Innovating and Transforming during Covid-19: Insights from Italian firms

1. Management challenges in the post Covid-19 era

Innovating and Transforming during Covid-19: Insights from Italian firms

Giulio Ferrigno, Valentina Cucino, Andrea Piccaluga

During health emergencies actions are taken by a wide range of different actors (Anderson et al., 2005). Actions are started by ordinary/expected actors, such as national and regional governments, hospitals, volunteers’ organisations, as well as by extraordinary/less expected actors, such as firms, universities, i.e. organisations whose institutional mission is not that of acting for the benefit of society in the case of a health crisis. Among these actors, it is particularly interesting to analyse how firms, i.e. profit organizations, operate and to know more about their motivations. Furthermore, the innovation literature suggests that different types of shocks, such as health emergencies, have the effect of stimulating firms to innovate. Within this type of innovations we also have the cases of firms which orient their innovative efforts towards the provision of products and services for the benefit of the society, going beyond profit objectives during an health emergency (Drabek and McEntire, 2003; Shepherd and Williams, 2014; Williams and Shepherd, 2016).

Covid-19 is an unprecedented health emergency which has caused, in the first months of 2020, a huge number of casualties, economic losses and disruption of daily activities all over the world. The situation has been and still is different in the various countries, according to many factors, such as the intensity of the pandemia, the decisions which were taken, the national health infrastructure, etc. However, beyond the “institutional” response to the pandemia, a number of other spontaneous initiatives have been taken, ranging from crowdsourcing actions to build new Covid-19 hospitals, to initiatives by firms and universities which perceived the gravity of needs in specific areas, which institutional actors could not fully respond to, etc. For example, the huge and sudden rise in the demand for medical devices (e.g. ventilators) and personal protective products (e.g. masks, hand sanitizers, gowns, lung ventilators) could not be satisfied in several countries, as fast as it was necessary, by institutional organizations (WHO, 2020) and this has stimulated actions by firms and universities (Baldwin & di Mauro, 2020; Kandri et al., 2020; Tognini, 2020).

As a matter of fact, it is notable that, worldwide, many firms have rapidly converted part of their manufacturing activities to provide medical or personal protective products in the worst moments of the Covid-19 emergency (Clark, 2020; Tognini, 2020). Italy, for example, has been very severely affected by Covid-19 and in this country a large number of high-tech and non high-tech firms, operating in different sectors (i.e. automotive, software, 3d printing, fashion, cosmetics, distilleries, and textiles), have rapidly increased or transformed their production to meet the demand for complex medical devices, personal protective equipment, surgical masks, ventilators, alcohol hand sanitizers, gowns or other components (Banks, 2020; Clark, 2020; Tognini, 2020).

Despite the existence of literature focuses on firms’ reaction to health emergencies through innovations that reshape their business models (Buliga, 2016; Martì, 2018), not much has been written about the purpose-led, non-profit objectives that may drive firms’ innovation efforts to support communities in the fight against a global emergency (Rey et al., 2019). This is why, in this paper, we try to answer the following research questions:

  • what kind of purposes have been driving firms’ actions to support communities in the fight against Covid-19?

(2)       Do different patterns exist in the way firms implemented their purpose-led actions through their R&D and innovation projects during Covid-19?

To address these research questions, we reviewed both purpose-driven firms (Rey et al., 2019) and R&D management literature (Duran, 1988; Peeters and Martin, 2017) in relation to health emergencies. On the basis of this literature we argue that two main dimensions can be considered to characterize firms’ actions. First of all, firms can choose to adopt short term or medium-long term purpose approaches. In other words, they can choose to launch purpose-led actions only in the short term or continue them after the peak of the health emergency. Secondly, their actions can be implemented through (mainly) existing R&D and manufacturing capabilities or (mainly) new ones, which therefore require new specific projects and initiatives. Consequently, we elaborated a conceptual framework that combines these two dimensions and applied it to 21 Italian firms that reacted to the Covid-19 emergency offering products and services related to the health domain (e.g. personal protective equipment), which were not part of their normal offering.

#Covid-19 #Italy #manufacturing transformation #purpose #R&D innovation