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This study aims to explore the strategic decisions at innovation level implemented by firms to thrive and transform themselves during crises. This study also aims to provide insights to answer the question: Why do some firms decide to implement certain types of innovation during a crisis?

This research was carried out through a multiple case study involving 22 firms. The methods were implemented in three steps to increase rigor and the replication of the study: identification and selection of cases, data collection through interviews triangulated with online information and analysis based on aggregating themes and finding patterns.

In the face of the COVID-19 pandemic, the companies analyzed focused their activities mainly on developing new features or functionalities for their products or services. Most of the firms implemented innovations across nearly all ten categories outlined by Keeley et al. (2013). Many of the implemented innovations involved personalized and superior service enhancements, process efficiency optimizations, channel diversification initiatives and new ways to collaborate to generate value. In general, the main drivers that led firms to decide to implement these innovations include reducing costs, enhancing operational efficiency, generating new revenue streams, augmenting sales and enhancing client relationships.

This research significantly advances the convergence of innovation, strategy and crisis in three impactful ways. First, it constructs a pragmatic and evidence-based framework, consolidating the primary catalysts, innovation categories and strategies adopted by firms in response to the challenges posed by the COVID-19 crisis. Second, it offers insights for guiding decision-making processes related to innovation, presenting actionable recommendations derived from the study’s findings. Thirdly, this study highlights critical perspectives that can guide governmental intervention, facilitating the formulation of more tailored and effective policies to assist companies during crisis periods.

This study centers on developing countries, specifically examining Colombian firms, considering their unique characteristics and priorities. Surprisingly, there is a scarcity of studies delving into the innovation and transformation of firms during the COVID-19 crisis in nations sharing cultural, economic and political similarities with Colombia.

This paper aims to explore the factors that influence innovation and productivity in small and medium-sized enterprises (SMEs) manufacturing enterprises in Colombia, in comparison with larger firms.

The study was based on firm-level panel data extracted from a census of Colombian manufacturing firms between 2007 and 2014. The authors used an adapted version of the Crepon-Duguet-Mairesse (CDM) sequential approach that interrelates R&D intensity, innovation outputs and productivity.

This study's findings indicate that investing in R&D has a positive impact on innovation in both SMEs and larger firms. However, the effect on productivity is significantly higher for SMEs. Evidence also suggests that the innovation performance of SMEs and larger firms is influenced by co-evolution among the firm's resources and capabilities, knowledge flows with external organizations, access to funding and knowledge appropriability conditions. However, highly qualified personnel, internal and commercial sources of funding, and market knowledge sourcing are crucial for innovation in SMEs. These conclusions are especially relevant for the design of industrial and innovation policies in developing economies, where innovation is a prerequisite for catching up and economic advancement.

The paper provides new empirical evidence on the determinants of innovation in SMEs, the mechanisms by which innovation capabilities and outputs affect its productive performance, and how the relationship between these dimensions varies with firm size in the context of a developing country.