Better-prepared to face COVID-19: Organizational learning from SMEs’ experience with banking crises

This paper analyzes whether experiencing a banking crisis influenced firms’ performance during the COVID-19 pandemic. Drawing on the organizational learning and crisis management literature, we hypothesize that firms with banking crisis experience may learn from it and, thus, have a greater capacity to react and adapt to future external crises through adequate adaptative mechanisms. Using a survey sample of over 31,000 small- and medium-size enterprises operating in 39 countries, we obtain results consistent with our hypothesis that firms with banking crisis experience coped better during the pandemic than other firms. This finding is observed regardless of the severity of the banking crisis episode or how long ago the banking crisis occurred. We further demonstrate that banking crisis experience’s positive impact is explained partly by the increase in human resource slack before the pandemic as a coping strategy.