand, and Canada) defended South Korea—thus, commencing the Korean War (Ohanian, 1997). During the Korean War, millions of North Korean and South Korean lives were lost (civilian and military), as well as huge casualties from the United States and its allied countries that served in this three-year conflict (Dingman, 1988; Keefer, 1986; Kim, 2017; Lee, 2006; Wainstock, 1999).

4.2 Communism and Capitalism in the Korean War Although history suggests that South Korea was a victim of a North Korean invasion (Merkel, 2008), it is crucial to stress the context of the geo-political conflict. As mentioned earlier, the United States and the Soviet Union were the two governing nations on the Korean Peninsula and both enforced their respective political ideologies in North Korea and South Korea (Matray, 1981). While the United States and the Soviet Union were part of a wartime alliance to defeat Nazi Germany (and the other players within the Axis Powers) in the Second World War (alongside countries, such as Canada, the United Kingdom, New Zealand, and Australia), they had radically different political, societal, and economic views on how nations should be

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governed (Greenberg et al., 1997). In the United States, the country was run under capitalism, whereby, the forces of supply and demand were managed under a free market (where enterprises are run as for-profit entities—should entrepreneurs desire to fulfil these performance outcomes), without a high-degree of government regulation (Atkinson & Coleman, 1989). In the Soviet Union, the state was run under communism (a function of Marxism), where civilians share resources proportionately, based on their needs, and the state is responsible for the spread of wealth (Alexeev et al., 1992). Underpinning the Korean War was the highly-different political and economic values held by the United States and the Soviet Union (Ruetten, 1967). As time has revealed, these international relations deteriorated further, with serious events, such as the “Bay of Pigs Invasion” (April 1961), the “Cuban Missile Crisis” (October 1962), and the “NORAD Computer Glitch” (November 1979) (Felsburg, 2015; Paterson & Brophy, 1986). These international relations began to ease during the Reykjavík Summit (October 1986) and the Washington DC summit (December 1987), where President Ronald Reagan met with General Secretary Mikhail Gorbachev to discuss the growing tensions between the world’s two superpowers and the increasing threat of nuclear war (Cooper, 2016). Yet, during the Korean War, the international relations between the United States and the Soviet Union were far from being peaceful (Rosenberg, 1983). This included proxy wars, like the Yom Kippur War (1973), in which the United States aided Israeli forces against a coalition of Arab countries that were supported by the Soviet Union (Handel, 1977). It is vital to acknowledge that while North Korea might appear to be the enemy in the armed conflict; it was under the de facto leadership of the Soviet Union (and China). Likewise, South Korea was effectively led by the United States, meaning that both sides were governed (in this post-war period) by a larger picture of the ideological differences between communism and capitalism (Lee, 1996). This provides complications, with respect of which countries were the true belligerents during this geo-political conflict (Jervis, 1980). Here, questions could be asked pertaining to the driving forces (at a country-level) behind the two opposing forces.

4.3 Key Milestones Within the Korean War In the early stages of the Korean War, it appeared that the North Korean forces were on the verge of certain victory, in which they had occupied almost all the Korean Peninsula (including the South Korean capital city, Seoul), apart from the small region of Pusan, which was held by South Korean forces (Lowe, 1997). However, when the United States’ military intervened, the tides were turned, whereby, a retaliatory offensive was made to reclaim South Korea, as well as pushing through the 38th Parallel and into North Korea (including the capital, Pyongyang) (Keefer, 1986). Afterwards, the outcome of this armed conflict was uncertain, with there being various short-term victories claimed by both sides (i.e., respective push-backs) (Jervis, 1980). However, in July 1953, North Korea and South Korea signed an armistice agreement, creating

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an international border surrounding the Demilitarised Zone (DMZ), with this border still existing in the present-day (Cha, 2009; Hunter, 2015). The international relations between these two countries have been extremely tense, with peace being non-existent (Won & Hong, 2015). Indeed, North Korea remains one of the strictest countries to enter, with only a few modes of access into this highly-secret rogue nation (Hall, 1990; Kim et al., 2007; Simple Flying, 2022). Critically, the Korean War never ended—which poses further complications and complexities surrounding this geo-political conflict.

4.4 The Potential for the Use of Nuclear Weapons During the Korean War During the height of the Korean War, the United States was considering the bigger picture of the armed conflict. Following an earlier point, the spread of communism throughout Asia was becoming an increasing threat (i.e., the domino effect), with countries, such as China, Vietnam, and North Korea being ruled under a red flag (Lee, 1996). General Douglas MacArthur, who was one of the most respected (albeit controversial) American officers during the Second World War, oversaw the strategies of the United States armed forces during the Korean War (Ruetten, 1967). With the looming threat of communism in Asia, General MacArthur advised President Harry S. Truman to authorise an atomic strike against China (as they were supporting North Korea) to demonstrate the strength and determination of the United States and to end the fighting on the Korean Peninsula (Calingaert, 1988). President Harry S. Truman swiftly refused to authorise an atomic strike on China—despite unleashing the fullforce of the “Manhattan Project” on Hiroshima and Nagasaki at the end of the Second World War5 (as noted by Walker, 2005). President Harry S. Truman was aware of the Soviet Union’s successful development of nuclear weapons in August 1949 and was attempting to achieve a nuclear disarmament treaty (Rosenberg, 1983). Due to his suspected cavalier mind-set, General MacArthur was effectively dismissed from his senior military position and was no longer a key decision-maker the Korean War (Ruetten, 1967). Although the use of atomic bombs would have created vastly different outcomes to the armed conflict, once the Korean War ended in July 1953, it is critical to note that peace was never agreed between North Korea and South Korea (Crane, 2000; Hunter, 2015). Specifically, although both sides won short-term victories (leading to months of a 5

The “Manhattan Project” was a secret research and development assignment—involving the production of the atomic bomb (Dower, 1995). Atomic scientists from the United States, Canada, and the United Kingdom (and other allied countries) worked covertly during the Second World War to develop such weapons of mass destruction (Graybar, 1986). After a successful test deep in the New Mexico desert (in the United States) (July 1945), President Harry S. Truman gave the order to use the newly-developed atomic bombs on the Empire of Japan to avoid an invasion of the Japanese mainland (Bernstein, 1974). In turn, the use of these nuclear weapons ended the conflict in the Pacific Theatre—thus, marking the closing stages of the Second World War (Walker, 2005).

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stalemate situation), there was not a clear victor of the armed conflict. Hence, the Korean War ended with a new land border (the DMZ), roughly mirroring the 38th Parallel (Cha, 2009). Further, a ceasefire was the only form of agreement between these two nations—not a peace treaty, like the world has seen in other armed conflicts, including the First World War (1914–1918) (Marks, 2013; Won & Hong, 2015). Consequently, North Korea and South Korean forces have technically been at war since 1950, with the DMZ symbolising the tense international relations between these two countries (Hall, 1990). The history of Taekwon-Do follows in the next section.

5 The Formation and Development of Taekwon-Do 5.1 Political Issues Surrounding Korean Sports The tense international relations on the Korean Peninsula have affected various Korean sports (Lee & Bairner, 2009). The two Koreas have competed at sporting tournaments, such as the FIFA World Cup and the Olympic Games under their respective flags, indicating that despite their shared heritage; they are separate countries (Hong, 2012; Merkel & Kim, 2011). On that note, a mistake was made at the 2012 Olympic Games (hosted in London, United Kingdom), whereby, “on the first day, the South Korean flag was accidentally displayed next to the faces of the North Korean women’s Football team on the stadium’s huge screen” (Merkel, 2008, p. 1810). Thus, there is evidence to suggest that the volatile international relations between North Korea and South Korea have led to certain tense country-level dynamics in the sporting sector (Kim et al., 2016). Arguably, this volatile international political environment has been caused by the Korean War. Indeed, as covered in due course, TaekwonDo, a sport that is native to the Korean Peninsula, has been drastically affected by this international political environment (Ahn et al., 2009; Lo, 2011). Nevertheless, these themes reinforce other politically-focused work pertaining to sports (e.g., Jones et al., 2020; Miragaia et al., 2017; Ratten, 2011; Ratten & Babiak, 2010; Ratten & Ferreira, 2017; Ratten et al., 2021). Plus, these issues supplement the environmentallevel elements of the resource-based view, with respect of how external forces (and stakeholder networks) can distort how organisations operate in a variety of sectors (Cadogan et al., 2012; Crick, 2022b; Crick & Crick, 2021d; Priem & Butler, 2001).

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5.2 The Early years of Taekwon-Do Shortly after the Korean War, General Choi Hong Hi (IX Degree Black Belt) merged elements of Taekkyeon and Karate to form a new martial art called Taekwon-Do— literally translating as “foot, fist, art” or “the way of hand and foot” (Lee & Bairner, 2009). General Choi Hong Hi grew up with a troubled childhood—that was influenced by alcohol and gambling within a dysfunctional family (Lo, 2011). During the Second World War, it is believed that General Choi Hong Hi was trained in Japanese martial arts (like Karate) and was imprisoned by Imperial Japanese forces during the occupancy period (Wells, 2012). Hence, some of the history of Taekwon-Do focuses on pro-Korean figures during the Japanese occupancy of the Korean Peninsula (see Lee, 2014). As mentioned earlier, Taekwon-Do was established in April 1955 and was taught to soldiers in the South Korean military. Interestingly, despite its military roots, Taekwon-Do was officially named in a Korean Geisha house—attended by the owners of nine Kwans (Korean gyms), two of which were owned by General Choi Hong Hi (Gillis, 2011). After some voting, the name Taekwon-Do was selected (Lo, 2011). During the next few years, the Korean Taekwon-Do Association (KTA) was established (September 1959), which was replaced by the International Taekwon-Do Federation (ITF) in March 1966 as the sport’s governing body (Ahn et al., 2009).

5.3 The Internationalisation and Division of Taekwon-Do Across the 1960s, General Choi Hong Hi and his team of senior Taekwon-Do practitioners helped to internationalise the sport in countries, such as Turkey, Malaysia, Singapore, and West Germany (Lo, 2011). General Choi Hong Hi intended for the KTA (and the ITF) to unite the divided Korean Peninsula. However, the South Korean government did not want Taekwon-Do to be taught to those in North Korea, and in May 1973, they withdrew their support for the ITF and formed the World Taekwondo Federation (WTF), with the support of General Choi Hong Hi’s arch-enemy—Kim Un-Yong (1931–2017) (Moenig & Kim, 2017). At this point, even though TaekwonDo was less than twenty years old, it was affected by international political factors that were connected to the Korean War (Ahn et al., 2009). Interestingly, the WTFstyle’s senior officials spent the 1970s and 1980s internationalising the sport across 48 countries, resulting in millions of people practicing this form of the martial art (Kim et al., 2009). Critically, the division of the ITF and WTF-style governing bodies served as the first major split of the martial art (Gillis, 2011). As a point of clarity, when referring to the ITF-style, the sport is spelled as Taekwon-Do, whereas, when mentioned in the capacity of the WTF-style, it is spelled as Taekwondo. Yet, when discussing the sport in a general sense, it is spelled as Taekwon-Do, as this was the

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sport’s original spelling before it was divided into various break-away organisations throughout the world6 (Moenig & Kim, 2017). Around the time of the formation of the WTF governing body, General Choi Hong Hi relocated the headquarters of the ITF from Seoul, South Korea to Toronto, Canada, where he resided at the time (Crick, 2014). It is believed that during this period, the South Korean government wanted to take control of the sport to minimise the chances of North Korean officials (and the military) training in its practices (Gillis, 2011). Yet, the ITF-style was temporarily not taught in North Korea or South Korea due to this political move made by the South Korean government (with the assistance of Kim Un-Yong) (Moenig & Kim, 2017). This was a major milestone for General Choi Hong Hi, as he wanted Taekwon-Do to be taught to the two Koreas, as well as to students throughout the world (Gillis, 2011). Instead, during the 1970s and 1980s, Taekwon-Do internationalised, in which it spread to various countries in North America, Europe, the Middle East, and South-East Asia (and beyond) (Crick & Crick, 2016a). A similar internationalisation strategy was undertaken by the WTF (Kim et al., 2009; Moenig et al., 2012).

5.4 The Major Differences Between the ITF and WTF-Styles of the Martial Art In the present-day, the ITF-style is primarily adopted by North Korea and the WTFstyle is largely affiliated to South Korea, with the latter being used in the Olympic Games (Kim et al., 2016). These two styles of Taekwon-Do differ, in terms of the requirements students must pass to be promoted to more senior ranks, their uniforms, and the heritage of the sports (Ahn et al., 2009). For instance, in the ITF-style, a motion called sine-wave is used, which involves practitioners raising and lowering their centre of gravity to execute their various attacks and defensive movements (Choi, 1983). In the WTF-style, Taekwondo practitioners focus on the speed between movements, whereby, attacks and defensive techniques are executed quickly, rather than there being an emphasis on the sine-wave motion (Kazemi et al., 2006). Moreover, 6

Internationalisation is a multi-faceted process (Cadogan et al., 2012; Crick & Crick, 2016b). That is, organisations can pursue new countries (and/or markets) through numerous outwards channels, together with using different market entry modes (see Chaudhry et al., 2019; Crick, 1992; Crick & Crick, 2014; Crick et al., 2020a; Jones & Crick, 2004; Sharma et al., 2018; Sraha et al., 2020). Moreover, internationalisation can exist through entrepreneurs engaging in inwards forms of such activities, like hiring immigrant workers and engaging in tourism-focused ventures to satisfy the wants and needs of foreign customers (Crick & Crick, 2015; Crick et al., 2016; Karami et al., 2023; Sraha et al., 2022). Sometimes, entrepreneurs internationalise through the assistance of key stakeholders—not least of which investment partners, the government, and trade mission support (see Crick & Chaudhry, 2000; Crick & Crick, 2018; Crick & Lindsay, 2015; Spence & Crick, 2001). That said, the internationalisation of sporting organisations operates differently to mainstream firms (Ratten, 2022; Ratten & Ratten, 2011; Ratten & Tsiotsou, 2010). Hence, this investigation focuses on the internationalisation (and political issues associated with) Taekwon-Do, coupled with other political issues that are connected to this sport’s involvement with geo-political conflicts.

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in the ITF-style, students are taught a series of patterns (called tul), which are a set number of attacks and blocks against an imaginary opponent—used to prepare them for actual hand-to-hand combat (Choi, 1983). In the WTF-style, a different set of patterns of taught to students (called poomsae) (Lee & Shin, 2016). Hence, there is different content that underpins the syllabi of the two major variations of the sport. In the ITF-style, the patterns (tul) are taught with a history of ancient and more recent Korean culture (Cook, 2009). For instance, “Dan-Gun”, which is the second ITF pattern that students learn, is named as the Holy Dan-Gun, who was the legendary founder of Korea in 2,333 BC (Kim, 2005). As another example, ITF students are taught the pattern “Joong-Gun” (the sixth pattern in their syllabus) (Choi, 1983). This pattern is named after the Korean patriot Ahn Joong-Gun, who assassinated Ito Hirobumi (the first Japanese Governor General of Korea) in 1909, the man believed to have been a driving-force in the Japanese occupancy of Korea (Lee, 2014). The final pattern student will learn, as VI Degree Black Belts, is called “Tong-Il”, which symbolises the hope for an eventual reunification of Korea (which was divided into North Korea and South Korea in 1945) (Lo, 2011). In short, Korean culture is integrated into the ITF-style’s syllabus—which is less apparent in the WTF-style, as these patterns (poomsae) focus on the technical movements and the origins and development of the universe, as well as spiritual issues (Lee & Shin, 2016). Also, in the ITF-style, there is an emphasis on power breaking, whereby, students must strike plastic or wooden boards with a hand or foot techniques (Wells, 2012). The purpose of students being able to break plastic or wooden boards is to demonstrate destructive force, should they have to defend themselves in a real-life situation (Choi, 1983). In the ITF-style, students are required to learn their patterns (tul) (as described above), as well as various types of sparring, in which they fight certain opponents, to show their skills in simulated combat (Kazemi et al., 2006). While power breaking and patterns (poomsae) are prominent features of the WTF-style, there is a larger emphasis on sparring, with this form of the sport being more competitive in nature (Lee & Kim, 2007). This means that although the two major forms of TaekwonDo have similarities, they are practiced in different ways, with their own rules and regulations governing the two codes (Moenig & Kim, 2017). Indeed, the ITF and WTF codes are comparable with Rugby Union and Rugby League, in terms of them being similar sports, but with various critical differences and rules (Rowe, 1997). Following on, the example of Rugby Union and Rugby League highlights how these sports are based on the same game, but has very different rules, such as number of players, as well as the names of the positions (Dunning & Sheard, 1976). Rugby League became a break-away sport from Rugby Union in 1895, so that the clubs in the north of England (e.g., Leeds, Wigan, Warrington, and Huddersfield) could create a self-governing sport that was not tied to the clubs in the south of England (The Sun, 2017). Put another way, the division of Rugby into these codes was based upon the internal politics of the sport, rather than the international political environment associated with other sports, like Taekwon-Do. Therefore, although it is not uncommon for sporting organisations to divide into break-away codes or new sports to be created (Denham, 2000), Taekwon-Do is in a relatively unique situation, whereby, its entire lineage is based upon volatile international relations that date back to the Korean

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War (Gillis, 2011). This makes Taekwon-Do just one casualty of this armed (and geo-political) conflict, with tensions existing within other sports that the two Koreas practice in respective capacities (Merkel, 2008). Importantly, underpinning the formation and development of Taekwon-Do was a rivalry between two of the figureheads and creators of the martial art, namely, General Choi Hong Hi and his arch-enemy Kim Un-Yong (Gillis, 2011). While the details of this aspect of Taekwon-Do’s history remain somewhat sketchy, the tense relationship between these two individuals led to the division of the sport into the ITF and WTF-styles in 1973 (Moenig et al., 2012). Specifically, in 1973, Kim Un-Yong was elected as the President of the WTF governing body and was one of the key members of the organisation that helped to secure the WTF-style of the martial art into the Olympic Games (Lo, 2011). Interestingly, Kim Un-Yong is known as one of the most controversial people surrounding Taekwon-Do (Merkel & Kim, 2011), as he was jailed on corruption charges (embezzlement) in 2004 (Sydney Morning Herald, 2004). Although Kim Un-Yong’s criminal record tarnishes the formation and development of Taekwon-Do, it has been established that his long-term rivalry with General Choi Hong Hi was a driving-force for the division of the sport into the various break-away organisations that exist in the present-day (see Gillis, 2011).

5.5 Break-Away Forms of Taekwon-Do Taekwon-Do has expanded beyond the ITF and WTF governing bodies. That is, “through the emergence of break-away organisations practicing variations of the sport, in 2013, there were 70 million Taekwon-Do practitioners globally, making it one of the most popular martial arts in the world, despite its recent creation” (Crick & Crick, 2016a, p. 174). Break-away Taekwon-Do organisations have been formed for various reasons, like the rising bureaucracy (e.g., power-based hierarchies) surrounding the sporting governing bodies (Lo, 2011). A recent example is that Rhee Ki Ha (IX Degree Black Belt), who was the pioneer of Taekwon-Do in the United Kingdom, decided to leave the ITF in October 2011—with the support from several loyal instructors and students to form an independent style of the sport (Crick & Crick, 2016a). Rhee Ki Ha’s move from the ITF acted as one of the largest milestones in the history of Taekwon-Do, for which his break-away organisation (namely, First Grandmaster Rhee Taekwon-Do) has internationalised to countries, such as Australia, New Zealand, Canada, Ireland, and the United Kingdom (the adopted home country—away from the Korean Peninsula) (see, for example, ACE, 2014; ITFA, 2014). It appears that in Taekwon-Do, if a senior member were to leave a mainstream governing body (like the ITF), there could be knock-on effects, whereby, their loyal students and students would follow them and join their new Taekwon-Do organisation (consistent with Crick, 2014). In the case of First Grandmaster Rhee TaekwonDo, this style of Taekwon-Do has internationalised, due to the popularity of the founder, as well as the potential residual angst and resentment towards the internal

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politics (as well as external, geo-political, conflicts) that have affected the martial art (Crick & Crick, 2016a). The First Grandmaster Rhee Taekwon-Do organisation has been supported by various senior members, such as Paul Cutler (IX Degree Black Belt), Raymond O’Neill (IX Degree Black Belt), and Andrew Rhee (XIII Degree Black Belt) (see ACE, 2014; ITFA, 2014). Thus, certain mainstream Taekwon-Do governing bodies (including the ITF) are susceptible to losing valuable members, should a senior figurehead decide to leave the organisation (Crick & Crick, 2016a). This demonstrates that Taekwon-Do has been affected by large-scale internal politics, dating back for many years (Crick & Crick,2022b; Gillis, 2011; Lo, 2011; Merkel, 2008). Nevertheless, other martial arts have divided into break-away organisations. A prominent example is Jiu-Jitsu, which despite originating from Japan (a relatively undivided country—unlike the two Koreas), has been split into various codes (or similar fighting styles), like Aikido, Russian Sambo, and Brazilian Jiu-Jitsu (Hopkins, 2015). To stress a vital point, in the case of Jiu-Jitsu, this martial art’s division is seemingly unrelated to its country-of-origin, as Japan has remained a unified country across its long lineage (Morris-Suzuki, 1995). Put another way, Jiu-Jitsu has a much longer history than Taekwon-Do. Indeed, Taekwon-Do is in a different situation to Jiu-Jitsu, as it was formed soon after the end of the Korean War in a time where the Korea Peninsula was highly-divided (Lee & Bairner, 2009). Thus, it is suggested the circumstances surrounding Taekwon-Do’s formation and expansion in North Korea and South Korea (and across the globe) have divided the martial art to the extent where is may never be unified (Crick & Crick, 2016a; Lo, 2011; Merkel, 2008). Such evidence suggests that the country-of-origin (and the political volatility of such a nation) of a martial art can drastically affect the politics and stability of a sport (in line with Crick & Crick, 2019). Furthermore, there have been other break-away Taekwon-Do organisations. For instance, in August 1983, the Taekwondo Association of Great Britain (TAGB) was founded as an independent style of the martial art that practiced its original style, but was not governed by the rising internal politics surrounding the sport (TAGB, 2018). Although the TAGB has expanded to become a large-scale organisation in the United Kingdom, it has become somewhat isolated from the ITF and WTF-styles—due to the students executing attacks and blocks at rapid speed, which are far quicker than other forms of the martial art (HED Taekwon-Do, 2018). Also, the uniforms that are worn by TAGB members look significantly different to those that are worn in the ITF and WTF-styles (Taekwon-Do Promotions, 2017). Hence, although non-TaekwonDo practitioners might be naïve about the origins of the sport, it is crucial to note that due to the division of the martial art, there is no longer such thing as a single-form of Taekwon-Do (Crick, 2014). Rather, owing to a vast array of geo-political factors, Taekwon-Do has split into several break-away organisations, with some being very small, through to other, and much larger, governing bodies (Ahn et al., 2009; Merkel, 2008; Moenig et al., 2012). For instance, the Unified International Taekwon-Do Federation (UITF) was developed by a group of senior ITF Taekwon-Do instructors, who were somewhat resentful

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to the international political differences affecting the sport and formed an independent organisation (with over 15,000 members across 35 countries) (UITF, 2017). The division of Taekwon-Do into these break-away organisations is caused by the bureaucracy (e.g., power-based hierarchies) surrounding the martial art (Kim et al., 2016; Merkel, 2008), but is affected by the long-standing international politically-charged history of the sport (Ahn et al., 2009). Furthermore, three separate ITF organisations have been formed, with huge support from various members—thus, further dividing the sport (Gillis, 2011), with the first having its headquarters in Seoul (South Korea), despite the complex national-level affiliation of the martial art, the second being operated between London (United Kingdom) and Toronto (Canada), and the third being run from Benidorm (Spain) (Crick, 2014). In these three ITF-style organisations, their members are distributed across the world (Crick & Crick, 2016a). In these three ITF organisations, each of the senior instructors that lead each governing body claim that their style of Taekwon-Do is the original (most traditional) form of the sport (Lo, 2011). To add more confusion, the various senior instructors that oversee the three ITF organisations have been practicing the sport so long (explaining why they have achieved such senior ranks), that they once trained in Taekwon-Do when it was a more unified martial art—even before it split into the ITF and WTF governing bodies (Crick, 2014). Henceforth, an agreement may never take place over which is the original ITF-style of Taekwon-Do—owing to how the ITF divided simultaneously after General Choi Hong Hi’s death (Crick & Crick, 2016a; Gillis, 2011). That said, the WTF-style, despite splitting from the ITF-style in 1973, remains a somewhat unified governing body, with relatively little disagreement into how the style of the sport should be run (Moeing et al., 2012). Nevertheless, Taekwon-Do is very much a divided martial art, with the internal politics mirroring the volatile political environment surrounding the Korean Peninsula (Ahn et al., 2009; Hong, 2011; Nam-Gil & Mangan, 2002). Thus, it is evident that Taekwon-Do’s divisions (complex as it is) have been a function of the ever-changing (and long-lasting) political volatility surrounding the Korean Peninsula (i.e., complex geo-political conflicts).

5.6 The Death of General Choi Hong Hi and the Division of Taekwon-Do In 1999, a congressional meeting was held in Buenos Aires, Argentina, in which senior ITF Taekwon-Do instructors (from around the world) met to discuss the succession of the martial art (ITF, 2018). At this stage, the ITF-style of the sport was relatively united, in which instructors followed the leadership of General Choi Hong Hi (Gillis, 2011). That said, General Choi Hong Hi was 81 years old and was in the process of deciding which senior Taekwon-Do instructor would succeed him as President of the ITF governing body. During this meeting, Choi Jung Hwa (then, a VII Degree Black Belt, but is now an IX Degree Black Belt), the son of

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General Choi Hong Hi, was anticipating being named as the next President of the ITF (Lo, 2011). However, General Choi Hong Hi decided that he wanted to remain in power for another term, at which point he would nominate his successor of the Presidency (ITF, 2018). Choi Jung Hwa was suspected to have been impatient and was believed to have made connections with some senior instructors to break-away from his father’s ITF organisation to form his own ITF, with him as President in the early 2000s (as covered by Gillis, 2011). General Choi Hong Hi was outraged at his son’s decision and disowned him as both a father and a Taekwon-Do practitioner (Lo, 2011). It transpired that if Choi Jung Hwa had been patient, he would have succeeded his father as President of the ITF—and would have limited the division of the martial art (Gillis, 2011). General Choi Hi spent the end of his life in Pyongyang, North Korea, where he passed away from cancer in June 2002 (ITF, 2018). As such, if Choi Jung Hwa had waited for a few more years (1999–2002), he would have alleviated the large-scale split of ITFstyle Taekwon-Do. By the end of General Choi Hong Hi’s life, he forgave Choi Jung Hwa, as his son, but not as a Taekwon-Do practitioner (Lo, 2011). In General Choi Hong Hi’s final words, he described that this son had betrayed him and sought to destroy his legacy by dividing Taekwon-Do (Gillis, 2011). Therefore, it is crucial to stress that in addition to the poor international relations between North Korea and South Korea, Taekwon-Do has been divided because of other disputes, such as those within the founder’s family. As such, it is possible that had Choi Jung Hwa not split from his father and formed his own ITF-style organisation, he would have become the President of his father’s style of Taekwon-Do. Instead, General Choi Hong Hi decided that it was better to pass the leadership of the ITF to a non-Taekwon-Do practitioner, rather than his son—who was already a senior instructor (Lo, 2011). The following section deals with the future of Taekwon-Do.

6 The Evolution of Taekwon-Do in the Years to Come 6.1 The International Political Environment in Sport In the existing body of knowledge, the political environment (not least of which in the capacity of sporting organisations) usually concerns factors, such as taxation, liberal versus conservative laws, and cultural and/or religious policies that differ between countries (Cunningham, 2010; King, 2014; O’Gorman, 2011; Ratten, 2019; Walker & Hayton, 2018). Indeed, the environmental aspects of the resource-based view signify that macro-level forces can potentially harm organisations (e.g., limiting their successes) (Cadogan et al., 2012; Crick & Crick, 2021e; Priem & Butler, 2001). This has implications for stakeholder networks (again, consistent with the extended themes of resource-based theory), as complex macro-level forces could be damaging for such relationships (Barney, 2018; Crick et al., 2020b). While these are extremely important issues for sporting organisations to consider (as they help them to manage

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governmental, cultural, and religious rules) (Clarke & Ojo, 2017; De Bosscher et al., 2006; Green & Collins, 2008; McDonald, 2007; Mules, 1998), this book chapter has uncovered how volatile geo-political conflicts between two or more countries can affect such actors. Through the context of Taekwon-Do, the historically-poor international relations between North Korea and South Korea (Won & Hong, 2015) have led to large-scale internal political unrest, whereby, the martial art has been split into several break-away organisations throughout the world (Lee & Bairner, 2009; Lo, 2011; Merkel, 2013; Moenig et al., 2012). Such evidence highlights the need to better-understand how the international political environment affects sporting organisations to help such players to minimise the destructive consequences that it can cause. To that end, it is important to delve deeper into contemporary affairs— to evaluate how historical events might yield present-day problems, coupled with anticipating future scenarios.

6.2 The North Korean Nuclear Weapons Programme as a Geo-Political Concern The turbulent political situation between North Korea and South Korea has extended long since the end of the Korean War (Nam-Gil & Mangan, 2002; Yim, 2002). Technically, and to stress a crucial matter, the Korean War never ended, for which peace between the two countries was not fully-agreed—apart from a ceasefire and the creation of the DMZ (Cha, 2009; Hunter, 2015; Jervis, 1980). The Korean War was part of a larger-scale and long-term battle of political ideologies surrounding capitalism and communism (Armstrong, 2003). Since the Soviet Union was one of the main suppliers of weapons and ammunition to North Korea during the Korean War, and the United States fought alongside South Korean forces in the same conflict, there is evidence to suggest that the Korean War was part of the Cold War (Gaddis, 2005; Zhihua, 2000). As the United States sought to avoid the spread of communism in Asia, there were various conflicts throughout the mid-twentieth century, such as the Korean War and the Vietnam War (1955–1975) (Lee, 1996). Despite the ceasefire in 1953 between the two opposing forces fighting on the Korean Peninsula, the geopolitical conflict extended on a much larger scale, owing to the opposing superpowers of the Soviet Union and the United States (Whitfield, 1996). After the collapse of the Soviet Union in 1991, the North Korean regime set its ambitions on developing a nuclear weapons programme (Mack, 1994). After various unsuccessful attempts during the 1990s, 2000s, and 2010s, in late 2017, the country claimed to have developed a nuclear-tipped intercontinental ballistic missile that could reach the mainland United States, as well as being in clear reach of its enemy states, such as Japan and South Korea (Daily Mail, 2017). This concerning milestone brought the leaders of the western world into a state of action regarding the best solutions on how to deal with a nuclearised North Korea (CNN, 2017). Across various dates in 2017, President Donald J. Trump, of the United States, with support from the

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United Nations, enforced heavy economic sanctions on North Korea to punish them for their nuclear weapons programme, coupled with their threats to deliver them on civilised countries (e.g., Japan, South Korea, and the United States) (CNN, 2017; Daily Mail, 2017). These economic sanctions began to take a massive effect on the already poor North Korean financial system and national-level well-being (New York Times, 2018).

6.3 Changes to the Geo-Political Conflict on the Korean Peninsula In April 2018, one of the most significant milestones linked with the international relations on the Korean Peninsula occurred. Specifically, Kim Jong-Un, the Supreme Leader of North Korea, crossed the 38th Parallel into South Korea and met with President Moon Jae-In (The Guardian, 2018). In June 2018, Kim Jong-Un met with President Donald J. Trump in Singapore, for which a pledge was made by North Korean officials to abandon its nuclear weapons programme, serving as a gigantic step for the international relations between North Korea and the western world (BBC, 2018a). While it was expected that the outcome of this meeting will take an extended period to be completed, this serves as a small amount of evidence to suggest that the North Korean communist regime has begun to liberalise. Further, North Korea has broken previous pledges pertaining to its nuclear weapons programme (The Week, 2018). Consequently, it is of interest to follow the ongoing developments surrounding the political environment surrounding North Korea and countries that it has international relations with (positive or negative), as well as how such changes to the political landscape affect Korean sports, such as Taekwon-Do. Since the meeting in Singapore, there has been an interesting discourse between the world’s media surrounding the future of the North Korean nuclear weapons programme and its relations with the United States and its allies (CNBC, 2018). For instance, in July 2018, satellite images suggested that the North Korean military was in the process of dismantling facilities that had previously been used to conduct the testing of fissile materials (i.e., uranium enrichment) and intercontinental ballistic missiles (Financial Times, 2018). However, more recently, there have been various sources that have indicated that the North Korean military has merely upgraded its nuclear weapons facilities - creating some uncertainty about the future of this rogue nation and its likely weapons of mass destruction (ABC News, 2018; Economic Times, 2018). Nevertheless, there has been progress on the world stage, with the meeting of President Donald J. Trump and Supreme Leader Kim Jong-Un, making the political environment surrounding the activities of North Korea (historical and recent) an interesting issue to study, including how it has implications for sporting organisations, including, but not exclusive to Taekwon-Do. Moving forward, in February 2019, another summit took place between Supreme Leader King Jong-Un and President Donald J. Trump in Hanoi, Vietnam. This

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meeting was cut short due to it being apparent that no viable deals could be reached between the two administrations, including that the United States was not prepared to lift the earlier-mentioned major economic sanctions on North Korea due to its obscure promises regarding its nuclear weapons programmes and key human rights violations—not least of which the imprisonment and torture of Otto Warmbier (Grieco, 2020). This stalemate (and, arguably, failed summit) created additional uncertainties regarding the future of North Korea’s international relations between with the United States, South Korea, and beyond. Likewise, in the early stages of 2023, North Korea boasted its supposed nuclear arsenal—in an extravagant parade (The Guardian, 2023). To that end, despite there being an array of optimistic news stories pertaining to the Korean Peninsula, it is more likely that such positive sources of news were short-lived, owing to the volatility that has arisen from the North Korean regime (extending BBC, 2018a; CNBC, 2018; The Guardian, 2018). It is proposed that these environmental forces may change in the years to come, but for now, it is seemingly a troublesome time in this modern (atomic) age. In fact, these forms of turbulence support the environmental themes of the resource-based view, whereby, macro-level forces occur in an unpredictable (not necessarily linear) fashion (in line with Cadogan et al., 2012; Crick & Crick, 2021f). Moreover, it highlights that fragile stakeholder networks (again, another extension to resource-based theory) are volatile—and can impact organisations’ successes (building upon Barney, 2018; Crick & Crick, 2021g; Crick et al., 2021).

6.4 The Evolving International Political Environment Underpinning Taekwon-Do For emphasis, over the last few years there has been some progress regarding the international relations between North Korea and South Korea and their shared heritage with Taekwon-Do. By way of illustration, in August 2014, a joint meeting was held between representatives from both countries to discuss Taekwon-Do’s place in the summer Olympic Games (Osborne, 2014). An outcome of this meeting was that North Korean athletes can now compete in the summer Olympic Games, but only if they adhere to the rules and regulations of the WTF (USA Today, 2015). The 2018 Pyeongchang Winter Olympic Games were another positive milestone for international relations between North Korea and South Korea, whereby, the two nations represented a unified country, despite the recent tensions linked with North Korea’s nuclear weapons programme (Calder, 2018). The positive momentum has continued, with the two countries agreeing to pursue a joint bid to host the summer Olympics in 2032 (BBC, 2018b). Thus, Taekwon-Do’s future is uncertain, but the tensions between North Korea and South Korea are easing in these respects (despite the ongoing, and large-scale, geo-political conflicts), which could benefit the martial art (BBC, 2018a; The Guardian, 2018).

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Regarding the unification of Taekwon-Do, Crick (2014) studied break-away ITFstyle Taekwon-Do organisations in New Zealand—using a survey of 114 ITF instructors and students. The results indicated that roughly 76% of the respondents thought that the ITF and WTF-styles should not be merged. Interestingly, however, approximately 78% of the respondents thought that instructors from the ITF and WTF should work closely and be on better terms with one another. Crick’s (2014) results highlighted that it is unlikely that there will be a unified form of Taekwon-Do, but there may be more cooperation and goodwill between the two main codes if North Korea and South Korea continue to communicate.7 This aligns with the stakeholder themes of resource-based theory, in terms of the importance of networking activities being employed to withstand pertinent environmental shocks (in line with Barney, 2018; Crick & Crick, 2020; Crick et al., 2023a). Hence, even if the senior officials governing the ITF and WTF-styles of the sport were to make the decision to merge the two forms of the martial art, it is more than likely that members in certain factions of Taekwon-Do would be resistant to such change. This view, shared by a vast array of Taekwon-Do practitioners, may have been caused by the poor international relations between North Korea and South Korea, as well as the knock-on effects that the international political environment has had on the sport (e.g., bureaucracy) (Ahn et al., 2009; Merkel, 2008; Moenig et al., 2012). For emphasis, the global expansion of Taekwon-Do has made it one of the most popular martial arts in the world (Crick & Crick, 2021a; Kim et al., 2016). However, the sport has been divided, whereby, it is uncertain that it will ever be unified (Gillis, 2011; Merkel, 2008). Due to the long-term poor international relations between North Korea and South Korea (Cha, 2009; Hunter, 2015), peace may not be agreed soon. While Taekwon-Do has been caught-up in the international political differences between these two countries (Merkel, 2013), such geo-political issues have caused several break-away organisations to be established throughout the world (Crick & Crick, 2016a). It is important to stress how international relations can affect sporting organisations in negative capacities. Here, Taekwon-Do is a sport that has been damaged by the long-term and volatile relations on the Korean Peninsula (Lee & Bairner, 2009; Won & Hong, 2015). Further, the insights from this book chapter extend earlier research concerning international relations in sport. Instead of examining governance issues (as per Bloyce & Smith, 2012; Geeraert et al., 2015; 7

Crick (2014) was supplemented by Crick and Crick (2016a). These authors found that TaekwonDo clubs engage in cooperation with their competitors (coopetition strategies). Later, Crick & Crick (2019) developed and validated a multi-dimensional operationalisation of the coopetition construct (namely, the COOP scale)—using empirical data from ITF Taekwon-Do clubs in New Zealand. The COOP scale highlights that there are three forms of coopetition strategies, as they can occur across different geographic proximities and between product-markets (Crick & Crick, 2022c). Coopetition encapsulates various ways that decision-makers (in various arenas) cooperate with their competitors, such as formal alliances through to ad-hoc activities (see, for example, Crick, 2021b; Crick & Crick, 2023b; Crick et al., 2023b). Likewise, coopetition has been found to be a beneficial strategy for certain enterprises (of different sizes), coupled with some potential dark-sides (Crick, 2018c; Crick & Crick, 2022d; Crick et al., 2022b). While this book chapter does not focus on coopetition in a Taekwon-Do (or sports) setting, it is noted that these networks are prominent among Taekwon-Do organisations.

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Houlihan & Zheng, 2015; Jedlicka, 2018), the negative effects of volatile political environments on sporting organisations have been explored. In other words, tense international relations can have devastating effects on global sports. This book chapter is concluded in the following section.

7 Conclusions Guided by the wider themes of the resource-based view (Barney, 2001; Crick, 2018a; Crick et al., 2021; Priem & Butler, 2001), the objective of this book chapter was to highlight how adverse political environments can yield damaging effects on global sports. This objective was achieved by providing a historical overview of TaekwonDo (formed through reviewing an array of scholarly and practical sources) to highlight how sporting organisations can be affected by changing international relations and geo-political conflicts. To that end, the following five conclusions are made: 1. It is concluded that Taekwon-Do has expanded throughout the world. Yet, this has been caused by the tense international relations between North Korea and South Korea—leading to bureaucratic problems within the sport (e.g., a countless number of break-away codes and governing bodies) (consistent with Ahn et al., 2009; Crick & Crick, 2016a; Lo, 2011; Moenig & Kim, 2017). 2. It is also concluded that the future of Taekwon-Do is uncertain, but recent evidence suggests that there may be more cooperation between the ITF and WTF-styles in the years to come (something that only time will tell). This seems to co-vary with the state of the international relations between the two Koreas (extending CNBC, 2018; Financial Times, 2018; The Guardian, 2018). 3. Another conclusion is that academics should not under-estimate the negative effects of the political environment, with Taekwon-Do being a highly-relevant illustration of its impact. Future investigations are encouraged to examine the damaging impact of the political environment on other sporting organisations (and mainstream companies) to extend this historical overview (building upon O’Gorman, 2011; Ratten, 2019; Walker & Hayton, 2018). 4. An additional conclusion is that by taking a historical perspective on global sports, there is ample scope to evaluate (and perhaps anticipate) contemporary political turmoil in the world of sports (and beyond). This encapsulates other geo-political conflicts (not just those that are associated with sports), like those in Eastern Europe and the Middle East (reinforcing Green & Collins, 2008; Merkel, 2008; Ratten, 2017). 5. A final conclusion is that stronger insights have emerged on the wider aspects of the resource-based view, in which environmental-level factors (here, political factors, international relations, and stakeholder networks) can help or hinder sporting organisations as they globalise. These macro-level forces play huge roles in shaping the successes within the world of sports (following Barney, 2018; Crick & Crick, 2021d; Crick et al., 2023c; Priem & Butler, 2001).

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To close, this book chapter has highlighted how Taekwon-Do has internationalised, but has been embroiled in complex political factors (i.e., geo-political disputes). These macro-level forces have created damaging effects on this nonmainstream sport (issues that co-vary with these large-scale problems), but nonetheless, there is hope to propose that improving conditions may advantage the sport in the years to come. It is recommended that future research should be used to delve deeper into these matters—to explore the role of tense international relations and adverse geo-political conflicts within the world of sports. Acknowledgements The author would like to offer thanks to Graham Patterson (VIII Degree Black Belt) of the International Taekwon-Do organisation (based in Wellington, New Zealand) for his advice and expertise that led to the development of this book chapter. Also, earlier versions of this study were presented in the School of Business and Economics, Loughborough University, United Kingdom and the School of Business, University of Leicester, United Kingdom for feedback purposes. The author is grateful for an array of suggestions that enhanced this investigation. In addition, gratitude is expressed to Emeritus Professor Ian Henry (School of Sport, Exercise, and Health Sciences, Loughborough University, United Kingdom) for supplying critical feedback on an earlier version of this book chapter. Lastly, a special thanks is given to Emeritus Professor John Davies (Wellington School of Business and Government, Victoria University of Wellington, New Zealand) for his scholarly help pertaining to sports management research.

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Managing Intangible Resources on e-Commerce Msme Embracing Digital Era in Surabaya: A Test of Business Adoption as Mediation Wiliam Santoso, Hadi Kusuma Sunyoto, and Petrus Usmanij

Abstract The hi-technological advancements, particularly in the high-tech sector, are currently experiencing rapid growth across various regions worldwide. The widespread use of mobile phones and the internet has been instrumental in driving these expansions, facilitating faster and more affordable communication exchanges. In Indonesia, the substantial number of internet users has had a profound impact on the proliferation of e-commerce, leading to a significant increase in online transactions. This research focuses on examining the factors that influence the performance of ecommerce in Surabaya, Indonesia, with a specific emphasis on knowledge management, technology readiness, organizational learning capability, and e-business adoption. The study involved 100 respondents, comprising owners or managers. The findings reveal that knowledge management, technology readiness, and organizational learning capability have a substantial influence on e-business adoption. Furthermore, e-business adoption significantly impacts e-business performance. Keywords Knowledge management · Technology readiness · Organizational learning capability · e-business adoption · e-business performance

1 Introduction Microsoft co-founder, as well as the Forbes richest person in the world in 2017, Bill Gates once said “If your business is not on the internet, then your business will be out of business.” This shows how important the role of the use of information technology is in business processes or what is known as e-business, especially in Indonesia a developing country with “a lot of room to expand” on internet penetration used by MSMEs. At present, businesses that are conducted electronically W. Santoso · H. K. Sunyoto Ciputra University, Surabaya, Indonesia P. Usmanij (B) La Trobe University, Melbourne, VIC, Australia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 V. Ratten (ed.), Entrepreneurship Research, https://doi.org/10.1007/978-981-99-4452-1_5

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offered more promising new opportunities regarding the establishment of venture wealth with its dynamic, swiftly increasing, and highly competitive characteristics as researched by Cagarra-Navarro and Martinez-Conesa (2007). This research only focused on MSMEs that operate under an e-commerce platform. The increase in the adoption of mobile phones and the internet has facilitated the expansion of internet usage among micro, small, and medium enterprises (MSMEs), resulting in faster and more affordable communication for all segments of society. According to a study by Chong et al. (2014), this phenomenon has contributed to the rapid development of the industry and intensified competition. The dissemination of the internet around the world has enabled consumers to access data and global developments easily, quickly, and in real time. Furthermore, as the number of internet users continues to grow, it fuels the public’s inclination to leverage existing technology for conducting transactions. One notable consequence of the widespread internet usage in Indonesia is the escalating number of individuals engaged in online transactions as both sellers and buyers. According to data from Statista (2022), there has been a substantial increase in online transactions.

Statista (2022) This phenomenon also becomes the initiator which causes online shopping to transform the development of the business world where consumers are able to obtain the wanted product and likewise sellers may attain buyers through Internet access (Rakesh & Khare, 2012). This is then utilized by a lot of firms around the world to engage in Electronic Business by maximizing the use of technology. Additionally, the utilization of electronic business (e-business) by companies has become a tendency that is extensively applied throughout the international marketplace as information systems are by far the main essential catalyst in the digital business world today. Oliveira et al. (2016) added that it is a new and rapidly transforming way to operate the business and maintain the relationship with partners, suppliers, customers, etc. E-business is defined by Papazoglou and Ribbers (2006) as the process of conducting

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computerized business transactions and utilizing electronic communication systems across personal networks and the Internet from one end to another. Furthermore, research by Rodgers et al. (2002) explained that e-business also facilitates connectivity among extended firms, allowing employees, customers or clients, suppliers, and other stakeholders to be interconnected, irrespective of their geographical location or region. Consequently, organizations must harness their information systems and technology to establish a competitive edge. Ranganathan and Ganapathy (2002) elaborated that this can be achieved by, for instance, implementing online shopping methods. In today’s business world, several studies have attempted to reveal the utilization of technology applied throughout many firms. One of the most famous models is called the technology acceptance model found by Davis (1989) and the diffusion of innovation model found by Rogers (1983). Mostly, these two models above are applied in the marketing field. Moreover, two theories normally elaborated on how customers are able to adapt to technology so that companies may choose the correct appropriate marketing strategies by using technology. Nevertheless, currently, there are not many types of research that attempt to view the adaptation of technology from the business point of view. It implies that technology adaptation is not only viewed only from one point, particularly marketing but also from the strategic perspective. According to Wheeler (2002), information technology is categorized as an invaluable resource that can be leveraged by business professionals to create sustainable value for their companies. In today’s fiercely competitive environment, technology has become a prerequisite for companies to ensure their continued existence (Zhu et al., 2003). The COVID-19 pandemic has further accelerated the transfer in consumer behavior toward online methods of purchasing products and services, emphasizing the significance of technology more than ever before (Guthrie et al., 2021). Simultaneously, external factors, such as the rapid advancement of information technology, have become catalysts for companies to view technology as a resource that demands continuous development. The evolution of information technology not only simplifies the process of selling goods but also enhances internal business operations within the company. Therefore, companies can utilize information technology as a resource to improve their business capabilities and get a competitive advantage, teaming up with the principles of the Resource-Based View theory found by Barney (1991). Companies need to possess resources in the form of information technology advantages prior to the e-business strategies implementation. Nevertheless, it is evident that merely having sufficient information technology is insufficient to guarantee the success of a company’s e-business endeavors (Daghfous & Al-Nahas, 2006). Several other studies later found that e-business adoption affects e-business performance (Migdadi et al., 2016). Through the implementation of superior quality information technology combined with good e-business implementation, it is hoped that this will bring good performance to the e-business itself. In addition, several other studies state that there are other factors that affect e-business performance, namely the willingness and ability of the company itself to continue to learn and develop

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the knowledge it has. Both of these are reflected in the variable knowledge management (Maditinos & Theriou, 2014) and organizational learning capability (Lee et al., 2007). Other research also mentions several factors that influence e-business adoption and the use of information technology, namely technological readiness (Pan & Jang, 2008). East Java is considered the second-largest province that contributes to Indonesia’s Gross Domestic Product. According to the Indonesian Central Statistics Bureau (2021), East Java contributed 14.57% which was slightly less than the Indonesian capital city of Jakarta (17.23%). Moreover, as the second-largest city in Indonesia, Surabaya has become one of the references for online business trends in Indonesia. Based on data from the Indonesian Central Statistics Bureau (2022), the largest economic sector in Surabaya is trade (27.7%) and manufacturing (19.24%). Data from the Indonesian Central Bank (Indonesia Central Bank, 2022) showed that online transaction in Surabaya increases to an average of 12.07% per year. The e-commerce growth trend, especially in trade sector, should be able to be utilized by MSMEs in East Java, particularly in Surabaya, to improve their business performance. An initial research was developed by Tornatzky and Fleischer (1990) to criticize the Technological, Organizational, and Environmental (TOE) Framework. Different with previous study, respondents used in this study are e-commerce in the Surabaya. This study describes the influence of knowledge management, technology readiness, and organizational learning capability on e-business performance through e-business adoption. The expectation of this research is to contribute to the field of strategic management, especially in terms of implementing e-business-based strategies. This research seeks to develop a new model from previous studies in identifying the factors that influence the success of implementing e-business. This research can also be the foundation for further research developments in the field of implementation of ebusiness strategies. Thus, this research search for revealing the factors that influence the e-business performance of e-commerce in Surabaya.

2 Literature Review The focus of this research is limited to the intangible resources. Previous research revealed that intangible resources contributed more to firm performance than tangible resources (Mavondo & Reisinger, 2005). As e-business adoption is an obligation for MSMEs, they need to have good knowledge management in order to be agile on technology development. Agility in adopting technology can also be obtained by MSMEs through organizational learning capability. Finally, technology readiness is the key factor that can blend the two previous variables to stimulate e-business adoption.

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2.1 Knowledge Management McAdam and Reid (2001) and Grant (2013) categorized knowledge management capability into four dimensions namely knowledge acquisition, knowledge creation, knowledge storage, and knowledge sharing. Generally, knowledge is divided into two categories, explicit knowledge, and tacit knowledge (Polanyi, 1962). Firstly, explicit knowledge is knowledge that can be physically codified and shared, including generally accepted principles and procedures. Meanwhile, tacit knowledge is the result of a person’s experience obtained through practice in the field. Moreover, knowledge is not solely acquired on an individual basis, but can also be obtained collectively by a group or community (Grant, 2013). Knowledge nowadays has become one of the most essential encouragement forces to drive the success of a business (Choi & Lee, 2002; Kuan, 2005). This collective knowledge arises from the existence of a knowledge integration, which comes from a combination of the efforts of several individuals who have different but complementary skills. Despite the varying definitions of knowledge management (KM), as defined by Chong et al. (2014) in their study, the general concept of KM can be understood as a cyclical process aimed at identifying, transferring, storing, and disseminating knowledge within an organization. The ultimate goal of this process is to facilitate the reuse, awareness, sharing, and learning of knowledge across the organization. Several previous studies have also defined knowledge management as a business process consisting of various subprocesses, including organizational learning, knowledge integration, and knowledge distribution (Wilkens et al., 2004). This study adapted the variable dimensions of knowledge management capability from research by Cepeda and Vera (2007) who measure knowledge management capability using three indicators including learning and obtaining, sharing knowledge, and creating and improving. In order to integrate knowledge management as an effective organizational strategy, Lim (1999) recommend four steps namely capturing or creating knowledge (plan), sharing knowledge (do), measuring effects (check), and learning action (act). Hsu et al. (2007) identified four factors that influence the implementation of knowledge management, including information technology, management complexity, formal documentation, and knowledge acquisition mechanisms. The findings of Lin and Lee’s (2005) study indicate that various dimensions of knowledge management, including knowledge level, knowledge acquisition, and knowledge application, exert a positive and significant influence on the adoption of e-business systems. This finding is corroborated by several studies that affirm the positive and significant impact of knowledge management on e-business adoption (Navarro & Conesa, 2007). Moreover, Tsironis and Psychogios (2012) discovered through their research that knowledge management represents a critical success factor in the implementation of e-business. However, Lin’s (2013) research reveals that not all dimensions of knowledge management impact e-business adoption. Specifically, only knowledge dissemination demonstrates a significant effect on all stages of e-business adoption. Based on the review of the theory, hypothesis 1 is formulated, namely:

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H1 Knowledge management capability has a significant effect on e-business adoption.

2.2 Technology Readiness Bharadwaj (2000) builds a construct that information system capability consists of infrastructure, human resources, and knowledge. Zhu et al. (2006) define technology readiness into two categories, namely technology infrastructure and IT human resources. According to Zhu et al. (2004), in the Technological, Organizational, and Environmental Model, technology readiness is the most influential factor in e-business value compared to other influential factors such as financial resources, global scope, and regulatory environment. According to Zhu and Kraemer (2005), technology infrastructure is important because it provides a platform for internet technology, while IT human resources will support technology readiness through knowledge and expertise to develop the technology. Previous research by Mishra and Agarwal (2010) is also supported by proving that technology readiness has a significant influence on e-business adoption (Mishra & Agarwal, 2010). Based on the review of the theory, hypothesis 2 is formulated, namely: H2 Technology Readiness has a significant effect on e-business adoption.

2.3 Organizational Learning Capability Organizational learning is defined by Lopez et al. (2005) as a process where an organization can earn new knowledge from the environment. According to Goh (1998), organizational learning capability is the ability of an organization to implement the appropriate management practices, structures, and procedures that facilitate and encourage learning. Thus, organizational learning will empower the organization to be a learning organization. According to Limpibunterng and Johri (2009), organizational learning capability is a primary capability of an organization because of which the organization establishes, enriches, and applies knowledge to outperform its competitors in terms of its competitiveness and performance. In addition, Ke and Wei (2006) explain that organizational learning capability is an important component of technology innovation. Research conducted by Lee et al. (2007) found that organizational learning capability significantly stimulates the better implementation of e-business, through knowledge application. The ability of e-commerce to be flexible and sensitive to continuous technology change depends on organizational learning capability. Lin and Lee (2005) find that organizational learning influence significantly to e-business

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adoption. It is also supported by Migdadi et al. (2016). Based on the review of the theory, hypothesis 3 is formulated, namely: H3 Organizational learning capability has a significant effect on e-business adoption.

2.4 E-Business Adoption According to Abu-Musa (2004), the implementation of e-business is an application of internet-based technology and communication to manage intra- and interorganizational business processes. These implementations not only affect the way the company deals with customers and suppliers but also become an important part of the business strategy. E-business adoption is defined as a company’s readiness to have the suitable attitudes, skills, knowledge, and technology to facilitate the processes of e-business (Hafeez et al., 2006). Based on this definition, e-business is measured using indicators of technological adoption, organizational capability, and attitudinal capability to measure e-business adoption. Research by Davis et al. (2014) used several indicators to measure e-business adoption, including its application in procurement, production, and distribution. According to Wu et al. (2003), e-business adoption is divided based on e-communication, internal administration, e-procurement, and e-order taking. According to Al-Somali et al. (2015), there are three stages of the e-business adoption process in organizations, namely the non-interactive (initiation) stage, the interactive stage, and the established e-business. The non-interactive stage occurs when an organization decides to invest in e-business accompanied by preparations to redesign business activities. In the interactive adoption stage, the organization tries for the first time to take advantage of e-business technology. In the last stage, ebusiness stabilization occurs when the technology has been fully implemented in the organization so that all members of the organization have experienced the e-business technology. While Lin and Lee (2005) divide e-business adoption into five stages. The first stage namely initiation where companies begin to recognize the importance of e-business systems and prepare for their implementation. In this stage, the company begins to use internet technology to access information. The second stage is propagation where companies start investing in building e-business infrastructure for internal activities. The third stage is networking where there is external integration that allows interaction through the network not only within the scope of internal but also external to the company. At this stage, the company begins to engage in business cooperation through an online environment for business transactions. The fourth stage is business integration where technology is then integrated into business processes. The fifth stage is the highest stage namely business transformation where the application of e-business has succeeded in changing the company’s overall business model. According to Navarro (2007), e-business adoption has a positive and significant effect on e-business performance. Rapp et al. (2008) stated that e-business is a

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very important strategy that can affect company performance. This is supported by Merono-Cerdan et al. (2008) which states that e-business implementation has an effect on company performance. Amoroso (2001) found that e-business has a significant effect on company performance, specifically in three factors, namely customer-focused factors, corporate financial factors, and business process factors. Several studies have shown that e-business adoption has a positive and significant effect on e-business performance (Migdadi et al., 2016). Based on the review of the theory, hypothesis 4 is formulated, namely: H4 e-Business adoption has a significant effect on e-business performance.

2.5 E-Business Performance According to Madu and Madu (2003), the purpose of e-business is customer satisfaction through increasing trust in the company, maintaining good relationships with customers, and attracting new customers. Moreover, by implementing e-business can increase a company’s ability to create value, increase revenue, and improve performance (Hafeez et al., 2006).

3 Research Issue and Methodology The data analysis technique used in this study was multiple linear regression to test the four hypotheses. Furthermore, this study also uses Sobel Test to discover the mediation effect of knowledge management, technology readiness, and organizational learning capability on e-business performance through e-business adoption. Multiple linear regression can be used to identify the strength of the effect that the independent variable has on the dependent variables. The data collection instrument utilized for the conceptual framework involved the distribution of questionnaires to randomly selected respondents based on predetermined sample characteristics. Questionnaires were disseminated to respondents in their present location at the time of distribution. Upon finishing the completion, respondents returned the filled questionnaires, and then the researcher carefully filtered those that were fully completed and followed the provided instructions. Once, the selection process concluded, the chosen questionnaires were subjected to further processing. The questionnaire utilized in this study was divided into two parts. The first part consisted of inquiries aimed at gathering general information about the respondent’s identity, which proved valuable for assessing the compatibility of respondent characteristics with the sample criteria. The second part comprised statements designed to collect research data and facilitate the analysis of the relationships among knowledge management, technology readiness, organizational learning capability, e-business adoption, and e-business performance. The

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preparation of the questionnaire was carried out by adapting the instruments used based on previous research. Firstly, the questionnaire containing statements regarding knowledge management was adapted from Lin (2013). Secondly, the questionnaire containing statements regarding technology readiness was adapted from Tsironis and Psychogios (2012). Thirdly, the questionnaire containing statements regarding organizational learning capability was adapted from Lee et al. (2007). Fourthly, questionnaire containing statements regarding the quality of IT implementation was adapted from Yeh et al. (2012). Furthermore, the questionnaire containing statements regarding e-business adoption was adapted from Lin and Lee (2005). And lastly, the questionnaire containing statements regarding e-business performance was adapted from Migdadi et al. (2016). The population used in this study is e-commerce in Surabaya. The sampling technique used in this study is non-probability sampling, with the reason of the exact number of populations cannot be identified clearly. The primary data collection method employed in this study involves the utilization of a questionnaire as the principal tool. The researchers adopted a purposive sampling technique, whereby the sample members were selected based on an assessment of specific characteristics that align with the research objectives. Ferdinand (2002) provides some guidelines for determining the appropriate sample size, including recommendations such as (1) employing 100–200 samples for maximum likelihood estimation, and (2) considering the number of parameters to be estimated, typically aiming for a sample size that is 5–10 times the number of parameters estimated. Since this study has 17 indicators the samples were determined as 85 but as per the minimum guidelines, the number of respondents is as many as 100 owners or managers. Samples were collected from various e-commerce in Surabaya by distributing questionnaires, with the characteristics of the respondents, namely: (1) e-commerce operating at least the last 1 year and (2) having a maximum average turnover of 4.8 billion IDR per year in 1 year last. From 120 questionnaires distributed only 105 can be collected and only 100 were used in this study. The research model of this study can be seen in Figure 1. The novelty in this research is that this research seeks to complement the Net Enabled Business Innovation Cycle theory which focuses on the use of technology to generate customer value, while in this research it is more focused on the performance of the company’s e-business and not on the perspective of the customer. In addition, this research also looks for antecedents of the successful implementation of e-business itself through combining the Technological, Organizational, and Environmental (TOE) Framework model with a Resource-Based View. Bharadwaj (2000) found that Resource-Based View Theory provides a better view of understanding company resources and capabilities as a strategic advantage in achieving superior performance through technology. Based on that idea, this study focused on intangible variables, namely knowledge management, technology readiness, and organizational learning capability. But, having those variables on business is not enough. Those variables should first enable business to have e-business adoption first, then can increase e-business performance.

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Fig. 1 Research model

4 Finding and Discussion Grant (2013) elaborated that knowledge is not only limited to individual acquisition but can also be obtained collectively. Several studies have highlighted the positive and significant impact of knowledge management on e-business adoption (Bose, 2003; Cegarra-Navarro & Martinez-Conesa, 2007; Hsieh & Kienow, 2006). Zhu et al. (2003) found out in their research that a successful e-business adoption is contingent upon the presence of adequate technological infrastructure within a company. Additionally, Salwani et al. (2009) demonstrated that technology competence influences the adoption of e-commerce. In competitive environments, companies are compelled to adjust their strategies to align with their competitors’ approaches (Zainun-Tuanmat & Smith, 2011), thus driving the increasing popularity of e-business adoption. Moreover, research by Al-Somali et al. (2015) revealed that while only regulatory and legal environment variables significantly impact each stage of e-business adoption, competitive pressure does not exhibit a significant effect on e-business adoption. Zhu et al. (2004) in their previous study adapted the technology, organization, and environment (TOE) model to examine several factors influencing e-business performance. The result is the significant influence of organizational learning and knowledge management factors on company performance. This research is also supported by the research of Lee et al. (2007) and Maditinos & Theriou (2014) who proved that organizational learning capability has a significant effect on e-business performance. The finding of this research consists of descriptive statistics, validity and reliability to test the indicators, multiple linear regression to test hypotheses, and the Sobel test to test the mediation effect.

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4.1 Descriptive Statistics Data collection is for obtaining data from respondents regarding statements on the questionnaire which is conducted from primary data sources from managers or owners of e-commerce in East Java. The number of respondents which are collected for this research are 100 respondents. From questionnaire distribution, respondent data collections are. Based on Table 1, it shows that most respondents are coming from food and beverage business (34%), clothing (32%) and service (14%). The organizational learning capability variable exhibits the highest mean average with a value of 3.833. This indicates that the respondents generally agree with the indicators related to organizational learning capability more strongly than with the indicators of other variables. On the other hand, e-business performance displays the highest standard deviation score of 0.81095. This implies that the respondents’ answers regarding e-business performance are less consistent and more diverse compared to their responses for other variables (Table 2). Table 1 Respondent classification

Characteristics

Number

Percentage

Food and beverage

34

34

Clothing

32

32

Cosmetics

6

6

Service

14

14

Health

6

6

Finance

1

1

Others

7

7

Total

100

100

Business

Table 2 Mean and deviation standard

Variable

Mean

Deviation standard

Knowledge management

3.6098

0.78600

Technology readiness

3.6050

0.79390

Organizational learning capability

3.8333

0.70671

E-business adoption

3.2733

0.72842

E-business performance

3.4325

0.81095

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Table 3 Validity test Indicator FL

Indicator FL

Indicator FL

Knowledge management

Tech readiness

Organizational E-business learning capability adoption

Indicator FL

Indicator FL E-business performance

X1.1

0.718

X2.1

0.646 X3.1

0.425

Y1.1

0.600 Y2.1

0.784

X1.2

0.549

X2.2

0.655 X3.2

0.587

Y1.2

0.613 Y2.2

0.715

X1.3

0.697

X2.3

0.683 X3.3

0.264

Y1.3

0.665 Y2.3

0.508

X2.4

0.665

Y2.4

0.567

Source Own calculation

Table 4 Reliability test

Variable

Cronbach’s alpha

Knowledge management

0.801

Technology readiness

0.832

Organizational learning capability

0.595

E-business adoption

0.782

E-business performance

0.818

4.2 Validity and Reliability Test Validity test of this research is executed with result as follow (Table 3). The value of corrected item total correlation as validity test for each indicator showed that all value is greater than the value of r table (0.197). It represents that the data for this research is valid. The reliability test of this research is executed with result as follow (Table 4). Based on the result summary of the reliability test, the score of Cronbach alpha for all variables is greater than 0.50. It shows that all data are reliable.

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4.3 Multiple Regression Analysis Result The result of multiple regressions analysis can be seen below: Hypotheses

Variables

Coeff

t. sig

Expected hypothesis

Research result

H1

Knowledge management to e-business adoption

0.400

0.000

Significant

Accepted

H2

Technology readiness 0.268 to e-business adoption

0.003

Significant

Accepted

H3

Organizational learning capability to e-business adoption

0.336

0.000

Significant

Accepted

H4

E-business adoption to e-business performance

0.476

0.000

Significant

Accepted

Multiple linear regression analysis shows that all hypotheses are accepted (t sig < 0.05). It means that knowledge management, technology readiness, and organizational learning capability significantly influence e-business adoption. A variable that has the greatest influence on e-business adoption is knowledge management, next organizational learning capability, then technology readiness. Also, e-business adoption significantly influences e-business performance.

4.4 Results of the Sobel Test Testing the indirect effect (indirect effect) can be done using the Sobel test. Baron and Kenny (1986) introduced the Sobel test, which defines a variable as intervening when it impacts the association between the independent variable and the dependent variable. The Sobel test is carried out by testing the strength of the independent variable’s indirect influence on the dependent variable through the intervening variable. The Sobel test for Influence Knowledge Management to e-business performance through the mediation of e-business adoption can be seen as follow.

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Based on Sobel test, the value of test statistic 3.47 > 1.96 so that e-business adoption can mediate the influence of knowledge management to e-business performance. Sobel Test for Influence Technology Readiness to e-business performance through mediation of e-business adoption can be seen as follow.

Based on Sobel test, the value of test statistic 2.69 > 1.96 so that e-business adoption can mediate the influence of Technology Readiness to e-business performance. Sobel Test for Influence Organizational Learning Capability to e-business performance through mediation of e-business adoption can be seen as follow.

Based on the result of the Sobel test above, the value of test statistic 3.12 > 1.96 so that e-business adoption is able to mediate the influence of Organizational Learning Capability on e-business performance. Overall, we can conclude that e-business adoption can mediate the three independent variables toward e-business performance. Therefore, it is confirmed that e-business adoption is a critical point for MSMEs engaged in e-business.

5 Conclusion The results of descriptive statistics on respondents’ answers show that the knowledge management variable has an overall average value of 3.6098 which indicates that the average value of respondents’ answers tends to agree with the statements in the knowledge management variable. In addition, based on the results of data analysis, it is known that knowledge management has a significant effect on e-business adoption as indicated by a significance value of 0.000 which is smaller than the specified significance level of 0.05 which means that first hypothesis is accepted. Moreover, this finding is in line with previous research done by Tsironis and Psychogios

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(2012). Good knowledge management possessed by companies will enable MSMEs to encourage better e-business adoption because all elements in the organization will be able to obtain information and knowledge about e-business easily so that they can quickly understand and be easy to apply. Knowledge management also has the greatest effect on e-business adoption among the three variables. It means that this variable is essential for MSMEs. To enable knowledge management, MSMEs have to build good communication that can facilitate knowledge circulation among employees. According to the results of descriptive statistics on respondents’ answers, the technology readiness variable has an overall average value of 3.6050 which indicates that the average value of the respondents’ answers tends to agree with the statements in the technology readiness variable regarding the respondent’s attitude toward the amount of cost sacrifice incurred by customers to stay. In addition, as a result of the data analysis, it is shown that technology readiness has a significant effect on ebusiness adoption as indicated by the significance value (p) of 0.003 which is smaller than the specified significance level of 0.05. It means that the second hypothesis is accepted. The result of this finding supports previous research conducted by Mishra and Agarwal (2010). Moreover, technology readiness can affect e-business adoption because when a company has a level of technology readiness in its company it will be easier to adopt e-business because the success of e-business is also supported by the company’s ability to prepare technology, especially in terms of infrastructure readiness because e-business requires adequate technological infrastructure readiness. However, even if it is significant, technology readiness has the smallest coefficient among the others. It means that even though technology readiness is important, it is not enough to promote e-business adoption. Furthermore, according to the descriptive statistical results of the respondents’ answers, the organizational learning capability variable has an overall average value of 3.8333, which indicates that the average value of respondents’ answers tends to agree with the statements in the organizational learning capability variable, namely regarding the respondent’s attitude toward the level of guest satisfaction with the services they receive. In addition, the data analysis result shows that organizational learning capability has a significant effect on e-business adoption, which is proven by the significance value (p) of 0.000 which is smaller than the specified significance level of 0.05. It means that the third hypothesis is accepted. This finding supports previous research by Lin and Lee (2005). E-business adoption needs to be adaptive to the constant change in information technology, which is why a company needs to keep learning over time. This variable also has the second-largest effect on adoption highlighting the importance of knowledge and learning for MSMEs. According to the results of descriptive statistics on respondents’ answers to the ebusiness adoption variable, it has an overall average value of 3.2733 which indicates that the average value of respondents’ answers tends to agree with the statements in the e-business adoption variable, namely regarding the respondent’s attitude toward the level of guest satisfaction on service it received. In addition, as a result of the data analysis, it is proved that e-business adoption has a significant effect on e-business performance as indicated by the significance value (p) of 0.000 which is smaller

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than the specified significance level of 0.05. It means that the fourth hypothesis is accepted. This finding supports previous research (Migdadi et al., 2016). E-business adoption has an effect on e-business performance, when a company has good ebusiness adoption, it can be ascertained that the company’s e-business performance will also increase. Thus, to increase e-business adoption, the company should pay attention to knowledge management (largest value of coefficient with a number of 0.400). This is interesting because when the company needs to have an e-business, technology readiness only may be enough, but if the company needs to adopt an ebusiness, they need more than just technology readiness, the company needs knowledge management. There is no use for a company even just having an e-business if the company does not adopt it well. The adoption of e-business is dynamic and requires involvement from the internal stakeholders, which is why knowledge management is needed. Sobel test results also showed that e-business adoption can mediate the three variables of knowledge management, technology readiness, and organizational learning capability to e-business performance. It means that e-business is really essential for e-business in Surabaya.

6 Research Limitation and Future Research Recommendation This study has succeeded in proving and supporting previous research that e-business adoption is influenced by various factors, including knowledge management, technology readiness, and organizational learning capability, which in turn, e-business adoption can improve e-business performance. The variable that has the greatest influence on e-business adoption is knowledge management, thus it is hoped that companies will pay more attention to improving knowledge management by increasing awareness of the importance of knowledge sharing among employees and cultivating knowledge management within the company. In addition, companies can also conduct training related to knowledge management. This study has several implications for MSMEs in Surabaya who is engaged on e-business. First, as explained before that knowledge management is important for MSMEs. MSMEs should invest in employee training to stimulate knowledge management. Training should focus on how employees define and think about knowledge, understand, and carry out knowledge-oriented tasks. The main challenge for MSMEs in implementing knowledge management is that most existing knowledge in MSMEs is tacit and really hard to become explicit. To overcome this, MSMEs should develop a culture of knowledge sharing and always have an understanding that the main asset of the organization is knowledge itself.

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7 Research Limitation The scope of this study is limited to the examination of micro, small, and medium enterprises (MSMEs) specifically in Surabaya. To enhance the research’s appeal, future studies could be conducted in different regions of Indonesia to account for geographical variations. Additionally, this research solely focuses on variables such as knowledge management, technology readiness, organizational learning capability, e-business adoption, and e-business performance. Future studies could explore the inclusion of other variables, such as organizational culture or leadership, to provide a more comprehensive understanding of the subject matter.

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March Towards Innovation: Case of Singapore Esha Thukral

Abstract Singapore is a leading destination for innovation and entrepreneurship. Innovation is seen as a comprehensive system that interacts closely with the environment rather than a linear mechanical progression. This means that innovation does not happen by itself instead it is a result of meaningful interaction/collaboration of systems (at various levels in between different actors in the environment). However, in case of Singapore the role of the government in building the innovation capacity stands out as innovation in Singapore is policy driven. This chapter sheds light on the degree of governments involvement in Singapore in driving innovation and its implications. Keywords Singapore · Innovation · Startups · Ecosystem · Government measures

1 Introduction Innovation has contributed significantly to the growth and development of the society. Innovation is seen as a comprehensive system that interacts closely with the environment rather than a linear mechanical progression. This means that innovation does not happen by itself instead it is a result of meaningful interaction/collaboration of systems (at various levels in between different actors in the environment). The concept of ‘innovation systems’ was introduced in the late 1980s to study the impact of knowledge and innovation on economic growth in evolutionary systems centred around institutions and learning processes (Ranga & Etzkowitz, 2013). The term ‘system’ means a group of institutions whose interactions determine the innovation performance of domestic firms (Thukral, 2021). Actors in the ecosystem include government agencies that fund research and development initiatives, and formulate and implement policies that support innovation, small and large organisations to E. Thukral (B) Department of Management, Sport and Tourism, La Trobe Business School, La Trobe University, Melbourne, Australia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 V. Ratten (ed.), Entrepreneurship Research, https://doi.org/10.1007/978-981-99-4452-1_6

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transform new knowledge and research into the marketplace, supporting organisations like universities, research institutions, etc., and infrastructure support like transportation and telecommunication (Fukuda & Watanabe, 2012). Singapore is now counted in the league of developed nations (like Japan, USA, etc.) owing its growth and progress to the supportive ecosystem. While all the actors in the ecosystem played a crucial role in making Singapore a leading destination for entrepreneurship, the role of the government in building the innovation capacity stands out (Wan et al., 2005). The government in Singapore is perceived to be following more of a ‘directive’ role and has been planning and implementing a series of policies, strategies, science and technology plans and allocating large amount of research and development funds, for example, it started a $500 million ‘Innovation Development Scheme’ to promote the country as an ‘Innovation Hub’. This gave a boost to the innovative environment of Singapore as almost 480 innovative projects received grants under this scheme of which 350 were local companies and rest were multinational companies (MNCs) (Wan et al., 2005). The role played by the government is one of the determinants for building innovation capacity, as per the National Innovation System Theory and Triple Helix Theory (Etzkowitz & Leydesdorff, 2000) While it is widely acknowledged that a competent state is important, there is still some uncertainty about how the state should function, what specific role it should play, and how it should engage in innovation (Mok, 2005).

2 Singapore’s Innovation-Driven Economy: Result of Governments responses Singapore is a young country as it gained its independence on 9 August 1965 (Toh, 2012). Singapore being a small country with very limited natural resources had an initial mandate to survive than thrive. The government then had critical issues at hand, 70% of the Singapore population were living in slums, and there were hardly any local industries that could create jobs for the local people. During that time there was no compulsory education, and the number of college graduates were very few. To strengthen the education system, schools founded by different ethnic groups were merged into a unified Singaporean education system. A bilingual policy has been put in place so that all children can learn both their mother tongue and English. A textbook agency was established to provide textbooks. Expansion was very rapid that universal primary education was achieved in 1965 and universal lower secondary education achieved in the early 1970s. By the end of the ‘survival stage’, Singapore had created a nationwide public education system (OECD, 2010). There was also a looming skill gap/lack of manpower which was negatively impacting the economy. Singapore’s economy needed highly qualified technicians, engineers and business graduates for sustained growth, government therefore began concentrating its efforts to bridge the skill gap (SG101, 2021). The National Industrial Training Council was established in 1968 and was responsible for providing technical

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education and training. In 1969, the Singapore Institute of Technology was established to offer a 2-year full-time technician course to bridge the gap between trade courses offered by vocational training institutions and three-year technician courses offered by Singapore Polytechnic and Ngee Ann Technical College. In 1979, the Government of Singapore established the Council for Professional and Technical Education to liaise with all government departments involved in training and education to enhance the management and workforce development in a more targeted manner. To support more technical development Singapore needed engineers thus, the National Technological Institute was founded in 1981 and offered practicebased engineering courses. Nanyang Technological Institute started offering courses in civil, electrical and mechanical engineering. The total number of engineering students increased to 2,418 in 1988 from 386 in 1978. At the tertiary level, Singapore Polytechnic introduced some changes to the course structure and made computer literacy compulsory for all students and Ngee Ann Technical College (renamed Ngee Ann Polytechnic in 1981) opened a Centre for Computer Studies in 1982 and offered certificate courses in computer science. In 1990 to supplement existing programmes and expand the variety of courses offered, a third polytechnic was established named Temasek Polytechnic. Today there are a total of five polytechnics, Nanyang Polytechnic opened in 1992 whereas Republic Polytechnic is a more recent addition as it came into being in 2002 (Toh, 2012). During the 1980s and 1990s, foreign investment was government’s top priorities, encouraging multinational corporations (MNCs) to set up Research & Development centres in Singapore to promote technology transfer and diffusion to local businesses. The government’s role at that time was to drive the economic development of the nation and bridge the skill gap. Thus, during that time government had to resort to export-oriented industrialisation revolving around foreign investment and to attract new high-valued industries to Singapore, the government even provided tax impetus to certain industries. To facilitate investment government developed transport infrastructure (airports and seaports) (SG101, 2021). In the late 1990s, when to an extent Singapore’s government targeted efforts in the education system created a fair amount of skilled workforce. Now was the time to vanquish the dependencies on foreign capital, rise and fall of global export market. To overcome the dearth of domestic entrepreneurship and innovation and build a more self-reliant economy the government launched a series of five-year science and technology plans (STP) in 2001 with a budget of $6 billion dollars and established the ‘Technopreneurship Innovation Fund’ to encourage technologybased businesses to invest in new companies alongside venture capitalists (Wang, 2018). However, government discontinued this initiative after sufficient private venture capital fund became available (Pangarkar & Vandenberg, 2022). In the year 2006 the Research, Innovation and Enterprise Council (RIEC), a Cabinet-level body, was established to advise on Singapore’s R&D strategies as well as programmes. To support RIEC and promote more innovation, in 2008 the National Research Foundation (NRF) was established, and they together launched National Framework for Research, Innovation and Enterprise to facilitate high-technology commercialisation. In 2010 the budget for science and technology plan reached

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US$9 billion (S$13.55 billion), this commitment was further given a boost with another five-year RIE 2015 plan with US$ 12.4 billion (S$16.1 billion). Several other support programmes were also initiated by different government agencies or bureaus to encourage innovation and development of local businesses. The support schemes provided financial aid directly to local businesses and indirectly through incubators to promote talent development and collaboration (Wang, 2018). In 2014, Singapore created a goal of becoming a first Smart nation, by developing a National Digital Identity framework for citizens and businesses to transact conveniently through digital platforms while being secure. The government also started a Tech Skill Accelerator programme to have more workforce with ICT skills. It also started an open innovation network that matches pain points, challenges or digitalisation opportunities faced by the businesses, with problem solvers (micebook, 2022). Enterprise Singapore a government agency initiated ‘The Global Innovation Alliance (GIA) Network’ in 2017 to strengthen the links between Singapore and prime innovation hubs across the globe. GIA not only assists technology companies in Singapore to connect with the overseas ecosystem via Innovation launchpads but also aids them to strengthen ties (National Research Foundation: Prime Minister’s Office, Singapore, 2021). The Research, Innovation and Enterprise (RIE) 2020 plan was created with an aim to aid the progress of knowledge-based, innovation-driven economic and social development to strengthen Singapore’s commitment to innovation in below sectors for which the government pumped $19 billion. 1. 2. 3. 4. 5. 6.

“Services & Digital Economy Innovation & Enterprise Urban Solutions & Sustainability Academic Research Health and Biomedical Sciences Advanced Manufacturing and Engineering” (Airswift, 2020).

3 Singapore Today Singapore now is not only home to nearly 4,000 technology-based start-ups but has also attracted international start-ups like Taiger (artificial intelligence start-up) to relocate from Spain to Singapore (micebook, 2022). It also has almost 234 supporting organisations which includes incubators, accelerators, research institutions (Startup SG, 2023) and approximately 520 investors that play a key role in the ecosystem of Singapore. The accelerator programmes have now expanded beyond financial institutions, to universities, research centres and, most recently, large corporations aspiring to serve as incubators for start-ups hoping to find innovative solutions for their businesses (EDB Singapore, 2022). Singapore’s start-up ecosystem is now recognised as World’s leading Innovation hubs and was recently ranked 6th globally and number one in Southeast Asia by StartupBlink (StartupBlink, 2023). Startup Genome (a leading ‘innovation policy

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and research firm’) and the Global Entrepreneurship Network in 2021 also ranked Singapore’s start-up ecosystem as 17th in the world and fifth in Asia after Beijing, Shanghai, Tokyo and Seoul while giving a high score in funding, performance and talent access (EDB Singapore, 2022). They even valued Singapore’s ecosystem at over $25 billion, five times the global average. Thus, countries around the world admire Singapore for its resilient start-up ecosystem (Eliasz & Wyne, 2021). Singapore was also ranked seventh most innovative economy in the world. This assessment is based on the Global Innovation Index 2022, a report published by the World Intellectual Property Organization (WIPO) and the non-profit research firm Portulans Institute. The report ranks 132 countries based on innovation and success (Low, 2022). The ranking is indicative that Singapore has a conducive environment for local and global innovation-driven companies (World Intellectual Property Organization, 2022a). Singapore leads in 11 key indicators in total, one up from 2021, which includes government efficiency, ICT access, venture capital investors, hightech manufacturing and commitment to GitHub (digital services) (World Intellectual Property Organization, 2022b).

4 Implications of Government Involvement in Singapore There is an ongoing debate over the ideal role or degree of government involvement in the economy. It has been argued market alone cannot help building a knowledge economy, and government support is needed to address critical issues that market forces alone cannot rectify (Stiglitz, 2021). More often economic success in emerging Asia (NIC) is cited as evidence of the contribution of direct government intervention. On the other hand, neoclassical theorists believe that economy has the capability to self-correct itself and that there is no need for government intervention. Critics of market failure theory also argue that government intervention has more of negative consequence than positive as they are not experts in industry and are incapable of identifying opportunities (Lumen, n.d). In case of Singapore government efforts at the time of independence were more directive and pervasive; however, it was due to the need of the hour as Singapore’s economy at that time was lagging with no local industries and lack of skilled labour, and unemployment rate of over 10% (Song & Bhaskaran, 2015). Government efforts in the initial years did help Singapore economy to get back on feet. The initial success reaffirmed the belief that government intervention is integral in driving the economy and boosting innovation. In the 1990s, the government shifted their focus from focussing on MNCs to boosting local businesses. Support programmes range from direct or indirect financial support through incubators to local businesses to foster collaboration and talent development. The R&D expenditure to support innovation in Singapore has been enormous reaching to about $19 billion in 2020. Strong government intervention coupled with generous funding has changed the innovation landscape of Singapore. However, the change is prominent in sectors

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where government support is evident, like ICT, Technology-based Businesses, Engineering, Healthcare, etc. Thus, too much state intervention can focus resources on some sectors over others (Wang, 2018).

5 Conclusion Singapore today is one of the leading nations in innovation, and government role in driving the nation towards success has been critical. Though this has brought tremendous success to certain sectors, like ICT, Engineering, etc., where government support is more evident than other industries. This has caused a little distortion and unequal development in the ecosystem.

Bibliography Airswift. (2020). 5 reasons why Singapore is an innovation hub [Online]. Available at https://www. airswift.com/blog/singapore-innovation-hub. Accessed 10 March 2023. EDB Singapore. (2022). Singapore’s start-up ecosystem gets more vibrant as MNCs pitch in [Online]. Available at https://www.edb.gov.sg/en/business-insights/insights/singapore-s-startup-ecosystem-gets-more-vibrant-as-mncs-pitch-in.html. Accessed 8 March 2023. Eliasz, T., & Wyne, J. (2021). A close look at Singapore’s thriving startup ecosystem. [Online] Available at https://techcrunch.com/2021/08/11/a-close-look-at-singapores-thriving-startupecosystem/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_ referrer_sig=AQAAAD6_tQHqf9xMSQ5UFf96oZ8dDYWTVnRPDSYN0hNBt5zWwz3Z2OU804Z4TZAzQlUpBCSQiWlS81GUr0_kUyC. Accessed 25 February 2023. Etzkowitz, H., & Leydesdorff, L. (2000). The dynamics of innovation: From National Systems and “Mode 2” to a Triple Helix of university–industry–government relations. Research Policy, 29(2), 109–123. Fukuda, K., & Watanabe, C. (2012). Innovation ecosystem for sustainable development. In C. Ghenai (Ed.), Sustainable development—Policy and urban development—Tourism, life science, management and environment. s.l.:s.l.: IntechOpen. Lumen. (n.d.). Viewpoints on government policy [Online]. Available at https://courses.lumenl earning.com/wm-macroeconomics/chapter/viewpoints-on-government-policy/. Accessed 12 March 2023. micebook. (2022). Singapore—The global powerhouse for tech and innovation events [Online]. Available at https://micebook.com/blog/2022/02/21/singapore-the-global-powerh ouse-for-tech-and-innovation-events/. Accessed 3 March 2023. Mok, K. H. (2005). Fostering entrepreneurship: Changing role of government and higher education governance in Hong Kong. Research Policy, 34(4), 537–554. National Research Foundation: Prime Minister’s Office, Singapore. (2021). Growing a vibrant national innovation system [Online]. Available at https://www.nrf.gov.sg/rie2025-plan/growinga-vibrant-national-innovation-system. Accessed 10 March 2023. OECD. (2010). Singapore—Rapid Improvement Followed by Strong Performance [Online]. Available at https://www.oecd.org/countries/singapore/46581101.pdf. Accessed 15 February 2023. Pangarkar, N., & Vandenberg, P. (2022). Singapore’s ecosystem for technology startups and lessons for its neighbors. Asian Development Bank.

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Ranga, M., & Etzkowitz, H. (2013). Triple Helix systems: An analytical framework for innovation policy and practice in the knowledge society. Industry and Higher Education, 27(4), 237–262. SG101. (2021). Growing Our Economy [Online]. Available at https://www.sg101.gov.sg/economy/ growing-our-economy/1970/. Accessed 15 February 2023. Song, T. K., & Bhaskaran, M. (2015). The role of the state in Singapore: Pragmatism in pursuit of growth. The Singapore Economic Review, 60(3), 1–30. StartupBlink. (2023). The startup ecosystem of Singapore [Online]. Available at https://www.startu pblink.com/startup-ecosystem/singapore. Accessed 29 June 2023. Startup SG. (2023). Singapore’s startup ecosystem [Online]. Available at https://www.startupsg. gov.sg/directory/. Accessed 8 March 2023. Stiglitz, J. E. (2021). The proper role of government in the market economy: The case of the post-COVID recovery. Journal of Government and Economics, 1, 100004–100004. Thukral, E. (2021). COVID-19: Small and medium enterprises challenges and responses with creativity, innovation, and entrepreneurship. Strategic Change, 30(2), 153–158. Toh, M.-H. (2012). Internationalization of tertiary education services in Singapore [Online]. Available at https://www.adb.org/sites/default/files/publication/156243/adbi-wp388.pdf. Accessed 12 March 2023. Wan, D., Ong, C. H., & Lee, F. (2005). Determinants of firm innovation in Singapore. Technovation, 25(3), 261–268. Wang, J. (2018). Innovation and government intervention: A comparison of Singapore and Hong Kong. Research Policy, 47(1), 399–412. World Intellectual Property Organization. (2022a). GII 2022 results The GII reveals the most innovative economies in the world, ranking the innovation performance of 132 economies [Online]. Available at https://www.wipo.int/edocs/pubdocs/en/wipo-pub-2000-2022-section3en-gii-2022-results-global-innovation-index-2022-15th-edition.pdf. Accessed 1 March 2023. World Intellectual Property Organization. (2022b). Global Innovation Index 2022 What is the future of innovation-driven growth? [Online]. Available at https://www.wipo.int/edocs/pub docs/en/wipo-pub-2000-2022-en-main-report-global-innovation-index-2022-15th-edition.pdf. Accessed 26 February 2023.

Crisis Management and Innovation in Indian Manufacturing MSMEs Amidst COVID-19 Pandemic Deepak Kumar, B. V. Phani, and Suman Saurabh

Abstract Small firms faced unprecedented challenges during the COVID-19 crisis. Weak financial position, closure of markets and prolonged uncertainty forced them to re-think and re-design their businesses. Using multiple case study method, we examined the crisis management strategy of these firms during the pandemic. Though these firms did not have any pre-built contingency plans or buffer capital reserve, they have chalked their path out of the crisis by innovating their businesses. Diversifying products, Cost cutting, Inventory control and IT adoption were the most popular strategies for their recovery and growth.

1 Introduction Businesses have faced disruptions in the past caused by events like war, terrorism, natural disasters, politico-social turmoil and economic and financial mismanagement. The majority of such events have been local or regional in nature, affecting certain locations and/or industries. As a result, the scope of significant research addressing the impact of such exogenic disruptions on firms has been limited. The global COVID-19 pandemic, which began in December 2019, was a one-of-a-kind event that impacted and disrupted organisations across all industries and geographies. The crisis was unparalleled in its scope, and businesses were forced to deal with extended uncertainty. In such a scenario, the way these firms reacted would naturally differ from those seen in previous crises. The ensuing lockdowns and resultant closure of markets and production facilities led businesses to a situation where revenue dried up, receivables realisation ceased and inventory stockpiled, while expenses such as labour, salaries, rent, utility bills D. Kumar (B) · B. V. Phani · S. Saurabh Department of Industrial & Management Engineering, Indian Institute of Technology Kanpur, Kanpur, India e-mail: [email protected] D. Kumar Department of Computer Science and Information Technology, Latrobe University, Melbourne, VIC, Australia © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 V. Ratten (ed.), Entrepreneurship Research, https://doi.org/10.1007/978-981-99-4452-1_7

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and interest on loans continued to accrue. This put financial strain on the businesses, leaving them cash-strapped. Even after the markets re-opened, raw material costs had risen, demand had decreased, and the ways of doing business had changed (Wenzel et al., 2021). Crises also have some hidden costs and many of the economic repercussions are not immediately visible. It is possible that undocumented costs (such as decreased productivity, mobility or tourism aversion and psychological malaise) may be just as significant as documented costs, which suggests that the actual economic impact that crisis have on businesses and communities may be even greater than was previously thought (Chang & Falit-Baiamonte, 2002). Global crises like the COVID-19 pandemic can lead to exponential rise in the number of financially challenged businesses and precipitate business failures (Amankwah-Amoah et al., 2021). Due to the small size and resource constraints, small firms, also known as SMEs or MSMEs, are naturally fragile and thus more vulnerable to such shocks. These firms often rely on their larger partners during distress, who were equally impacted during the current crisis. This resulted in spill over, generating a ripple effect and amplifying the impact of the crisis on smaller businesses. According to Opinium Research (2020), the COVID-19 crisis has led to permanent closure of over 7% of SMEs in the UK, with many more on the verge of closing and collapsing. To survive, recover, compete and grow from the current state, firm innovation is critical and imperative for MSMEs. Various studies investigating innovative strategies by MSMEs during COVID-19 have looked at different components of innovation in a fragmented manner. There has been no cross-sectional study looking at comprehensive firm innovation in MSMEs during the pandemic. Our study fills this gap using multiple case study research which explores the implications of the global COVID-19 crisis on MSMEs and categorise the mitigation strategies to build a detailed firm innovation model for MSMEs during COVID-19. The rest of the article is organised as follows: Sect. 2 covers a review of the academic literature on crises, crisis management, crisis responses, strategies and innovation by MSMEs. Section 3 details the research methodology. Section 4 synthesises the research findings related to the challenges and associated responses during crisis by these firms. It then presents a detailed Firm innovation model for MSMEs. Implications, limitations and future research scope are presented in the concluding section.

2 Literature Review Hermann (1963) note that organisational crises are precipitated by unexpected occurrences that jeopardise the company’s strategic objectives and leave managers with little time to respond. It is an unplanned event that undermines important stakeholder expectations related to health, safety, environment and economic issues, which can have a substantial impact on the performance of an organisation. Others define it as an unforeseen occurrence with the potential for far-reaching negative effects (Pearson &

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Clair, 1998; Shrivastava, 1993).The definitions of crisis in the literature share three characteristics: an organisational threat, surprise occurrence and a short response time (Seeger et al., 2016). COVID-19 clearly qualifies to be called a crisis on all these parameters. Crisis management involves initiatives by both internal and external stakeholders to detect the crisis signals early, attempt to avoid or reduce damages, take steps to recover and learn from the experience (Pearson & Clair, 1998). Organisations must undergo the three phases of crisis management. This includes crisis prevention, crisis response and recovery (Hale et al., 2005). Some academics believe the response phase is crucial since it is during this time that crucial decisions can be made to save lives or mitigate the harmful effects of a crisis (Dominic et al., 2005). During the recovery, companies attempt to mitigate the effects of the crisis, return to the pre-crisis level business volume and learn from the experience (Smith, 2005). The likelihood of any particular crisis occurring is extremely low (Hermann, 1963). Because of the crisis’s black swan nature, firms have little understanding of the causes and consequences (Jackson & Dutton, 1988; Quarantelli, 1988), rendering decision-making more difficult due to the related uncertainty. Finally, crises instils a sense of urgency (Quarantelli, 1988), necessitating speedy decision-making. This could imply that decisions are made without having comprehensive information and assessing an exhaustive range of options. For their survival and growth, businesses must plan and implement timely and effective responses to these disruptive events (Pearson & Clair, 1998). SMEs in contrast to larger companies are less likely to do such rigorous planning (Wang et al., 2007). Some SMEs, on the other hand do respond to the crisis by using ingenuity to solve difficulties and seize opportunities (Adam & Alarifi, 2021). The resilience of these businesses enable them to grab opportunities that come associated with the crisis (Thukral, 2021). Previous literature on crisis and MSMEs covers a variety of topics such as need of formal and written planning (Spillan & Ziemnowicz, 2003), strategic planning through environmental scanning, crisis management through strategic planning (Vargo & Seville, 2011) and the recovery barriers (Runyan, 2006). Innovation has been crucial for businesses seeking crisis recovery and expansion. Innovation refers to the creation of new products and processes that can satisfy customer’s requirements more profitably and competitively (Zahra et al., 2006), implementing new technology or management practises to accomplish a specified operational improvement within a company (Eveland et al., 1990) and adopting new marketing mechanisms to capture a larger market share. Innovation improves MSME’s performance (Dai & Raharja, 2020; Kasseeah, 2013; Mil´ & Terziovski, 2010). According to Zulu-Chisanga et al. (2016), the key cause for the improvement in the financial metrics of MSMEs is the efforts made to develop new innovations. Freeman (2004) stated that the distinctive performance of SMEs is a result of the successful use of innovative techniques. Innovation is also critical to a firm’s survival (Ortiz-Villajos & Sotoca, 2013). The life of a business is inextricably related to its innovation processes, and it cannot survive and continue

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operations without innovation. Table 1 lists some relevant literature on the strategies adopted by MSMEs during such exogenous events. Table 1 Literature on MSMEs strategies during different crises Paper title

Author, year

Crisis event

Countries

Key findings

“British and German SMEs and the memory of war: a comparative approach”

Paulson, 2018

World War II

UK and Germany

While the victory made British enterprises complacent, their German competitors reacted with emotional and intellectual vigour to devastation and defeat, responding to changed circumstances with entrepreneurial ingenuity by using the assets left to them, resulting in post-war survival and growth

“Korean SMEs in Gregory et al., 2002 the wake of the financial crisis: strategies, constraints and performance in a global economy”

Asian Financial Crisis (1997)

South Korea

Korean SMEs focused on marketing and technology innovation to become globally competitive and gain market share

“SMEs survival in time of crisis: strategies, tactics and commercial success stories”

Bourletidis & Triantafyllopoulos, 2014

Global Financial Crisis (2008)

Greece

In order to survive, SMEs devised alternate marketing techniques, innovative approaches and fresh concepts

“The impact of natural disasters on micro, small and medium enterprises (MSMEs): a case study on 2016 flood event in Western Sri Lanka”

Samantha, 2018

West Sri Lankan Flooding

Sri Lanka

SME resilience needs collaboration and partnerships across businesses, governments and other private groups

“Post-disaster recovery: an entrepreneurial marketing perspective”

Morrish & Jones, 2020

2010–2011 Christchurch Earthquakes

New Zealand

To recover from the crisis, MSMEs must demonstrate attributes such as opportunity searching, resource organisation, customer value creation and risk acceptance (continued)

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Table 1 (continued) Paper title

Author, year

Crisis event

Countries

Key findings

“Analysis of post-disaster damage and disruptive impacts on the operating status of small businesses after Hurricane Katrina”

Sydnor et al., 2017

Hurricane Katrina

US

Available assets and human capital resources enable businesses to ride out the recovery period

“An examination Nafiu et al., 2014 of the impact of terrorism on small and medium scale enterprises’ mortality rates and standard of living in the northern region of Nigeria”

Terrorism

Nigeria

To avoid losing their entire businesses to terrorists, Small and Medium Enterprise operators/entrepreneurs must step up their security planning. In extreme instances, businesses may choose to relocate or wind-up their operations

“Innovation Adam & Alarifi, 2021 practices for survival of small and medium enterprises (SMEs) in the COVID-19 times: the role of external support”

COVID-19

Saudi Arabia

Innovation practices adopted by SMEs had a positive impact on the performance and likelihood of survival. External support aids strengthen this impact on business survival rather than its performance

Caballero-Morales, 2021 “Innovation as recovery strategy for SMEs in emerging economies during the COVID-19 pandemic”

COVID-19

Mexico

To reduce crisis risk, innovation is identified as a key aspect of business recovery

“Innovation among entrepreneurial SMEs during the COVID-19 crisis in Iran”

COVID-19

Iran

Embracing innovation helped SMEs to remain competitive. Experience is one of the most important factors affecting innovation. Organisation size and age were negatively associated with process innovation. Training as well as higher commitment to R&D can lead to greater innovation

Van Auken et al., 2021

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As with the previous crises, small firms adopted various strategies during COVID19 crisis like digitisation (Klein & Todesco, 2021; Kraus et al., 2020), re-designed corporate practices (Juergensen et al., 2020) and frugal innovations (Cankurtaran & Beverland, 2020). Some firms resorted to business model innovation(BMI) (Bivona & Cruz, 2021) as new-normal in form of social distancing and work-from-home rendered various models infeasible, while others opted for temporary BMI (Clauss et al., 2022) to adapt to the situation. Start-ups adopt a bricolage approach (Kuckertz et al., 2020) and most often outpace other players in responding and recovering from the crisis (Ebersberger & Kuckertz, 2021). Chesbrough (2020) emphasises the necessity of open innovation in particular. Small businesses, despite having fewer financial resources and lesser access to credit, forge their own path out of the crisis. These strategies and paths can propel some of these businesses through time to global prominence. Many big global brands that exist today were nearly wiped out by crises at one point. This includes, to mention a few, Kellogg’s, General Motors, Hostess and Amazon (CB Insights Research, 2020). During the Great Depression, when all companies were taking across-the-board cost-cutting measures, Kellogg’s took the opposite approach by doubling its advertising budget and creating radio advertisements and catchphrases to get a greater percentage of consumer attention. The marketing helped propel Rice Krispies to its current status as a morning staple. In late 2000s recession, General Motors was on the verge of bankruptcy, and the US government had to intervene to save the firm. More than 400 of the company’s 1,300 executives were asked to quit by the new administration, which also trimmed car dealers, staff, and entire divisions including Pontiac and Saturn. Management also attempted to make the corporation smaller by eliminating non-essential personnel and plants, as well as abandoning unproductive segments like GM’s European business. Similarly, Hostess’ fortunes were turned around through smart acquisitions, production breakthroughs, and an efficient marketing approach. Amazon, which lost 90% of its value during 2000s recession, was able to survive by leveraging negative cash conversion cycle. Amazon expanded its business operations in succeeding years. Marketplace, a second-hand book marketplace that eventually expanded into a third-party sales platform for businesses to sell just about anything, was launched. In the same year, the corporation started the first steps towards forming Amazon Web Services; a company that allows software developers to rent servers from Amazon data centres. Innovation has not only been key to a firm’s survival during crisis but has also written the post-crisis growth story for them. In our study, we investigate the innovative components in strategies and actions of Indian manufacturing MSMEs in response to the current crisis. We have used the four dimensions of firm innovation presented in the Oslo Manual (2005). Accordingly, Fig. 1 presents a general Firm innovation model that includes four types of innovations: product innovations, process innovations, organisational innovations and marketing innovations. Product innovation entails significant modifications in the capabilities of goods or services. There are both wholly new items and services as well as significant enhancements to existing products. Significant changes in manufacturing and

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Firm Innovation Product Innovations

Process Innovations

Marketing Innovations

Organisational Innovations

Fig. 1 Firm innovation (Oslo Manual, 2005)

delivery processes are represented by process innovations. The deployment of innovative organisational methods is referred to as organisational innovation. Examples include changes in corporate techniques, workplace organisation and the firm’s external relations. Marketing innovation refers to the introduction of new marketing methods. A few examples include changes in product design and packaging, product advertising and positioning and pricing tactics for goods and services.

3 Research Methodology The research is designed to understand the challenges and responses during the COVID-19 pandemic for the Indian manufacturing MSMEs. Qualitative data embodies very rich information which can reveal the true picture of the situation; hence, we adopt an exploratory approach which allows to identify key criteria for additional investigation. Each firm is a unit of analysis in our study. We conduct the review of scientific literature on MSMEs and crisis to identify different parameters that can guide the research process. Then, three phases of key research activities were designed to determine the challenges and associated response during COVID-19 crisis by MSMEs. First, this research identified the challenges MSMEs faced during two phases of the crisis: The Lockdown Phase and Re-opening phase. Second, we investigate the associated responses by the MSMEs and the policy response by the government. Finally, the data obtained from the case study was utilized to explain and consider the dimensions of firm innovation and create a detailed firm innovation during crisis model for small firms. The design of the study follows from Young et al. (2018) and involves steps mentioned in Fig. 2.

3.1 Case Study This paper uses a multiple case study approach to gain a better understanding of the extreme business disruption that occurred during COVID-19. Furthermore, as Voss et al. (2002) point out that when the findings are generalised based on research results, the multiple case study approach can help avoid researcher bias and increase external validity, allowing for more precise conclusions to be formed.

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D. Kumar et al. Identify Research Question/s

Select Interview type

Devise initial Interview Questions

Pilot/Refine Interviews

Ethical Review

Sampling

Undertake Interview

Analysis

Write-up/dissemination

Fig. 2 Research Design, Young et al. (2018)

3.2 Data Collection Data was collected in two parts. First, the information related to the firm and its manager was collected. Then semi-structured interviews (Appendix 1) were conducted with a set of comprehensive questions relevant to the research objective. Table 2 presents the summary of Firm and Owner/Manager Characteristics for the studied firms. In the case studies, five semi-structured interviews with the owners/managers of MSME manufacturing units in India were undertaken. This provided reliable access to strategic information regarding crisis difficulties and responses. We interviewed all the firms and visited physical premises of three of them. The interviews usually lasted about an hour. When additional clarification and explanation were required, follow-up phone calls were made. The case study technique enriches the data acquired, despite the small number of respondents or instances (Eisenhardt, 1989). Triangulating the data collected during the case study will improve the validity, quality and reliability of the data. Eisenhardt (1989) states that in multiple case approach there is no ideal number of cases, but suggests that a study of between four and ten cases usually works well.

3.3 Data Analysis This study employs both within-case and cross-case analyses. First, each instance is examined separately to derive insight about research questions; after that, crosscase analysis is used to determine the variance in the data. According to Eisenhardt (1989), the two rounds of data analysis are created in this study to avoid a premature

Number of employees

Export

Bags & backpacks

Aluminium windows 29 and doors

Automobile components

C

D

E

3

Steel utensils

40

7

29

Textile

A

90 C

12 C

6C

1C

10 L

3

300

35

120

10

Yes

Yes

Yes

No

No

70

52

37

65

36

M

M

M

M

M

Gender

Graduate

Graduate

Post Graduate

Graduate

Graduate

Education

Age

Annual turnover

Industry segment

Firm age (Years)

Owner/Manager characteristics

Firm characteristics

B

Case

Table 2 Summary of firm and owner/manager characteristics

40

20

7

20

3

Managerial experience (years)

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Firm Innovation

Product

Process

Market

Organisational

Producing crisis essentials

Upgrading Manufacturing technology

Expand market

Formal business practices

Diversifying to new product/segment

Re-allign production chain

Market penetration

Increase banking use

Weeding out unprofitable products

Cost Reduction

Prioritize profitable channels

Manpower reskilling and training

Product value addition

Inventory Control

Sales credit control

IT adoption

Design/develop future products

Fig. 3 Crisis induced firm innovation in MSMEs

conclusion, which can be caused by information and researcher bias. The following important dimensions serve as a foundation for the within-case analysis: • Challenges during crisis • Responses to these challenges by MSMEs • Firm innovation components in MSMEs strategies and actions. Then, using the cross-case analysis enables us to look for the variance in the data. A detailed model of crisis induced innovation in MSMEs is proposed as the result and is depicted in Fig. 3.

4 Results, Discussions and Implications This section synthesises the findings from the case analysis. It begins with describing the challenges faced by MSMEs during the COVID-19 crisis. Then the associated crisis response by the firms and government are presented. Based on the responses of the firm to the crisis, it is investigated how elements of firm innovation were

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incorporated in them and accordingly a detailed model for crisis induced innovation in small firms is presented.

4.1 Challenges for MSMEs During COVID-19 Crisis COVID-19 brought many businesses to an abrupt halt leading to closure of operations and near zero sales. An unprecedented situation that emerged swiftly caused markets and businesses to be locked down as a measure to contain the spread of the pandemic. This pushed the small firms which are inherently vulnerable to complete closure. This led to a variety of challenges for these firms to stay alive. There were two noticeable phases as is evident from the cases: Lockdown phase, from announcement (March 24, 2020) to repetitive extension and Re-opening phase (From June 1, 2020), when the businesses were allowed to re-open gradually in phased manner. We have categorised the challenges for these firms corresponding to these two phases. Most of MSMEs run hand to mouth with their capital and keep most of the funds utilised in the business. This is because they cannot afford to keep idle the little capital that they have and instead they leverage this to generate additional sales and profit. They tend to keep maximum of their funds utilised and achieve maximum cashflow and inventory rotation (Case C). So, most of the time, their capital position is weak and any unfavourable disruption makes it worse. When the businesses were mandated to close down their premises, the sales and revenue dried completely. But some of the expenditures kept incurring, salaries and wages being the most prominent of them and rent, electricity and interest on loans being the others. This ate away the meagre available funds in no time leaving the business owners with empty hands. In most of the cases, both the creditors and debtors for these small firms involved big players (Case D). So MSMEs having subordinate positions had to obey both the sides. The creditors asked for the repayment but these firms couldn’t forcefully ask their debtors to pay due to fear of losing their customer and sales. This subordinate negotiating position further created the capital gap for these firms. Also, the recoveries of receivables stopped significantly due to restriction on physical movement (Case B). This is because many of these firms send reminders to their debtors wherein their men regularly visit the debtors to collect the dues. The expenses of sending workers home safely added to the expense for many of these firms. This disturbed the cash flow equilibrium rendering these firms to acute cash crunch. Due to starvation of capital during the lockdown duration, smaller firms faced difficulties in providing regular salaries to their workers (Cases- A, B). They were also facing difficulty in meeting other financial obligations like rent (Case A), electricity bill (Case B) and interest payments (Case D). In regular times, inventory keeps flowing wherein raw material enters the premises and finished goods move out to the market. But the closure of market and factories stopped this cycle resulting in a lot of working capital tied in inventory both in the form of raw materials and finished and semi-finished goods. The closure of operations

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also increased the wastage as some of these inventory materials became damaged. The timing of announcement of the lockdown was near to the beginning of new financial and academic year and many of these firms had accumulated raw materials and finished goods according to the demand projections for the next fiscal year. This tied up large amount of working capital in the idle inventory (Case C). When the unlocking began and factories were gradually allowed to open in phased manner, MSMEs were embraced with another set of challenges. To begin with, firms faced shortage of raw materials (Cases A, B). Many of the firms procure inputs from other states. As the markets were just beginning to open and ban on movements were only partially lifted, there was shortage of transportation and workers (Case B). This also contributed to the difficulty in getting the raw materials. Also, there was steep hike in the prices of raw materials as high as up to 60–70% for some inputs (Case E). The next challenge was calling the workers who had migrated back home to far off distances (Cases A, C, D). This led to the shortage of workers and was not completely replaceable because they had the skills required to work in the firm. Hiring newer set of people would involve training them afresh which would further lead to cost increment (Case B). The closure of markets, loss of employments, migration, falling prey to the virus, loosing the dear ones and uncertainty of the time ahead created a fear psychosis (Case E) in the minds of public leading to significant drop in demand (Cases A-E). Also, the export markets were still not open which could contribute to it. The re-opening was allowed with an accompanying set of restrictions and guidelines like masks, regular sanitisation, social distancing, etc. The cost of adhering to these guidelines increased the operational cost (Cases C, D). Added to these was the cost involved in calling workers back from home and looking after their medical expenses to some extent. Few firms also had to face some administrative trouble due to permissions needed to re-open the businesses (Case C). From the cross-case analysis, it becomes clear that firms with smaller turnover faced greater difficulty with cashflow and capital un-availability. During the gradual re-opening, higher raw material prices and lack of demand were the prominent challenges for all the firms. A summary of cross-case analysis about the challenges is provided in Table 3 below.

4.2 Response to COVID-19 Challenges by MSMEs To begin with, MSMEs did not have any inbuilt crisis management plans. Neither do they have any reserved contingency buffer capital for such times barring a few which are relatively very big in capital size (Medium Enterprises). These firms tend to keep maximum of their funds utilised and achieve maximum cashflow and inventory rotation (Case C) and lots of sale on credit worsens capital position (Case B) leaving no scope for such buffer. Most of these firms are too small with respect to capital and manpower and most of their processes are far from being formal and procedural.

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Table 3 Summary of cross-case analysis: key challenges for MSMEs during COVID-19 Pandemic Phase 1: Lockdown

Phase 2: Gradual unlocking

Cash Idle Worker’s Steep Raw Labour Low Administrative starved inventory welfare hike in material shortage demand troubles raw shortage material prices Case ||| A

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Case || B

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Case | C

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Case || D

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Case | E

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Notes |||: heavy impact; ||: moderate impact; |: light impact

Hence, a formal crisis management plan or sufficient buffer capital reserve is not feasible for them. Previous research also indicates that MSMEs have a relatively lower degree of formalisation in crisis planning (Herbane, 2013). Also, the nature and scale of the crisis was unprecedented. So, no amount of forecasting and proactive planning would have been enough to be able to save them from the onslaught of the crisis. Instead, these firms made in time decision by accessing the situation and coming up with effective plan to respond to the crisis. These decisions regarding responding to the situations were taken mainly by the owner with consultation of few senior employees. The plans were made in consultation with the customers, looking at the competitors and in line with the strength and ability of the firms (Case E). MSMEs responded to these challenges according to their capabilities and have taken into consideration both the interest of their business as well as employees. In the wake of stopped revenue and cashflow, the first thing that they focused on was reducing the expenditure. Unfortunately, this had to begin with cutting the number of employees through temporary and permanent layoff (Cases A–E). Case A highlighted that to reduce the cost, instead of hiring additional employee after the lockdown, the owner increased his self-labour. In the scenario of no work during lockdown, most of these firms had to cut the salaries and wages of employees. To account for the interest of both the business and the employees, they decided a graded basic minimum salary that they can provide while the business remains solvent at the same time. Neither did they want to completely shut the salary losing their skilled manpower nor could they afford to pay full salaries leading to death of the cash starved business (Case B). On the finance front, the initial source of replenishment came from retained earnings and surpluses, personal savings and friends and relatives. Commercial credit

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was also sought to manage the cashflow. To keep the cashflow cycle balanced, the debtors were gently asked to pay the dues and creditors requested for moratorium or deferment of payments (Case D). Government did come with some policies to save these firms from cash starvation. Extended credit guarantee and moratorium on loan repayments and tax payments did ease short time cashflow imbalance. But utilisation of these schemes was mixed fearing increased interest burden. Some re-paid the outstanding credit to reduce the interest burden in times of no profit. When the market started to open, as both the cost of raw material and cost of operation went up, the first thing MSMEs focused on was to cut the cost and the indirect expenses reduced to the extent possible. Most evident characteristics have been the manpower restructuring including layoff, wages and salary reduction, increasing working hours and improving labour productivity through re-skilling and training (Cases B, D). To reduce capital tied up in inventory, tight Inventory control was followed, i.e., not buying or producing beyond what the orders are (Cases B, C, E). Credit control measures were also adopted to limit the sales on credit and realise the pending receivables (Case B). All these steps were taken to strengthen back the capital and cashflow position. Since the demand had dried up, firms re-directed their production processes to producing items of current demand with similar inputs, i.e., needing similar raw materials, equipment and manpower skill. Firms resorted to product renewal, value addition (case B) and widening the product line or segment diversification (Case E). Remoulding the product basket to weed out unprofitable products (Case D) and focusing on products with higher profit was stressed upon. Firms focused on developing products to be in demand in near future and products currently being imported. Firms also looked to expand the customer base and geographical market coverage including the export regions (Case E). But reduced demand, excess sales on credit (Case B) and consumed production capacity (Case A) prevented some firms from looking to expand the marketing and sales horizon. Firms have also looked to seek new partners and sales channels and have increased focus on channels with better margins (Case C). The pandemic has forced these firms to adopt more formal means of operating their businesses including intensifying banking use and paying the taxes (Cases A, B). In times of such unforeseen crises, this can help them avail the relief measures provided by the government. Also moving in to the formal business space enables the scope of growth and expansion for the businesses. They also felt the need to intensify the use of formal banking channel and payment methods. On the one side, this can help in getting government aids and getting credit from banks; on the other side, doing away with physical reminders and instead resorting to online reminders and payments would save much cost and time. During the pandemic, MSMEs have realised the importance of digital and banking tools. Also, the use of technology to connect through customers, partners and suppliers has gone up (Cases B–E). The meetings moved to online mode with the use of online meeting tools. Online route also got adopted for orders and payments. In a nutshell, the pandemic has brought these firms closer to banking and technology.

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Most of the firms have resorted to temporary or permanent layoff as is evident from the cross-case analysis of MSME crisis responses provided in Table 4. Smaller firms had to source additional capital as this firms faced greater cash and capital shortages. Each of the firms has resorted to some sort of innovation but bigger firms have innovated more than the smaller firms. This might be due to the fact that bigger firms at least had some capital at their disposal to invest in innovation while the very small firms were struggling to manage cash to barely remain afloat.

4.3 Firm Innovation During Crisis: Procedural Model Based on the case study, we discovered that these five companies used a number of similar strategies to deal with their crises. Finally, a total of 17 crisis management practices have been found. Table 5 lists some of the most prevalent crisis management techniques. Based on the above identified crisis management strategies by MSMEs, the basic firm innovation model (Fig. 2) is further verified and refined. The strategies are assigned to one of four major groups: product innovations, process innovations, organisational innovations and marketing innovations (Oslo Manual, 2005). Based on this, we develop a refined SMEs’ crisis innovation model that provides specific practical details for each dimension of innovation (Fig. 3). The elements which got greater emphasis by these firms are boxed and highlighted by blue borders. Clearly, MSMEs have adopted different strategic approaches to innovate and emerge from the crisis. They have re-innovated their business processes to adapt to the need of the hour. Diversification, cost reduction, inventory control and IT adoption are the most common strategies and are adopted by almost all the firms. During a recession, product diversity helps businesses generate additional revenue. Additionally, industries with cyclical behaviour must have a supplementary product that can compensate for revenue declines during the downcycle. This finding complies with Coad and Guenther (2013), who showed that diversity influences the long-term firm competitiveness and survival, and that firms with greater diversification exit less frequently. Cost reduction is the first go-to strategy for firms during crisis since their financial condition worsens. Thorgren and Williams (2020) explain how MSMEs took rapid action by delaying expenditures, decreasing labour costs, expenses and revising contracts and conditions. Tighter inventory control is adopted to minimise tie up of scarce capital in inventory. Zimon et al. (2021) also signals the shift in inventory management practices in MSMEs during the pandemic to make them financially sound. Technology adoption is no longer a choice for businesses and is imperative to remain competitive in the market. MSMEs can communicate with their clients more quickly with the help of technology, which could enhance their turnover. Investment in digital technology helps MSMEs to go global, as it is likely to become a significant facilitator for driving new business models and providing consumers with a variety of

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Source additional capital

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Processes restructuring

Phase 2: Gradual unlocking Wages/ salary cut

Product basket restructuring

Temporary/ permanent Layoff

Phase 1: Lockdown

Reduce expenditure

Table 4 Summary of cross-case analysis: Key crisis responses by MSMEs during COVID-19 pandemic

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Expand and deepen market coverage

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Organisational restructuring

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Table 5 Summary of SEMs’ crisis response strategies Crisis responses Producing crisis essentials Cost reduction Product/Segment diversification

Firms Firm A

Firm B

√

√

√

√

Weeding out unprofitable products

√

Sales credit control

√

√

√

√

√

√

√ √

√

√ √ √

1 4 5 1 2 3 2 4 1

√

2

√

2

√ √

√

Total

1 √

√

√ √

Product value addition

Increased banking use

√ √

Manpower re-skilling and training

IT adoption

√

√

Prioritise profitable sales channels

Adopt formal business practices

√

√

Market expansion

Design/develop future products

Firm E

√

Re-align production chain

Inventory control

√

Firm D

√

Upgrading manufacturing technology

Market penetration

Firm C √

√

2 2 2

√

√

√

2 4

options (Akpan et al., 2020). Starting from internal information system management to external processes like sales and marketing, leveraging IT tools can be a game changer. At a time when the market and economy are becoming more and more data driven, those who shun the technology will lose their competitive edge.

5 Conclusion The COVID-19 crisis was disastrous for businesses. Despite all their inherent weaknesses, MSMEs waited for the storm to subside and, in the meantime, sought to rebuild their foundations in order to emerge stronger from the crisis. It is typical to believe that MSMEs are less capable of dealing with crises than large corporations. This study, on the other hand, reveals that SMEs do not react passively to crises. Instead, they are extremely competent of dealing with crises proactively with limited resources. MSMEs demonstrate their distinctive approaches of crisis management and creativity despite their minimal market positioning strength. They managed the crisis and innovated their processes to adapt to the times ahead. Although difficult and even painful, such crises can be transformative for both the entrepreneur and the company. The lessons have been well learnt and the memory

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of challenges will further propel them to innovate and scale their businesses. This crisis and innovation have sown the seeds of growth in these small businesses, some of which will become large multinational organisations in the coming decades. We are constrained in our abilities to analyse which companies emerge as winners and why due to the recentness of the crisis, but this will be an interesting research area to explore in future. This study makes various contributions to the literature and theory. Firstly, it enriches the body of literature on crisis, crisis management and innovation during crisis by small firms. Second, it provides empirical evidence about the nature of challenges and responses by the firms during the crisis using the case study approach. Third, it proposes a novel crisis induced firm innovation model based on Oslo Manual (2005).The paper provides a comprehensive and real crisis view for MSMEs through adoption of the case study method allowing for comprehensive investigation of the challenges and associated responses. For practitioners, this study illuminates several aspects of the small business crisis. First, MSMEs’ owners/managers can use this information as a reference to better understand the nature of the crises and the challenges they face. Crisis situations need MSMEs to be more ready and proactive to sustain. Innovation is must for these firms in order to survive the turbulent times and hence these firms ought to adapt to the changing business and technological environment. This research provides vital information relevant to governmental policy formulation through a full discussion and evaluation of the difficulties and responses.

Appendix 1: Semi-structure Interview Questions Question no 1. (a) What problems did the firm face due to the pandemic? (b) What were the financial difficulties encountered? Question no 2. (a) Did the firm have any kind of plan or capital reserve to tackle the emergency situation? (b) Did the firm craft out a crisis management plan after the pandemic hit? What was the process and who were the stakeholders? Question no 3. (a) Did the policies and schemes by government and its agencies help in addressing above challenges?

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(b) What were the challenges that remained unaddressed by these policies and schemes and how did you tackle them? Question no 4. (a) Can you mention and discuss the sequence of actions undertaken by the firm, since day 1 of the pandemic to deal with it? (b) Did you do something completely new which you never thought of doing and which no other firm might have done to manage the crisis? Question no 5. (a) What revival and growth strategies did the firm adopt or is eying to adopt? (b) Is it in to or looking towards Product innovation and differentiation, increasing market width and depth, streamlining operations, adopting digitalisation and e-commerce, etc.? (c) Did the firm integrate new digital processes and tools like teleworking, social media, website creation, etc.? Question no 6. (a) What are the sources of finance being availed for this post pandemic revival and growth? (b) Why? (c) Did you approach any bank for credit? If no, why? If yes, how did they react? Question no 7. (a) How are these financial resources obtained being distributed across different business functions like product design and manufacturing, market discovery and penetration, marketing and advertisement, Employee training and Talent acquisition Technology upgradation and digitalisation? Question no 8. (a) What prospects do they see for the firm in the time to come? Question no 9. (a) Anything else you would like to share about the whole event unfolding up until now? (b) What are the lessons learnt and how would you incorporate them in your business?

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