Innovation and Covid-19 crisis: Evidence from Italian medium-sized firms

The purpose of this study is to analyse the conditions under which businesses have addressed the Covid-19 outbreak. Specifically, we focus on the pre-pandemic innovation profile of firms by considering the different levels of economic performance of medium-sized firms (top, middle and bottom performers). An exploratory analysis was carried out analysing data concerning 281 medium-sized firms in the Marche region of Italy in 2019 (pre-pandemic period); data were collected from the AIDA database (Bureau Van Dijk—A Moody's Analytics Company). Findings highlight the different conditions in which medium-sized Marche firms confronted the crisis. On the one hand, there are the top performers that invest more substantially in innovation and show both higher levels of productivity and a financial structure which is solid and at minimal risk of default. On the other hand, there are the medium and low performers, marked by undesirable characteristics, such as low levels of innovation, poor productivity, and a weak financial structure with high exposure to financial stress. What starts to emerge through the analysis of the firms’ profiles is a sort of circular logic which, in favourable conditions, takes the form of a virtuous circle, while in unfavourable conditions it translates as a vicious circle. Although this paper presents research outlights relative to an explorative step, it offers a relevant theoretical, managerial and policy implications.