How do SMEs' strategies change under the impacts of a critical external shock? The case of Vietnamese SMEs under the COVID-19 pandemic

The impacts of external shock caused by the coronavirus (COVID-19) pandemic force small and medium enterprises (SMEs) to change their strategy to survive and/or even grow. This study aims to explore how SMEs change their strategies under the impact of the pandemic. We used semi-structured in-depth interviews with owners/managers of SMEs in Vietnam immediately after the outbreak of the pandemic and the implementation of the social distancing policy to collect the data. A thematic analysis was carried out under the theoretical lens of the dynamic capability's theory and strategic responses to the crisis model. The findings revealed the crucial role of dynamic capabilities with SMEs' strategy changes during the acute social crisis. In particular, firms with innovative capability and agility capability employed innovative strategies to exploit opportunities from the uncertain market. Meanwhile, firms with less preparation for crisis management adopted a perseverance strategy, and the firms without those characteristics followed retrenchment strategies.