The impact of exogenous shocks on strategy, business models and product development in the Portuguese footwear industry Open Access

The fashion sector is characterized by short life cycles of products, high volatility, low predictability of the demand market and high impulse purchasing (Christopher et al., 2004). In addition, the products have a high degree of customization, which increases production management difficulties. To improve cost efficiency, many fashion company’s production takes place in Asian countries (McMaster et al., 2020).

Exogenous shocks are external occurrences that have a significant impact on economies, businesses or society. These shocks disrupt the economic environment, forcing businesses and governments to respond rapidly to limit the consequences. Exogenous shocks in business and economics can be triggered by a wide range of events, such as global crisis, natural disasters and international conflicts.

Companies are increasingly under pressure to follow complex growth paths to maintain and strengthen their competitiveness and also to keep up with the evolution of technological and social scenarios (Falahat et al., 2020). Increasing market uncertainty and environmental disasters have shifted the strategic objectives of many organizations, leading to a paradigm shift from a so-called “quest for profit” to a “quest for resilience” (Hamel and Välikangas, 2003).

Extreme weather events pose unprecedented threats to modern societies and small and medium-sized enterprises (SMEs) remain highly vulnerable and unprepared for such environmental perturbations (Halkos et al., 2018).

Footwear plays an increasingly important role in the fashion industry. Today, the contribution of the footwear industry to the Portuguese trade balance is one of the most significant in the entire Portuguese economy. The Portuguese footwear industry is one of the most advanced in the world, having invested in products with greater added value. In 2022, the footwear sector represented 1,856 companies, a turnover of 2,600 million euros and 40,611 employees (Bpstat, n.d.). The dimension classes are described in Table 1.

Footwear production has a long tradition in Portugal and in recent years the industry has undergone a transformation, often being presented as one of the success stories of the Portuguese economy (Corbo et al., 2018). Portuguese footwear manufacturers are mostly small and medium-sized and are predominantly located in the north of the country and are organized into two geographic clusters. This geographic concentration has provided the sector with a strategic advantage by facilitating access to production services and resources, accelerating information dissemination and the formation of formal and informal networks (Corbo et al., 2018).

Global crisis, natural disasters, competition and new technologies are contexts that require rapid adaptations and changes in strategies by companies (Girod and Whittington, 2017). In this sense, the COVID-19 pandemic had a significant impact on the global supply chains (Araz et al., 2020). The COVID-19 pandemic has led to store closures, accelerated digitization and sparked changes in online shopping. Online consumption habits have changed, the purchase of essential products has been boosted, while there has been a significant drop in demand for non-essential products such as clothing, footwear and fashion accessories.

In addition, the war in Europe and the energy crisis accelerated inflation and reduced growth, increasing uncertainty and wreaking havoc on world markets. The increase in the price of raw materials is affecting all types of industries, including the footwear industry. In this sense, the recovery of companies from the pandemic in a period of war and price escalation (in which energy prices soared) is an unprecedented challenge. In addition to high prices, energy rationing will begin to become a reality.

The research focuses on the concept of resilience to find out what strategies should be adopted to respond to external changes. This study investigates the footwear industry’s resilience to external changes in an attempt to provide insights into focuses and strategies that can define effective organizational responses to environmental stimuli. In this sense, it is important to understand how companies have adapted to the exogenous shocks. Thus, this paper addresses the impact of the exogenous shocks like COVID-19 pandemic, the Russia–Ukraine war and energy crisis in the European Union and focuses on the potential resilience strategies implemented by the footwear industry. The study’s research objectives include analyzing the impact of exogenous shocks on the organizational structure and business strategies of footwear companies, as well as investigating how footwear companies adapted their business models and new product development strategies in response to external pressures. The research question of this paper is the following: how do SMEs respond to exogenous shocks such as a pandemic, a war or an energy crisis?

The remainder of this paper is structured as follows. In Section 1, relevant literature review is provided. In Section 2, the methodology used is mentioned. In Section 3, the results analysis section presents the main results of the study based on the interviews carried out. In Section 4, the study was discussed and the theoretical and practical implications were highlighted. Finally, conclusions, limitations and opportunities for future work are reported in the final section.

Exogenous shocks are becoming more pronounced, and consequently the crisis that they generate are more severe and long-lasting (Miklian and Hoelscher, 2022). Global health emergencies, conflicts and global crisis are emerging common topics (Katsos and Miklian, 2021) and speed and ability to respond to these shocks are becoming increasingly important (Magistretti and Trabucchi, 2024). External shocks provoke dramatic changes in business operations and lead to radical restructuring (Martin‐Rios and Pasamar, 2018).

The literature on resilience of firms to pandemic shocks is relatively sparse. An organization’s resilience refers to its ability to recover from a crisis (Duchek, 2020), enabling it to adapt to a short-term crisis to align with long-term needs, thus manifesting an ability to face strategic challenges and survive eventual threats (Abualqumboz et al., 2020; Herbane, 2019).

The Russia–Ukraine war dealt a significant blow to commodity markets, especially food and energy, affecting world trade, production and consumption, causing high inflation (OECD, 2025; World Bank, 2025).

In the context of crisis, innovation is an important factor for organizational resilience of small businesses (Nah and Siau, 2020; Forsman, 2011; Ucaktürk et al., 2011). Innovation can be measured by three dimensions: product innovation, process innovation and management systems innovation (Maldonado-Guzmán et al., 2018). In this sense, the development of new products plays an important role in improving the performance of companies.

Product development is one of the important activities in a company (Maliki et al., 2017). Companies are forced to develop new products due to the competition, technological advancement, market changes and product life cycles (Yu et al., 2006; Chiang and Che, 2010; Unger and Eppinger, 2011). Innovation during the crisis is important for organizational resilience and competitiveness (Cefis et al., 2020; Hipp and Binz, 2020).

In this regard, the government has made significant efforts and stimulus package to maintain stable employment (Nurunnabi, 2020). SMEs are resource-limited organizations and in situations of high turmoil (e.g. pandemic crisis) are very dependent on government support through recovery packages and subsidies (Rank and Strenge, 2018).

The entrepreneurial orientation, based on risk-taking, innovation and proactiveness, makes the transition and mobilizes the resilience of SMEs to survive major disruptions and threats and facilitates the development of new capabilities that protect the company against different threats (Zighan et al., 2021).

The pandemic has forced many organizations to innovate and explore new possibilities, and implement emerging strategies for long-term economic development to mitigate the negative impacts of the COVID-19 crisis (Papadopoulos et al., 2020). In this sense, the adoption of digital technologies improves the competitiveness, productivity and profitability of organizations and, consequently, guarantees their survival (Papadopoulos et al., 2020).

Digital technologies encompass the internet of things, artificial intelligence, big data analytics, advanced tracking and tracing technologies, wearables and additive manufacturing (Budnitz and Tranos, 2022; Corvello et al., 2022).

Digital technologies help organizations to be more resilient and improve their resilience to the effects of a business interruption (Fitriasari, 2020). Thus, resilience is seen as the ability to accommodate change and evolve, transforming shocks and disruptions (such as a financial crisis or pandemic) into opportunities for regeneration and creative thinking (Herrman et al., 2011; Lee et al., 2018).

The exogenous shocks on firms can raise two contradictory situations. On the one hand, companies realize the need to adapt and implement new technologies to overcome emerging situations (Pereira et al., 2021). On the other hand, companies also try to limit their expenses, hindering or preventing the advancement of innovation led by new technologies (Paunov, 2012).

Business models focus on creating value for the customer, delivering a value proposition to certain market segments, the value chain structure required to deliver the value proposition, the value capture tools implemented by companies and linking these elements to a value architecture (Casadesus‐Masanell and Zhu, 2013; Chesbrough, 2010; Wirtz et al., 2016).

Business models evolve over time. In this sense, a line of research emerged from the evolution of business models called “business model dynamics” and are focused on changing and developing companies’ business models to achieve sustained value creation over time (Foss and Saebi, 2017).

Exogenous shocks can make existing organizational strategies obsolete and require an adaptation of business models. Furthermore, organizations have different priorities regarding their objectives before, during and after exogenous shocks, but existing processes typically no longer satisfy certain business objectives. In this regard, exogenous shocks can require companies to rethink their processes, structures and strategies to adapt to the new environment created by the exogenous shock (Martins et al., 2015; Röglinger et al., 2022).

The response to exogenous shocks has also been researched from a human resources standpoint, and strategic human resource development is advocated to improve operational skills during shocks and the subsequent learning capacity (Wang et al., 2009).

There is still a scarcity of literature on how to adjust the business model to the external environment. However, this is a critical topic since failure to adjust business models in a timely manner can result in reduced returns and, in extreme circumstances, bankruptcies and firm deaths (Corbo et al., 2018). Business models adapt in response to external stimuli, namely changes in the competitive environment and brought about by new technologies (De Reuver et al., 2009; Wirtz et al., 2010).

Large companies have powerful tools to resist exogenous shocks without major realignments in product and service offerings or long-term strategic objectives, making it easier to obtain government support (Miklian and Hoelscher, 2022; Morgan et al., 2020). In general, small businesses are more vulnerable and exposed than large businesses during exogenous shocks, although their vulnerabilities vary. Although small businesses are more vulnerable and susceptible to shocks, they can change and adjust their strategic orientation more quickly in response to changing conditions (Miklian and Hoelscher, 2022). Thus, small businesses develop different strategies. For example, family enterprises have a larger motivation to survive at any cost with better liquidity in external shocks due to the desire to adopt a long-term perspective to avoid the personal penalties of bankruptcy (Cater and Schwab, 2008; Faghfouri et al., 2015; Kraus et al., 2020).

Marshall and Schrank (2020) highlight the importance of good strategic and financial management to survive exogenous shocks. Taking on large debts at the time of and during exogenous shocks constrains post-shock performance and increases the potential for failure (Lawless et al., 2015).

To overcome exogenous shocks, organizations adopt strategies such as clustering, pivoting and starting again. In a cluster strategy, organizations collaborate with other like-minded organizations to adopt local improvements to mitigate the external effects of the shock (Chang and Miles, 2004; Chang, 2010; Marshall and Schrank, 2014). Organizations that join competitors continue to benefit beyond the crisis period (Khare, 2012). Furthermore, organizations that collaborate with others (building clusters) tend to be more resilient and likely to survive post-crisis than others (Andreano et al., 2018; Conz et al., 2017).

Pivoting strategy seeks to change the direction of the business and test new hypotheses, maintaining its base so as not to lose the position already achieved. This strategy aims to keep the organization sustainable in the face of a challenging situation or the emergence of a new growth opportunity (Devece et al., 2016; Ries, 2011).

The strategy of “starting over” with a new company can be more beneficial than trying to rebuild a failed business, since companies created during shocks tend to perform better in the long term and economically outperform established companies (Cowling et al., 2015; Morgan et al., 2020; Power and Reid, 2005; Smallbone et al., 2012; Terjesen et al., 2016).

Innovation and adoption of digital technologies during exogenous shocks influence companies’ sales growth (Ganotakis et al., 2023). In this regard, innovation is driven by the implementation of digital technologies, which keep companies competitive during exogenous shocks (Ardito et al., 2018; Bresciani et al., 2018; Mikalef and Pateli, 2017; Usai et al., 2021). In fact, digital transformation can generate innovations for companies as the value creation process changes (Nambisan et al., 2017; Scuotto et al., 2017).

Innovation can help companies become more flexible and agile, allowing them to quickly adjust and adapt their business models, respond to customer needs and improve their performance during exogenous shocks (Dewald and Bowen, 2010; Hamel and Välikangas, 2003; Ibidunni et al., 2022; Khurana et al., 2022; Krammer, 2022).

Allocating a set of entrepreneurship and market-oriented activities helps companies survive exogenous shocks, even if they are resource-intensive processes (Beliaeva et al., 2020; Eggers and Kraus, 2011; Morrish and Jones, 2020). Many companies are vulnerable to changing circumstances over which they have no control and yet show resilience, adaptability and flexibility (Smallbone et al., 2012). Small businesses are more likely to implement crisis management tools to solve problems, generating innovation with limited resources. This situation is a consequence of necessity as companies face exogenous shocks, and is not typically considered a strategic approach or a sign of conscious entrepreneurship (Tsilika et al., 2020).

Qualitative methodology was used in this study. Considering the objective of the study and using some sources such as websites, newspapers, articles, news and other sources, the interview script was outlined. First, three semi-structured interviews were carried out (Table 2), in what is considered the basis of the footwear sector in Portugal.

The Portuguese Footwear Technological Center (CTCP) is a non-profit organization, founded by Portuguese Footwear, Components, Leather Goods Manufacturers’ Association (APICCAPS) and two Institutes of the Ministry of Economy, namely: the Support Institute for Small and Medium Enterprises and Innovation (IAPMEI) and the National Institute of Engineering, Technology and Innovation (INETI).

CTCP supports companies in the footwear cluster, promoting the technical and technological training of human resources in companies and the improvement of the quality of industrial products and processes. In addition, prepares and disseminates technical information to the industry and carries out and encourages research, development and demonstration work.

APICCAPS represents the following business sectors: footwear industry; footwear components industry; and leather goods industry (bags, wallets, gloves, belts, […].

The footwear sector in Portugal is structured around three pillars: the APICCAPS, the CTCP and the ADC (Academy of Design and Footwear) (Table 3).

These interviews were important to get an overview of the footwear sector in Portugal and, on the other hand, to develop and explore in a more sustained way the script for interviews in companies in the sector.

Afterwards, using the Orbis Europe database, a set of criteria were defined to select companies to be contacted. The search strategy is detailed in Table 4.

Nine hundred fifty-seven companies were contacted, but only 11 agreed to participate in the study, which corresponds to a rate of 1.15%.

Then, 11 interviews were carried out in companies in the footwear industry (Table 5) to validate and deepen some themes of the interviews carried out at APICCAPS and CTCP.

After the initial contact with the company, in which the objective of the study was made known, the interview guide was sent and the company was asked to internally identify the most suitable person to be interviewed.

The semi-structured interviews had a duration between 60 and 120 min. The interviews were carried out following the interview script that was previously sent to the company interviewee. All interviews were recorded after authorization. Throughout the interview, the interventions were adapted to the context of the interviews and there were some changes in their development, such as (1) asking for examples of some specific situations, (2) how some problems were overcome, (3) what implications some decisions had in the future of the company, (4) examples of successful problems and solutions. This flexibility in the process was important to further explore topics as they arose during the interview.

Later, interviews and notes were transcribed word-for-word, to digital format for the analysis, which was supported by the qualitative data analysis software NVivo. This transcription process corresponded on average to 7–8 h per hour of interview. Software NVivo supported the organization, analysis and search of information in qualitative data. Relevant information was coded and placed in their respective nodes. Thus, several nodes were created, which were organized by themes and then grouped into categories. This made it possible to simplify the results analysis process.

Figure 1 shows the methodological pathway of this study, which consisted of four stages.

In Figure 2 it is possible to observe the data structuring process. First, the data was classified into first and second order layers and then classified into dimensions. The first-order layer includes data with relevant information extrapolated from the interviews. The second-order layer was obtained by segmenting the central themes and relating each theme to the first-order layers (sub-themes). The themes created were: digital transformation, business redesign, evolution of business models, process redesign, market opportunity, innovation and sustainability. This second stage was important to convert the interview data into the background of the theoretical framework. Finally, the second-order layers were aggregated into three dimensions (categories). The categories created were: Strategy, Business Model and Product Development.

Portuguese footwear manufacturers are organized into two very close geographic clusters and are mainly characterized by small and medium-sized companies, with similar structures and characteristics.

Most businesses were affected by the pandemic, promoting a reduction in production in many companies and, consequently, the need for layoff. However, the recovery period is not being easy due to the outbreak of the Russia–Ukraine war and energy crisis, which caused a great instability in the markets and significantly increased the prices of raw materials:

In this way, a set of challenges arose. Thus, understanding how companies in the footwear industry have adapted to a new context has become challenging. These challenges are interconnected and reflect a chain of global events that have severely affected companies, not only in terms of internal operations, but also their interaction with the global market. The shortage of workers and delays in the delivery of raw materials results in lost productivity and commitments to customers. The use of the layoff was an emergency measure to deal with uncertainty. However, this temporary solution had consequences in the medium and long term, mainly in terms of recovery and resumption of production capacity. Prolonged supply disruptions and price volatility have triggered a domino effect that continues to impact businesses even after markets reopen.

In the post-pandemic period, the war between Russia and Ukraine further aggravated the economic context, affecting market stability and, particularly, energy and raw materials prices. Geopolitical instability has disrupted promising markets and led to sudden increases in production costs. The war not only directly impacted the availability of certain resources, but also increased speculation in commodity markets, raising the prices of materials essential to footwear production. Price instability makes it impossible to create a stable pricing strategy. This uncertainty not only threatens companies’ profitability, but also compromises their credibility with customers, who, in many cases, receive an initial price for the product, and then find that the final value has undergone a significant adjustment due to fluctuations in the market. This reality exposes the structural vulnerability of companies in the sector, which depend on a series of external factors for the continuity of their operations.

Furthermore, the energy crisis placed additional pressure on companies, which began to face exorbitant energy costs and, in some cases, had to deal with the possibility of energy rationing. Rising production costs generated a ripple effect, forcing companies to rethink their pricing strategies, with no guarantee that customers would absorb these additional costs. In this sense, there is a daily challenge of negotiating with customers under a reality of fluctuating prices, unable to offer predictability in a highly volatile environment.

The need for adaptation is evident and the scenario described suggests that companies are still in a phase of reacting to consecutive crisis, seeking to develop a resilience and innovation strategy to face these challenges. This reveals that the footwear sector lacks greater flexibility and mechanisms to mitigate external risks.

One of the big issues that emerges from these interviewee statements is the lack of predictability. Companies are being forced to operate in an environment of extreme uncertainty, with daily price fluctuations and threats of shortages, which compromises their ability to plan long-term.

In addition to short-term adaptations, the sector needs structural solutions to prepare for scenarios of future uncertainty. Therefore, the main challenge that emerges from this analysis is the urgent need to reformulate business strategies in an increasingly unpredictable world.

The following subsections list strategies to mitigate the risks faced by companies in the footwear sector.

The exogenous shocks have changed the nature of business. In this sense, in the footwear industry, the business model has expanded to B2C.

The consequences of the exogenous shocks caused a significant disruption in the B2B segment. Many companies were temporarily closed, with many buyers and suppliers in quarantine, which caused several problems in the supply chain. In this sense, many companies have entered the B2C segment, which has increased product customization and the flexibility of the company’s systems. This has resulted in a shortening of the supply chain to satisfy demand faster and more flexibly, ensuring greater resilience for companies. In fact, the pandemic crisis seems to have shown that a high number of players and long distances make supply chains more vulnerable to disturbances. To increase flexibility and make supply chains more autonomous and less dependent on third parties, companies must develop skills in interacting with the end customer. Thus, it is to be expected the emergence of new logistics centers at a regional level so that companies can have shorter delivery times. Obviously, this leads to a higher level of stock, but this is necessary to avoid product stockouts.

This evolution from B2B to B2C caused changes in the way of approaching the customer and companies had to evolve in this sense. Thus, concerns such as marketing, customer service, customer acquisition and loyalty and customer proximity became crucial elements to obtain a competitive advantage.

This is a crucial point, as success in B2C is not just about quality production, but also about building a strong brand and the ability to efficiently manage the direct relationship with the consumer:

This makes it difficult for manufacturers to capture orders because they still need to improve interaction with a different type of customer:

The exogenous shocks meant that, due to uncertainties, companies worked with smaller orders. This makes the series smaller and more personalized, making companies work with small retailers rather than large wholesalers. In some cases, companies took advantage of this paradigm shift and started selling directly to the end customer:

The introduction of automatic machines, such as cutting machines, allows companies to reduce dependence on human labor and increase efficiency when producing in small series, a central feature in the new B2C business model. This also responds to the growing trend of fast fashion, where shorter product cycles and planned obsolescence increase the turnover of goods in the market:

Fashion has been fluctuating more and more, configuring itself in the form of making products obsolete or out of fashion and, in this way, creating new consumption needs, encouraging consumers to buy more. This allowed to reduce production costs because the product does not need to have a quality to last for many years:

However, this approach raises questions about the sustainability of the sector. The statement from the Executive Chief of APICCAPS, who cites the production of shoes with lighter and less durable characteristics, points to a problem in the current production model, that is, the prioritization of cheaper products with a shorter useful life to meet seasonal consumption demand. This model may be economically advantageous in the short term, but it raises environmental and ethical concerns in the long term, by encouraging a culture of rapid consumption and waste.

The transition from B2B to B2C in the footwear sector brought benefits, such as flexibility, customization and proximity to the customer. However, it also exposed vulnerabilities, such as the need to invest in digital and marketing skills, as well as the pressure to maintain larger stocks and manage small series, which can compromise profit margins.

The adoption of a production model focused on cheaper and less durable products raises an ethical and sustainability issue, especially as the market adjusts to the demands of more environmentally and socially conscious consumers. Companies that continue to adopt a purely volume-focused, low-cost approach may run into roadblocks in the future as pressures for more sustainable practices increase.

Therefore, the challenge for companies will be to balance the demand for innovation and flexibility with a more responsible and sustainable approach to maintaining long-term competitiveness, without compromising business ethics or environmental impact.

The exogenous shocks led to changes in the business and operations strategies of companies in the footwear industry, highlighting the challenges in logistics and production activities, due to a need that companies had to adapt to existing restriction measures and changes in the demand.

As most companies are characterized by considerable resource limitations, the pandemic made CEOs, in the period when companies were closed/layoff, reflect on the business. Thus, the CEOs gave up the time allocated to commercial and financial activities to dedicate themselves to the strategic reflection of the companies:

In this sense, there was a focus on the use of digital tools to support the execution of essential activities of the companies:

The COVID-19 pandemic accelerated the digital transformation process, as it allowed companies to focus their capabilities on developing digital skills due to the partial or total operational slowdown that most companies faced.

Digital transformation in the footwear industry seems to grow from downstream to upstream of the supply chain, that is, retailers and all intermediaries that work directly with the final consumer are more digitally modernized than footwear manufacturers:

Despite the operational benefits, digital transformation at the manufacturing level still appears to be at an early stage, with limited impact on sales and the relationship with the end consumer. As mentioned by the CEO of Company J, digitalization has improved production control, but has not increased production capacity or directly boosted sales. This indicates a significant gap between the internal digitalization of industrial processes and the application of these technologies to create a more engaging customer experience or to foster new sales opportunities.

This finding is critical, because while the retail sector, as noted, has made significant progress in digital transformation (especially in relation to e-commerce and consumer experience), manufacturers are still in a transition stage. This reflects an asymmetry in the supply chain: while retailers directly benefit from digitalization to improve sales and customer relationships, manufacturers are focused on improving operational efficiency.

At the manufacturing level, the digital transformation took place mainly in the company’s operational and industrialization activities:

The pandemic accelerated digital transformation by driving adoption of digital tools to improve operational management and production control. The digitalization of operations was seen as a key step toward increasing internal efficiency. Testimonials, such as that from the Sales and Logistics Manager of Company A, highlight how the use of digital tools allows companies to better control inventories and monitor the status of different production phases in real time. This represents an important advance in terms of process management and reduction of operational errors.

In this way, the digital transformation in manufacturers is still at a very early stage, unable to boost (significant) sales, but it is very useful in order processing, allowing the customer to monitor their status:

Exogenous shocks allowed companies to re-evaluate their strategies and focus on long-term issues. The digitization of order management and status monitoring are clear points of progress, providing greater transparency and control for both companies and customers. The decision of many companies to invest in new equipment and rethink the operational layout during layoff periods, as mentioned by the Business Manager of Company H, is a sign of resilience and an attempt to prepare for the future. However, the real challenge lies in transforming these investments into tangible efficiency gains and long-term sustainable growth, especially in a context of continued uncertainty.

The footwear sector is undergoing a significant transformation, but the real challenge will be to integrate operational efficiency with customer-focused innovations, creating a more balanced and sustainable business model.

The COVID-19 pandemic caused companies to have a greater diversification of customers and markets to reduce the risks of postponement and cancellation of orders.

Classic footwear companies felt the negative effects of the pandemic much more (for example, a drop-in sales) than sports footwear companies:

Due to the pandemic, many people worked from home (telework), many social events were canceled and restrictions imposed by the Government reduced the flow of people in public spaces. This caused the demand for more classic footwear to decrease significantly and, consequently, companies stopped selling.

On the other hand, many people started to practice sports, which increased the demand for more sporty footwear. In this way, companies more specialized in sports shoes did not significantly feel the effect of the pandemic.

However, the pandemic brought a market opportunity, namely an intermediate product that combines the classic and sporty concept. Thus, many companies have incorporated this product into their product portfolio:

In fact, in scenarios of uncertainty and great instability, as is the case with the COVID-19 pandemic, companies tend to take risks in the development of new products to increase their competitive advantage.

Innovation seems to be seen as a survival tool for SMEs during the COVID-19 pandemic and digital capabilities seem to facilitate and drive networking, research-based design of new products and the proximity and potential for attracting new customers.

New materials are increasingly being used in footwear production due to a growing environmental concern on the part of customers:

NPD is increasingly focused on sustainability. Innovation occurs because customers are increasingly concerned with sustainable and environmentally friendly products:

Market opportunities and NPD highlight a series of important adaptations and strategic transformations in companies, with a focus on innovation, portfolio diversification and sustainability. Exogenous shocks also revealed new opportunities for growth, mainly through adapting to consumer behavior and emerging environmental demands. However, these advances bring challenges, both from the point of view of competitiveness and economic viability.

This change in focus suggests strategic flexibility that is important for survival in times of crisis. However, the transition to new markets and products may not be equally easy for all companies. Many of them may have found it difficult to quickly adapt their production and logistical capabilities to this new reality. While diversification is an effective risk mitigation strategy, it also requires considerable investment in new product development, marketing and brand positioning, which can be particularly challenging for companies with limited resources, as is the case with many SMEs in the sector.

The transition to a more sustainable production model brings considerable challenges. Sustainability often involves high costs, and there is a clear dilemma between offering sustainable products and maintaining competitive prices. As mentioned by the CEO of Company I, not all consumers are willing to pay more for sustainable products, which creates a paradox: although the demand for ecological products is increasing, financial barriers can prevent large-scale adoption.

Additionally, dependence on sustainable component suppliers can limit companies’ ability to innovate. The Commercial Manager of Company C points out that innovation does not only depend on footwear companies, but also on the ability of suppliers to offer materials that meet sustainability demands. This suggests that innovation in the sector depends on close collaboration between different parts of the value chain, which can be an additional barrier for smaller companies that have less influence over their suppliers.

This study addresses the impact of external factors on strategy, business models and development of new products and it can be discussed according to contingency theory. Contingency theory suggests that there is no single correct way to organize a company, that is, the organizational structure must be contingent on the specific circumstances faced by the company, such as the external environment (Donaldson, 2001). The COVID-19 pandemic, the war between Russia and Ukraine and the energy crisis in the European Union are examples of global events that have profoundly affected companies’ business environment.

Previous studies have focused on identifying institutional pressures, through mimetic, coercive and normative influences, which forced companies to adapt, e.g. Agi and Jha (2022), Dubey et al. (2023) and Zeng et al. (2021). In this study the existence of external shocks was addressed, making a significant contribution to the literature.

Contingency theory suggests that companies must adapt their structures and strategies in response to these external challenges. Companies need to be prepared to quickly adapt to unforeseen changes in the external environment, adjusting their organizational structures and strategies as necessary to ensure their resilience and long-term success.

The pandemic has forced companies to completely rethink their operations, from remote work to the supply chain to how they connect with customers. The conflict between Russia and Ukraine also caused geopolitical instability, affecting trade relations and increasing uncertainty in global markets. The energy crisis, often triggered by factors such as natural gas shortages, rising energy prices or supply interruptions, has also significantly constrained companies. In the footwear sector, it caused increases in production costs, leading companies to optimize the use of resources.

The pandemic has accelerated the adoption of digital technologies and the implementation of remote and flexible work. These findings are supported by Pereira et al. (2021) and Tiwari et al. (2024).

Companies that were already prepared for this change had a smoother transition, while those with rigid structures had to adapt quickly to avoid the risk of being left behind. This entire process was done very quickly, which was not properly prepared and sustained, giving rise to internal experimental processes. This reflects the idea of contingency theory that companies must adjust their organizational structures to the external environment, being corroborated by Tiwari et al. (2024).

The conflict between Russia and Ukraine has also brought challenges to companies that operate in these regions or that have significant commercial relationships with them. Political and economic instability can have a direct impact on operations, from supply chain disruptions to unpredictable currency fluctuations. Companies that had already diversified their operations or established contingency plans were better able to deal with these unexpected changes.

The energy crisis in the European Union can highlight the importance of resilience and flexibility in company supply chains. Companies that have suppliers or partners located in areas affected by the crisis may face interruptions in the supply of materials or components, which could negatively impact their operations. Therefore, the ability to identify and mitigate supply chain risks becomes crucial in times of energy crisis. For example, rising energy costs have led companies to invest in more energy-efficient technologies (such as the implementation of solar panels).

These results show that companies have evolved and adapted to create a stronger and more direct relationship with the end customer, developing other skills, essentially in the area of marketing, which is in line with the study of Corbo et al. (2018). The exogenous shocks that companies face force them to react in a sudden and strong way, adapting their strategy and business model according to external conditions as a factor of competitiveness, often in an experimental and little sustained way. These findings are supported by Corbo et al. (2018) and Tiwari et al. (2024), for example. From a contingency perspective, our study reinforces the need for companies to react and adapt to external shocks to remain competitive and meet new needs and market demand, supporting the study of Tiwari et al. (2024).

Several implications can be highlighted in this study. At a theoretical level, this study provides an important contribution to contingency theory, by demonstrating that companies need to adjust their structures and strategies in response to exogenous shocks such as pandemics, geopolitical conflicts and energy crisis. This shows that adaptability is essential for business success in uncertain environments. Furthermore, the study increases knowledge about the impact of exogenous shocks by exploring the effects and consequences on strategies and business models. The study theoretically highlights the importance of digital transformation and the migration from the B2B to B2C model as a strategic response to changes in consumer behavior and market demands during crisis, expanding the literature on changes in business models. Finally, the study also expands theoretical discussions about the importance of innovation in uncertain contexts.

On the other hand, on a practical level the study focuses on strategic business adaptation in crisis scenarios, showing the importance of flexibility and resilience. In this sense, the study suggests specific practices to improve supply chain resilience, such as supplier diversification, prioritization of local suppliers and risk mitigation in crisis scenarios. This can help companies reduce vulnerabilities in the face of global disruptions. Furthermore, the migration of the business model from B2B to B2C and the focus on digitalization offer practical guidance for companies in different sectors facing similar crisis, by highlighting the importance of integrating digital and direct-to-consumer channels to increase agility and market reach.

The study also contributes to the importance of preparing contingency plans to mitigate future impacts of global crisis. Thus, companies can use this knowledge to anticipate and manage risks, implementing agile and flexible processes that increase their ability to adapt quickly.

More and more companies face challenges related to inflation (generalized increase in the price of raw materials), scarcity of raw materials, lack of labor and at the logistical level (increased transport costs; route optimization; […]. Exogenous shocks bring additional challenges, with repercussions on strategy, business models and the development of new products.

This study aims to help increase the resilience and responsiveness of companies in the footwear industry in the context of exogenous shocks like COVID-19 pandemic, the Russia–Ukraine war and energy crisis in the European Union. The exogenous shocks have brought significant and multiple challenges for footwear industry, making the companies adapt and redesign organizationally to increase flexibility and speed of product delivery to the customer. This organizational and strategic restructuring arises from the need to create a culture of creativity and innovation across all departments of the company, stimulating the development of new products and eliminating possible existing barriers.

Consumer behavior has changed radically and companies need to create strategies to make products easily accessible. In this sense, the change in the business model from B2B to B2C, driven by digital transformation, is important for companies to increase their sales levels. Selling directly to end consumers instead of retailers leads to a shortening of the supply chain, which requires the development of new skills. Also, with the emergence of the Russia–Ukraine war and high inflation, companies were forced to develop new products with a focus on sustainability, to diversify customers and suppliers, privileging local suppliers. The energy crisis that is emerging makes companies develop products with lower energy consumption and this is highly valued by customers.

Exogenous and unexpected events force companies to adapt their strategy and business model quickly. The exogenous shocks have boosted companies’ focus at a strategic, customer and product level, which forces them to restructure and adapt their business model. Taking advantage of market opportunities, combined with digitalization and the development of new products, is important for companies to survive in uncertain scenarios. Unexpected and exogenous events promote adaptations in the strategic management of companies, causing traditional business models to evolve in the face of a new external context.

Exogenous shocks create challenges for companies, namely:

• they create new needs in the market and companies seek to develop new products to meet this growing demand;

• drive digital transformation through advances in communication technology and presence on remote work platforms;

• disruption of global supply chains creating enormous logistical challenges;

• adjustments in priorities and resource allocation with implications for investments;

• strategic reformulation based on flexible processes and agile methodologies;

• risk management, such as through diversification of customers and suppliers; and

• challenges in product pricing due to strong fluctuations in raw material prices and exchange rates, for example.

This study is limited to the footwear industry. Future studies can analyze other types of industries and understand how companies have adapted in contexts of great uncertainty. Furthermore, this study does not address how cultural, social or behavioral differences in specific markets may impact adaptation to exogenous shocks. The study focuses on recent exogenous shocks such as the pandemic, the Russia–Ukraine war and the energy crisis, without analyzing similar past events for historical comparisons. It also does not explore the direct financial impact of the suggested strategies. Future studies could investigate how adaptations made during recent shocks remain or evolve in the long term (longitudinal study). Additionally, they can explore how different corporate cultures and consumer behaviors influence the implementation of strategic changes. A quantitative methodology could also be used to quantify the financial impact of exogenous shocks.