Who Gets Hurt in a Local Economic Crisis: Strategic Renewal and Internationalization Effects

Local economic crises are part of the growth trajectory of emerging markets yet the literature fails to offer insights on why some firms in emerging markets are more affected than others by a local crisis. The authors aim to bridge that gap by: (i) identifying strategic renewal through explorative and exploitative learning and international dependence in terms of markets served and financing received as key explanatory variables of sales growth during a local crisis, and (ii) showing that these effects change from the crisis period to the subsequent recovery period. Combining survey and objective data, the authors examine over 400 firms during the 2001 economic crisis and the 2002 recovery year in Turkey and provide empirical support for the developed theory. on the basis of these combined analyses, the authors show that what works during a crisis period may not work during recovery, and vice versa.