Corona crisis slows sustainable innovations in Swiss SMEs

Even one year after its outbreak, the Corona crisis is omnipresent for Swiss SMEs. The study by Prof. Dr. Sebastian Gurtner of the Institute Innovation & Strategic Entrepreneurship of BFH Wirtschaft shows that 92 percent of the 254 companies surveyed are affected by the crisis; 5 percent even to an extent that threatens their existence. In the first survey in March and April 2020, the level of concern was estimated to be slightly higher at 99 percent (in some form) and 12 percent (threatening the existence of the company).

Decline in sales and staff reductions as consequences of the crisis

Just under half of the SMEs surveyed said they had suffered a drop in sales in 2020. 9 percent of the companies even lost more than 50 percent of their sales last year. As a result, 18 percent of the companies had to lay off employees. The reserves saved in previous years also shrank in the "Corona year" 2020: on average, the companies affected had to use up 40 percent of their operating reserves. The personal resources of the entrepreneurs were also tapped at around one in five companies. Not all companies had to accept losses, however: As many as 33 percent of those surveyed were even able to increase their sales in 2020.

Sustainable innovations play a subordinate role in the crisis

As a result of the Corona crisis, changes in the business model were necessary at one in five SMEs. In many cases, this required innovations that were primarily related to the companies' main business activity: 18 percent of investments in 2020 went to technology-oriented innovations. Process optimization accounted for 13 percent of investment funds. Sustainable innovations, on the other hand, were less heavily promoted: Only 5 percent of the available innovation budget flowed into development projects with a focus on sustainability.

If companies have implemented innovations in 2020, these have primarily addressed changing customer needs. Due to the Corona crisis, for example, new digital sales channels had to be developed. The second most important reason was to maintain or improve their own competitive position.

What particularly inhibits sustainable innovations at present

Thus, although the Corona crisis triggered innovation efforts among the companies surveyed, hardly any projects were implemented that promoted social or environmental sustainability. The results of the studies provide three possible explanations:

• Lack of resources: During the Corona crisis, SMEs lacked both money and time to devote more attention to sustainable innovation. The main focus was on continuing operational business activities.
• Short-term planning horizon: 2020 was characterized by uncertainty: long-term planning was hardly possible; general conditions (e.g., restrictions on the number of people, store closures) often changed at short notice, and customer needs also changed. In this situation, it was difficult for the entrepreneurs to plan and implement innovations in the longer term.
• Low relevance of sustainable innovations: Awareness of the contribution that one's own company can make to ensure the sustainable development of society is still too low among many companies. In a pandemic, relevance is also often assessed in the short term and with an internal view. A large proportion of the companies surveyed were busy in 2020 with maintaining operations under the new conditions. Sustainable innovations that do not have a direct impact on business operations were thus pushed into the background.

The results come from the second survey of a progress study of the Institute Innovation & Strategic Entrepreneurship of BFH Wirtschaft. The survey took place in March and April 2021.

Source: Bern University of Applied Sciences