TAMU-CC Business Faculty Featured in ‘International Small Business Journal’ for COVID-Related Research

CORPUS CHRISTI, Texas – By many accounts, COVID-19 has complicated operations for small-business owners across the country. Researchers at Texas A&M University-Corpus Christi have joined forces with Florida Atlantic University to suggest ways that small businesses cannot just thrive – but prosper – during this trying time.

Dr. Jack Clampit, TAMU-CC Associate Professor of Management; Dr. John Gamble, TAMU-CC Mary & Jeff Bell Endowed Distinguished Professorship; and Dr. Jim Lee, TAMU-CC Director of the South Texas Economic Development Center and Professor of Economics; along with Dr. Melanie Lorenz, FAU Assistant Professor of Marketing, sought out to investigate how a “dynamic capability,” among small business owners could aid Coastal Bend businesses contending with the economic impact of COVID-19.

The dynamic capability concept suggests that managers who have developed an agile mindset that constantly seeks continuous improvement, is observant to new opportunities, and is prepared to shift the company’s strategy at a moment’s notice will outperform companies with risk-averse managerial mindsets focused on not deviating from business practices that have served the company well for many years. The conclusion, according to the researchers, was those small businesses with dynamic capabilities, performed better, both operationally and in terms of revenue generation, than those that did not. In addition, the smaller a small business was, the more they benefitted.

Their study was published in the International Small Business Journal in August 2021.

“Researchers around the world have been urgently studying COVID-19. Due to its recency, initial studies conducted by business schools focused on quantifying its effects or offering suggestions whose efficacy had not been empirically validated,” Clampit said. “We knew that our study might be the first in the world to offer guidance whose effectiveness had been empirically confirmed, and with small businesses hit especially hard – many of whom, in our area, were just finding their feet again after Hurricane Harvey – we decided that helping smaller businesses figure out ‘what actually works’ during COVID-19 was incredibly important.”

"Today, most local businesses are facing new challenges, like hiring difficulties and changing consumer behavior."

“Some business owners have quickly adapted to the new normal; others who resist change find themselves on the verge of failure.”

Lee’s South Texas Economic Development Center (STEDC) was part of a regional partnership that surveyed nearly 600 small businesses in the southern United States just after government-imposed lockdowns were lifted. Nationally, three times as many small businesses failed from February to May of 2020 compared to the Great Recession of 2007-2009, which lasted 18 months.

“The research team has communicated the key findings of this study to business networks across Texas. Beyond local business communities, the survey results have garnered the attention of public officials and policymakers, including staff at Texas Governor’s office and the White House,” Lee said. “A better understanding of businesses’ challenges during the COVID-19 crisis has helped the design of federal and state policies focusing on small businesses – the backbone of our local economy.”

During COVID-19, the federal government’s efforts to provide COVID-19 aid offered small businesses a measure of relief. This not only helped to level the playing field for smaller businesses, but it also afforded the authors to isolate the role of dynamic capabilities, versus other variables, such as cash reserves that larger firms might have access to, when attempting to confirm whether they actually helped businesses perform better.

“The role of dynamic capabilities did not end with the end of the business lockdowns last year. Today, most local businesses are facing new challenges, like hiring difficulties and changing consumer behavior,” Lee said. “Some business owners have quickly adapted to the new normal; others who resist change find themselves on the verge of failure. One priority of the TAMU-CC College of Business is to help local entrepreneurs leverage new business opportunities that the pandemic has created.”

The study found that smaller firms are well-suited to quickly recognize and then adapt to new customer needs, without being bogged down by the more formal processes that make larger firms efficient but less agile. Small-business owners may also be better positioned to take advantage of relationships with key internal and external stakeholders who are more personal in nature, and this, too, can facilitate business model pivots.

“Business owners and managers who have built successful companies based upon operating practices that have met customer needs for years or decades may be at a disadvantage during periods of economic turbulence,” Gamble said. “Specifically, managers trained to not deviate from a ‘tried and true’ business model may lack the agile mindset needed to quickly adapt to a radically new economic reality. The results of our study illustrate how agility benefited small businesses at the onset of the pandemic.”