The Fox Versus the Hedgehog: Firm Survival During Unprecedented Crises

Abstract

This paper examines how sales channel diversification influences firm resilience during the COVID crisis. Drawing on a series of logit regressions analyzing 11,662 firms across 31 developing countries, we find that firms embodying an open mind-set and a diverse array of sales channels, akin to foxes, are more likely to survive, as compared to their hedgehog counterparts, which focus on one particular task. Our mediation analysis suggests that this is mainly due to their faster growth in sales and exports. Moreover, we find that the impact of fox-like traits on firm survival is moderated by female leadership and corporate innovation.