Navigating crisis: SME strategies for risk mitigation through strategic upgrading

This research investigates the strategic responses adopted by Hungarian small and medium-sized enterprises (SMEs) in the face of an adverse socio-economic environment. Focusing specifically on B2B firms, the study examines how the current crisis compels managers to mitigate the risk of buyer attrition. This analysis leads to the identification of four distinct adaptation strategies employed by these firms. Furthermore, the research delves into the concept of ‘upgrading’ challenging the prevailing notion that product development is the sole pathway for upgrading. The results suggest that effective upgrading can be initiated from various aspects of the firm’s operations. This novel perspective suggests that upgrading can be a viable strategy for firms seeking to escape from a captive supplier position, by improving either functionality or resilience. This is a new perspective that goes beyond what could be expected from the literature. The findings provide useful insights for policymakers and practitioners seeking to improve the performance of SMEs in the current dynamically shifting B2B landscape.