Bouncing back: response strategies to the dotcom bust in Israel

Abstract

Purpose

The purpose of this article is to present and analyze the responses of high‐tech firms to the crisis of 2000‐2003 when demand declined rapidly.

Design/methodology/approach

A group of industry experts from the industry in Israel were interviewed about the practices adopted by firms as a result of the crisis. The responses were used to categorize several distinct strategic responses. The analysis was done for firms in all the three stages of high‐tech firms' lifecycle – seed, mezzanine and full production.

Findings

The article identifies three major managerial business orientations (MBO's) – financial, technological and marketing. High‐tech firms responded to the crisis by changing their MBO's from financial or technical to market oriented. Those firms in the full production stage that have embraced a market orientation before the crisis responded by adopting the more advanced strategic marketing orientation.

Research limitations/implications

This study was carried out towards the end of the crisis cycle. It is important to find out the dynamics of the reported change – whether it has been retained also after the industry started to improve from 2004 onwards. The study should be also replicated in additional countries besides the one in which it was performed.

Practical implications

This study contributes to the general knowledge about behavior of firms facing a major crisis especially in a new and fast developing industry that has not experienced such crises before. It also shows the value of marketing managerial orientation vis‐´‐vis other managerial business orientations. Managers in other industries that may face rapid crisis like change in business conditions should learn how to get ready and set up relevant defense strategies.

Originality/value

The data, approach and analysis are original to this paper. It introduces to managers, in technically‐based industries, the notion of competing managerial business orientations and points out that the prevailing emphasis on financial and technological orientation may fail in times of crisis. It concludes that such firms should adopt the marketing orientation right from their initiation because this ensures survival in times of crises. The paper should be also of value to researchers interested in studying how firms react in times of crises and in analyzing survival strategies.

Citation

Etgar, M. (2006), "Bouncing back: response strategies to the dotcom bust in Israel", Journal of Business Strategy, Vol. 27 No. 4, pp. 70-79. https://doi.org/10.1108/02756660610677146