A typology of crises and innovation configurations: a paradoxical perspective

In highly competitive markets, firms are compelled to transition from a cost-centric to an innovation-driven paradigm, emphasizing the development of novel, high-quality products and services to achieve sustainable competitive advantages (Blagoev et al., 2024; Chen et al., 2010; Luo and Xu, 2026). It is not only the timing but also the scope of innovation that determines organizational success (Ahuja et al., 2013; Crossan and Apaydin, 2010; Yin and Wang, 2025). The absence of innovation, or an inappropriate portfolio for it, can precipitate profound organizational crises. In the smartphone industry, for example, where evolving technological landscapes and shifting consumer preferences require revolutionary rather than merely iterative product enhancements, the decline of firms such as Nokia exemplifies how a failure to invest in radical innovation can undermine market dominance and ultimately precipitate a crisis (Vuori and Huy, 2016).

It is not just the case that the lack of innovation forestalls crisis; crises can also trigger innovation by forcing firms to adapt and change (Liang et al., 2024; Ni et al., 2023; Oke and Nair, 2023). Accordingly, distinct from previous research that typically focuses on managing the negative consequences of crises (Bundy et al., 2017; Hersel et al., 2023), we emphasize the role of crises as catalysts for innovation, drawing on recent studies that highlight the development opportunities they offer. For example, anti-dumping sanctions, an external crisis for targeted exporting firms, prompted firms to enhance their product innovation to escape from price-based competition (Huang et al., 2024). Research also shows that automobile recalls, an internal product-related crisis, can boost the learning and innovation of automakers (Ni et al., 2023).

In this study, we adopt a broad definition of innovation, which is “production or adoption, assimilation, and exploitation of a value-added novelty in economic and social spheres; renewal and enlargement of products, services, and markets; development of new methods of production; and establishment of new management systems” (Crossan and Apaydin, 2010, p. 1155). While scholars recognize that innovation plays a crucial role in navigating and managing crises (Archibugi et al., 2013; Belhadi et al., 2024; Ebersberger and Kuckertz, 2021), these studies do not take into account the nuances of crises or the paradoxes of innovation across different contexts. We extend this inquiry by developing a refined framework to illuminate how firms manage paradoxical innovation configurations in different types of crises.

According to the cognitive framing perspective, organizational decision makers tend to frame crises as two paradoxical contexts: (1) threats that may harm firm performance and survival, and (2) opportunities that may facilitate firm development (Gilbert, 2006; König et al., 2021). These two framings elicit distinct decision-making logics, thereby directing firms toward divergent innovation approaches along two dimensions: time (short-term vs. long-term oriented innovation) and space (or technological scope: knowledge-deepening vs. knowledge-broadening innovation. Specifically, within a threat-oriented framing, managers adopt a threat-rigidity logic, leading to rigid and conservative decisions (Jeong et al., 2023; Staw et al., 1981). In the context of innovation, this framing is likely to result in short-term-oriented or knowledge-deepening innovation. In contrast, with an opportunity-oriented framing, problemistic search logic, a key argument of the behavioral theory of the firm (BTOF), suggests that performance shortfalls caused by crises trigger greater risk-taking (Cyert and March, 1963; Gavetti et al., 2012; Greve and Zhang, 2022), resulting in long-term-oriented or knowledge-broadening innovation. Integrating and extending these insights from the paradoxical perspective (Kocabasoglu-Hillmer et al., 2023; Lewis, 2000; Schad et al., 2016), we develop a typology of crises to illuminate paradoxical innovation configurations that may be adopted during different types of crises.

Based on the manifestation of crises in terms of the urgency of perceived pressure (imminent vs. latent threats) in the time dimension and the source of crises (internal vs. external sources) in the space dimension, we categorize organizational crises into four types (i.e. imminent internal crises, imminent external crises, latent internal crises, and latent external crises). Grounded in this typology, we use a configurational theorizing approach (Furnari et al., 2021; Ketchen et al., 2022) to develop propositions for paradoxical innovation configurations within each crisis type. We develop these propositions by integrating insights from the paradoxical and cognitive framing perspectives, articulating how firms manage the coexistence of threat-oriented and opportunity-oriented framing (and thus the juxtaposition of threat-rigidity and problemistic search logics) during each type of crisis, leading to paradoxical innovation configurations. Furthermore, we substantiate our theoretical reasoning with case studies. We interviewed CEOs or middle managers from eight Chinese companies spanning the manufacturing and service industries that have experienced various types of crises and used innovation as a key response.

This study contributes to the literature on organizational crises and innovation in two ways. First, we advance scholarly understanding of organizational crises by proposing a new crisis typology. Scholars have noted the fragmented nature of organizational crises, which makes it difficult to understand their implications comprehensively (Bundy et al., 2017; James et al., 2011). In this regard, our typology helps dispel ambiguity around the concept of crises by illustrating the distinct natures of different types. In particular, we differentiate the manifestation of perceived threats into imminent and latent crises in the time dimension. Moving beyond previous research that often focuses on the threat framing led by imminent crises (Liu et al., 2017; Williams et al., 2017), we shift scholarly attention to latent crises, which are prevalent in management practice (as shown in our case studies) but remain underexplored in the crisis management literature.

Furthermore, we identify different innovation configurations with paradoxical elements, thereby offering novel insights into how to manage innovation activities in response to crises with distinct natures. Drawing on the paradoxical perspective (Lewis, 2000; Schad et al., 2016), we integrate insights from problemistic search logic and threat-rigidity logic to illustrate the paradoxical demands for divergent innovation approaches in both time (short-term versus long-term oriented) and space (knowledge-deepening versus knowledge-broadening) dimensions during each type of crisis. Our propositions offer tailored implications for innovation management in the face of different types of crises.

Organizational crises refer to “strategic issues that will likely lead to a negative outcome unless corrective action is taken” (James et al., 2011, p. 46). Scholars typically characterize organizational crises as being highly ambiguous and having high stakes and perceived urgency (Pearson and Clair, 1998). Unlike business problems and challenges, which can be addressed through organizational routines, crises are deviant and infrequent (James et al., 2011). Therefore, they often require organizational solutions beyond normal routines. In this study, we exclude crises that can directly destroy organizations, such as extreme natural disasters, because such crises completely exhaust firms' basic resources and make it difficult for them to respond with innovation. As critical organizational issues, crises have attracted considerable scholarly attention. Previous studies have examined subjects such as preventive strategies to avoid crises (Pearson and Mitroff, 1993), crisis leadership (James et al., 2011; Stoker et al., 2019), solutions to mitigate the impacts of crises (Liu et al., 2017), and learning from organizational crises (Rerup, 2009).

Although important and insightful, extant research typically emphasizes the negative consequences of organizational crises, exploring either ex-ante ways to prevent them or ex-post ways to address their consequences (Bundy et al., 2017). However, the positive potential of crises, such as the development opportunities they reveal, remains underexplored. Drawing on the paradoxical perspective (Lewis, 2000; Lewis and Smith, 2014; Schad et al., 2016), we examine both the negative and positive implications of crises, thereby shedding light on how firms manage paradoxical innovation configurations in response to crises.

The paradoxical perspective recognizes that many phenomena consist of contradictory yet interrelated elements that appear logically separate but are actually related when presented together (Kocabasoglu-Hillmer et al., 2023; Schad et al., 2016). A central premise of this perspective is the importance of considering and engaging with all opposing elements in a paradox (rather than focusing on a single element), thereby promoting ambidexterity that enables both elements (Lewis and Smith, 2014). Indeed, addressing a single element may be more straightforward and yield short-term benefits, but, in the long term, sustainable success requires an effective balance of the multiple, divergent demands posed by the paradox. Drawing on this perspective, scholars have identified a wide range of paradoxical demands faced by organizations, such as social versus financial goals, stability versus change, long-term versus short-term initiatives, and exploration versus exploitation (Lewis, 2000; Schad et al., 2016). In operations management studies, scholars have leveraged the paradox perspective to understand the integration of advanced digital technologies into learning production systems (Johansson et al., 2024) and the implementation of small-series production in high-cost contexts (Harper, 2022).

According to the cognitive framing perspective (Dutton and Jackson, 1987; Gilbert, 2006), decision makers may frame the crises they face as paradoxical situations: both threats and opportunities that require simultaneous attention yet conflicting solutions (Sarkar and Osiyevskyy, 2018). These framings could lead managers to make firm decisions based on distinct logics—threat-rigidity versus problemistic search—which are both influential and compelling in adverse circumstances. Within threat-oriented framing, firm managers tend to perceive crises as threats to firm survival and thereby follow threat-rigidity logic, making rigid, conservative responses to stay safe (Connelly and Shi, 2022; Staw et al., 1981). This logic views survival as the top priority for firms. In contrast, within opportunity-oriented framing, firm managers may view crises as opportunities to address specific problems and thus help the firm to develop. In this circumstance, following the problemistic search logic of the BTOF, crises trigger firms to take greater risks in seeking improvement and development to achieve aspired performance (Cyert and March, 1963; Greve and Zhang, 2022). This logic embodies a problem-solving mindset during crises: crises not only present challenges for firms but also signal the need for addressing the problems underlying those challenges, which will help with long-term growth. Following this logic, firms tend to prioritize development opportunities in response to crises.

Taken together, these two paradoxical framings foster distinct decision-making logics for firms facing crises, which typically require contradictory responses. The threat-rigidity logic prioritizes organizational survival, encouraging safer, more conservative responses, while the problemistic search logic focuses on developmental opportunities, prompting more substantial, risk-taking actions. In the context of innovation, firms need to pursue paradoxical innovation activities to promote ambidexterity.

Based on the paradoxical framing of crises as both threats to firm survival and opportunities for development, we articulate their implications for innovation across two critical dimensions: time and space. In the time dimension, the temporal orientation (short-term vs. long-term oriented) is a key attribute of innovation activities, which determines firms' resources and capabilities for addressing time-(in)sensitive technological issues (Chen et al., 2012; Chen and Jin, 2023; Kessler and Chakrabarti, 1996). With a short-term orientation, firms tend to invest in innovative activities that seek quicker, more efficient solutions to time-sensitive problems (e.g. the COVID-19 vaccine). In contrast, a long-term orientation fosters investment in innovative activities that aim for slower but potentially far-reaching solutions to cope with time-insensitive issues (e.g. weight-loss drugs).

In the space dimension, the scope of innovation (knowledge-deepening vs. knowledge-broadening) relative to focal firms' existing knowledge constitutes another important attribute of their innovation activities, underlying the technological areas they focus on (Katila and Ahuja, 2002; Lavie et al., 2010; March, 1991). Knowledge-deepening innovation builds on existing knowledge and reinforces existing skills, processes, and structures (e.g. the inactivated vaccine for COVID-19), thereby reflecting the degree to which existing knowledge is reused or exploited in innovation activities; whereas knowledge-broadening innovation requires new knowledge or departure from the firm's existing knowledge (e.g. the mRNA vaccine for COVID-19), thereby reflecting the degree to which it entails the exploration of new knowledge in innovation activities (Katila and Ahuja, 2002). When facing crises, given the paradoxical framing that triggers both threat-rigidity and problemistic search logics, firms need to formulate paradoxical innovation configurations across time and space to pursue ambidexterity.

Short-term vs. long-term innovation. In the time dimension, threat-rigidity and problemistic search logics lead to divergent innovation approaches (short-term vs. long-term oriented innovations) in response to crises, thereby requiring firms to manage different temporal orientations in their innovation activities. Within the threat-oriented framing of crises, firms tend to follow threat-rigidity logic and thus engage in short-term-oriented innovation activities. Specifically, survival threats arising from crises lead to restrictions in information processing and a constriction in control (Connelly and Shi, 2022; Staw et al., 1981). Following this logic, firms exhibit a high level of conservativeness in resource allocation and thus tend to emphasize the efficiency and controllability of their activities. In the time dimension of innovation, the threat-rigidity logic implies that firms will shift attention and resources to short-term-oriented innovation activities that help them search for quicker, more efficient solutions to mitigate urgent threats to their survival.

With the opportunity-oriented framing of crisis, on the other hand, problemistic search logic directs firms to initiate long-term-oriented innovation. Crises can lead to performance shortfalls that signal certain problems to firm managers, thereby motivating them to search for solutions to promote performance and development (Cyert and March, 1963). In particular, given the high-stakes nature of crises (James et al., 2011), performance shortfalls triggered by crises prompt a substantial search for ways to boost performance. To pursue the desired performance and development, firms facing crises exhibit greater risk tolerance and patience, which are necessary to facilitate substantial search. Thus, in the time dimension of innovation, problemistic search logic encourages firms to invest in long-term-oriented innovation activities that support their search for far-reaching and effective solutions to problems and address demands for improvement (Greve and Zhang, 2022). In sum, when facing crises that impose paradoxical demands, firms are expected to pursue ambidexterity, enabling both short- and long-term innovation.

Knowledge-deepening vs. knowledge-broadening innovation. In the space dimension, threat-rigidity and problemistic search logics are also linked to distinct scopes (knowledge-deepening vs. knowledge-broadening) of innovation activities in response to crises, requiring firms to balance their approach across distinct technological areas. With the threat-oriented framing of crises, the threat-rigidity logic fosters a conservative approach and directs firms to emphasize knowledge-deepening innovation. As noted above, when facing threats arising from crises, firm managers experience greater psychological stress and anxiety, leading to restrictions in information processing, constriction of control, and conservation of resources (Connelly and Shi, 2022; Staw et al., 1981). Consequently, they tend to rely on prior knowledge and turn to responses based on their experience to maintain control over potential outcomes. In the space dimension of innovation, the threat-rigidity logic predicts that firms will tend to rely on knowledge-deepening innovation, using their existing knowledge to inform continuous refinements.

On the other hand, within the opportunity-oriented framing of crises, problemistic search logic directs firms to engage in knowledge-broadening innovation. As articulated above, performance shortfalls caused by crises usually indicate to firm managers that there are deep problems, thereby triggering substantial searches that typically involve higher risks (Cyert and March, 1963; Posen et al., 2018). In the space dimension of innovation, accordingly, problemistic search logic implies that firms, in pursuit of their aspired levels of development and performance, are motivated to invest in knowledge-broadening innovation activities to search for substantial and distant solutions beyond their existing knowledge base. Overall, due to the paradoxical framing of crises that can encourage both threat-rigidity and problemistic search logic, firms are expected to pursue ambidexterity that enables both knowledge-deepening and knowledge-broadening innovation in the face of crises.

In sum, during crises, firms encounter innovation paradoxes in two dimensions: time (short-term versus long-term oriented) and space (knowledge-deepening versus knowledge-broadening). In this study, we develop a new typology of crises to illuminate, during distinct types of crises with different natures, how firms pursue different innovation configurations that involve paradoxical innovation activities in the time and space dimensions.

Typology is a key approach in theory development (Busse et al., 2026; Hansen, 2021; Patil et al., 2023; Sengupta et al., 2025) and is especially helpful for understanding the fragmented and complex nature of organizational crises (Bundy et al., 2017). Previous studies have categorized crises based on their origins, affected stakeholders, solution strategies, preventative measures, and complexities (Grewal et al., 2007; James et al., 2011). For example, based on whether crises are predictable and influenceable, Gundel (2005) proposes a typology of conventional crises (easy to influence and easy to predict), unexpected crises (hard to predict and easy to influence), intractable crises (easy to predict but hard to influence), and fundamental crises (hard to predict and hard to influence). These studies provide a foundation for understanding the multifaceted implications of organizational crises. Nevertheless, the existing typologies, although insightful, focus on managing the threat brought by different types of crises, while potential opportunities have been largely neglected, leading to an insufficient understanding of how paradoxical framing (threat-versus opportunity-oriented) promotes ambidexterity that enables contradictory innovation activities in the face of different types of crises.

In this study, we develop a new typology of organizational crises to incorporate both potential threats that may arise from them and potential development opportunities they present. In particular, corresponding to the innovation paradoxes in time and space dimensions, we categorize organizational crises based on two dimensions: (1) the time dimension regarding the manifestation of the perceived pressure (i.e. imminent vs. latent crises) and (2) the space dimension in terms of the source of the crises (i.e. internal vs. external crises).

Imminent vs. latent crises. In the time dimension, the manifestation of crises shapes the time pressure perceived by firm managers, thereby influencing their framing of crises as threats or opportunities and their temporal orientations in decision-making. In this dimension, we categorize crises as imminent vs. latent crises. Imminent crises, which firms experience more commonly, typically put organizations under urgent pressure, such as policy shocks, geopolitical glitches, employee misconduct, product design failures, and competitors' attacks. In contrast, latent crises manifest as potential issues that may gradually erode an organization's performance and reputation. Due to their latent nature, such crises have been largely ignored by previous research. However, it is critical to consider latent crises because they can shape firms' perceptions of long-term issues and thus determine their proactiveness in responding (König et al., 2021). Indeed, although latent crises may not immediately disrupt organizational operations or provoke any urgent response, their long-term consequences can be severe if left unaddressed, potentially jeopardizing the organization's viability and competitive positioning (Barnett and Pratt, 2000; Kratochvil, 2025). For example, the digital revolution represents an external latent crisis for the newspaper industry because what first appeared as a promising technological shift has instead systematically eroded the traditional advertising and subscription revenue base that sustained print journalism for more than a century (Gilbert, 2005). On the other hand, Toyota's unintended acceleration issue in the late 2000s represents an internal latent crisis. The issue began with seemingly minor mechanical problems—sticky pedals and floor mats interfering with accelerators—that Toyota initially downplayed and attributed to isolated incidents. The slow unfolding of the problem led Toyota to underestimate its seriousness, resulting in delayed recalls and significant reputational harm.

Internal vs. external crises. In the space dimension, we categorize crises as internal vs. external based on their origin. Although many crises are caused by a combination of internal and external factors, most of the time the original source of crises is one or the other (Grewal et al., 2007). Distinguishing between internal and external crises is important because the source of crises determines the salience and specificity of the issues perceived by firm managers, thereby shaping their framing of crises as threats or opportunities and the scope of their search for potential solutions (Hall and Johnson-Hall, 2017). Internal crises refer to those caused by internal sources, such as scandals (Jacobs and Singhal, 2020), product safety recalls (Hora et al., 2011), accidents (Diestre and Rajagopalan, 2014), and manager-controlled crises (Barnett and Pratt, 2000; Kim, 1998). Given the internal source, such crises are typically specific to focal firms, with clearer and more salient consequences and less ambiguity about cause and effect. In contrast, external crises originate outside the focal organization's purview and often involve factors beyond managerial control, such as technology discontinuities (König et al., 2021), regulatory changes (Huang et al., 2024), and the COVID-19 pandemic (Li et al., 2023). Given the external sources, such crises are general to many relevant firms (rather than specific to the focal firms), thus with less direct and salient consequences but higher cause-and-effect ambiguity. Thus, based on categorization along both time (imminent vs. latent) and space (internal vs. external) dimensions, we identify four types of crises: imminent internal crises, imminent external crises, latent internal crises, and latent external crises (see Figure 1 for an overview with examples).

Imminent internal crises (imminent threats, internal sources). Imminent internal crises are those led by internal sources and induce immediate threats. These crises can result from intentional wrongdoing or unintentional accidents and can dramatically damage firms' reputations and stakeholder trust, such as product safety incidents, workplace accidents, corruption, discrimination, and sexual harassment (Greve et al., 2010). The Volkswagen “Dieselgate” scandal in 2015 exemplifies an imminent internal crisis stemming from intentional wrongdoing. To circumvent emissions regulations, engineers installed defeat devices in diesel vehicles, a deliberate act of fraud that eroded trust and triggered massive fines (Jacobs and Singhal, 2020).

Imminent external crises (imminent threats, external sources). Imminent external crises are those driven by external factors that pose immediate threats. Environmental jolts are a typical type of imminent external crisis, which are “transient perturbations whose occurrences are difficult to foresee and whose impact on organizations is disruptive and often inimical” (Meyer, 1982, p. 515). Examples of such environmental jolts include the COVID-19 outbreak (Li et al., 2023), geopolitical events (Fan et al., 2024), tariff hikes (Lam et al., 2022), economic shocks (Wan and Yiu, 2009), and oil price shocks (Ahuja et al., 2013).

Latent internal crises (latent threats, internal sources). Latent internal crises derive from internal issues that lead to slow-burning consequences. Such crises attract less scholarly attention but are not uncommon in business practices, such as gradually worsening corporate cultures and creeping quality issues, all of which can eventually evolve into a crisis in the long term if not effectively addressed (Anand and Mukherjee, 2024; James et al., 2011). Some crises of this type are caused by management mistakes or unresolved issues that are initially hidden. For example, environmental degradation stemming from unsustainable business practices may initially go unnoticed but could eventually lead to regulatory scrutiny, stakeholder backlash, and reputational damage (Alcadipani and Medeiros, 2020). Moreover, recognizing the importance of addressing slowly evolving issues through organizational changes, visionary leaders can strategically frame a latent internal crisis, alerting their employees to the potential long-term threats posed by these issues (Barnett and Pratt, 2000). In particular, they can flag to internal employees and the public media that their company is at stake (Barnett and Pratt, 2000; Shi et al., 2024). By doing so, managers intentionally create a latent internal crisis, aiming to disrupt the firm's routines and incite organizational change to directly address the issues they can foresee. For example, Kim (1998) discusses the organizational learning patterns of Hyundai Motor, emphasizing the significance of “proactively constructed crises”, which are artificial crises created by top management to highlight performance gaps. Such a crisis motivated the company to continually absorb new knowledge and catch up with competitors in developed countries. Similarly, during lean implementation programs, managers often motivate employees to engage in initiatives by emphasizing the crises that loom large if processes are not streamlined and inventories are not reduced. This paints a picture of potential crises in the long run, which helps the company as a whole reach consensus on the need for lean implementation (Nguyen et al., 2024).

Latent external crises (latent threats, external sources). Latent external crises are caused by external factors that, if unaddressed, erode long-term organizational viability but may not pose immediate threats. Such crises often stem from shifts in an industry's fundamental structure, including technological paradigms, consumer preferences, and institutional norms (Gilbert, 2006; Maula et al., 2013). For example, Uber's platform-based approach more effectively meets consumer preferences for convenience and real-time connectivity based on its dynamic pricing and gig-economy labor model (Cramer and Krueger, 2016), thereby posing a latent external crisis for the traditional taxi industry, which relies on regulated monopolies and fixed pricing. Similarly, the AI revolution represents a latent external crisis to industries relying on codifiable routines (Felten et al., 2021). The development of generative AI is challenging sectors such as customer service, pushing firms to reduce their reliance on human agents and to embrace AI for automated interactions. Additionally, latent external crises also arise from institutional changes. For instance, driven by sustainability mandates associated with climate change, the automotive industry is shifting toward electric vehicles, which pose a latent external crisis for traditional automakers with a high proportion of fossil-fuel vehicles (Bohnsack and Pinkse, 2017).

Taken together, this typology of crises expands on previous studies that focus on imminent crises and provides a foundation for understanding the nuances of decision-makers’ threat and opportunity framings across different scenarios. Accordingly, we develop propositions for paradoxical innovation configurations within different types of crises, supported by case studies of eight Chinese companies.

We combined theoretical reasoning and case studies to develop a framework of innovation configurations across different types of organizational crises. We adopted the typology-driven approach to case studies (Yin and Heald, 1975) to analyze the different types of crises experienced by the companies and their innovation responses. Our typology of crises guided our data collection and analysis, enabling us to purposefully select cases that exemplify different configurations of crisis and innovation dynamics. Following the logic of theoretical sampling (Eisenhardt and Graebner, 2007), we selected cases that varied along key dimensions of our typology (i.e. time and space) to ensure heterogeneity in crisis types. Specifically, we collected and analyzed data from eight firms to ensure that we have two cases for each type of crisis (based on either the time or space dimension) in our typology. Our sample of eight companies represents distinct industry settings—including manufacturing and service sectors—and encompasses both medium-sized and large enterprises. This allowed us to explore the relevance of our theoretical framework across various empirical contexts. All the selected firms had recently experienced organizational crises (e.g. supply disruptions, market downturns, digital transformation pressures) and had explicitly recognized innovation as a strategic priority. Table 1 summarizes information about our sampled firms and interviewees, while Table 2 presents the crises these firms experienced and their innovation responses.

We conducted semi-structured interviews with senior and middle-level managers from each company. The interviewees included three CEOs and five functional managers (quality control, supply chain, marketing, digitalization, and business segment). Each interview was conducted online and lasted approximately one hour. The interview questions are detailed in the Online Appendix. We also obtained and analyzed internal reports and publicly available data, allowing for triangulation and validation of interview insights. Where necessary, follow-up interviews were conducted to ensure the accuracy and clarity of the information. We analyzed and interpreted our findings from the case studies guided by our typology and our existing theories, rather than using open coding to generate a new theory (Eisenhardt and Bourgeois, 1988; Henderson and Clark, 1990; Tushman and Anderson, 1986).

We integrate insights from the cognitive framing perspective (i.e. whether managers adopt problemistic search logic or threat-rigidity logic) to develop propositions on paradoxical innovation configurations for each crisis type in our typology. Our theoretically-derived arguments are supported by direct quotes from interviews. In this section, we first present propositions on how innovation configurations relate to the time and space dimensions, followed by a discussion of innovation configurations within our four types of crisis.

We propose that imminent crises trigger short-term innovation as the primary response and foster long-term innovation as a supplementary action. According to the cognitive framing perspective, decision makers may naturally frame imminent crises that pose urgent pressure on their firms as threats, thereby emphasizing survival as the top priority. Indeed, research shows that imminent crises, if not managed promptly and effectively, can directly threaten an organization's survival. To illustrate, product safety incidents, as a typical imminent crisis, can result in a dramatic and rapid decline in the firm's reputation, leading customers to stop buying the firm's products (Liu et al., 2017). For instance, shortly after the massive Takata airbag recalls, Takata filed for bankruptcy due to customer lawsuits and the costs associated with those recalls. Accordingly, within a threat-oriented framing of such crises, firms tend to follow threat-rigidity logic and prioritize efficiency and controllability in their activities, seeking quicker solutions to mitigate the urgent threat (Staw et al., 1981). In the cendgontext of innovation, as articulated above, firm managers tend to engage in short-term innovation activities aimed at more time-efficient solutions. For example, in response to a drastic sales decline caused by US-China geopolitical tensions, Firm A prioritized survival. As the CEO mentioned, “We adopted a conservative approach, opting out of projects with low profit margins or potential risks of loss. We prioritized innovative strategies to ensure the company's survival”.

While imminent crises pose threats to firm survival, they also reveal opportunities to identify deeper issues behind the crises and thus may encourage firms to initiate long-term innovation to resolve them. For example, scholars have shown that although product recalls are imminent crises, they also offer opportunities to revisit the firm's technology and supply chain, thereby identifying the problems that may have caused the incidents (Kalaignanam et al., 2013; Ni et al., 2023). In the context of innovation, as noted above, these deeper problems usually require long-term innovation. For example, facing an imminent crisis driven by competitors' aggressive price-cutting, Firm F took the opportunity to transform its competitive strategy through long-term innovation. As stated by the marketing manager of Firm F: “Our company opted for a high-end approach, integrating IT technology into the product and focusing on intelligent equipment, rather than competing on price”. Indeed, focusing only on short-term innovation may help address surface threats posed by imminent crises, but it sacrifices the opportunity to address deeper issues and may thus hinder long-term development. Overall, it is more viable to supplement short-term innovation with long-term innovation, to enable ambidexterity, combining the temporarily opposing innovation activities.

We propose that latent crises foster long-term innovation as the primary response and elicit short-term innovation as a supplementary activity. According to the cognitive framing perspective, firm managers are more likely to frame latent crises that could manifest as potential issues as opportunities, and are encouraged by this framing to identify and resolve the problems underlying them, and proactively prevent long-term negative outcomes. With this opportunity-oriented framing of crisis, firms tend to follow problemistic search logic to seek substantial solutions to their problems and pursue long-term development. In the context of innovation, when there is weaker pressure for rapid action, firms are more motivated to invest in long-term innovation for forward-looking, far-reaching advancement (Cyert and March, 1963; Posen et al., 2018). To illustrate, the digital department manager of Firm G viewed the emergence of AI as a latent crisis for the firm because they expected it to reduce current customers' use of the firm's knowledge database. He also emphasized that: “For an information or data service provider like us, the opportunities of AI indeed outweigh the risks”. To capture the opportunities, Firm G has established a new team to develop AI applications for its products, aiming to enhance its long-term competitiveness.

Although latent crises offer opportunities for long-term development, they may also lead to negative outcomes more quickly than expected, posing immediate threats to firms' short-term operations and performance. For example, if one of Toyota's isolated incidents in the late 2000s had been widely reported by the media, it would have been escalated rapidly into a real crisis. Therefore, in addition to the opportunity-oriented framing of latent crises, firm managers may also frame them as potential threats and thus follow the threat-rigidity logic, engaging in efficient, controllable activities, often relying on short-term innovation. Even if they adopt problemistic search logic and look for solutions to any potential negative consequences, their innovation activities will be focused on the short-term, aiming for quicker solutions (Posen et al., 2018). In our case studies, the CEO of Firm C perceived the gradually intensifying competition as a latent crisis, which, although not survival-threatening at the time, was likely to erode the firm's profitability. Thus, instead of waiting for further consequences, the firm quickly established a new online promotional platform to attract more customers. As stated by the CEO: “Even if the company's revenue is impacted, we must move forward with this initiative. If we don't take action now, the company will eventually face closure, leaving no room for future development”. Indeed, focusing solely on long-term innovation may help reveal future development opportunities, but firms risk ignoring immediate consequences that could directly threaten their short-term operations. Hence, it is more effective to supplement long-term innovation with short-term innovation, achieving ambidexterity that enables temporarily opposing innovation activities.

We propose that internal crises not only trigger knowledge-deepening innovation as the primary response but can also foster knowledge-broadening innovation as a supplementary action. As articulated above, internal crises are typically specific to focal firms, with clearer, more salient consequences and less ambiguity about cause and effect. Moreover, such crises usually do not affect other firms but can be leveraged by competitors, especially rivals, to attack focal firms and capture their market share (Zhou et al., 2019). Based on the cognitive framing perspective, such crises are more likely to be framed by focal firm managers as threats due to the specific and salient negative consequences for their firms alone. Therefore, these managers may follow the threat-rigidity logic in decision-making, restricting information processing, tightening their control over resources, and relying more on prior knowledge and experience to navigate the crises (Connelly and Shi, 2022; Staw et al., 1981). In the context of innovation, as noted above, such conservative tendencies and reliance on existing knowledge often direct firm managers to invest in knowledge-deepening innovation that refines their existing knowledge (Lavie et al., 2010; March, 1991). As firm managers identify problems within their firms, which are usually derived from their own systems, processes, or decision-making structures, they tend to search for solutions proximate to their existing knowledge (Kumar and Schmitz, 2011). In our case study, Firm D experienced an internal crisis stemming from a product design failure. When talking about the response to this crisis, the quality control manager of Firm D stated that: “A key aspect [to address the crisis] involves analyzing and processing returned products to identify areas for improvement”, which guides their knowledge-deepening innovation to refine their prior product design. This manager further emphasized that: “We concentrated on several specific product types, focusing on a limited range of products while moving away from a broad, scattered approach”. Moreover, Firm H experienced an internal crisis regarding sourcing strategies, which also pushed the firm to improve innovation, particularly by refining existing knowledge. For example, the business segment manager from Firm H explained that: “In this kind of (crisis) situation, we must push product upgrading based on technological advancement”. In particular, this manager emphasized the importance of knowledge-deepening innovation in response to the crisis: “We primarily focus on innovation at the application layer. It's about how we integrate new technologies in novel ways or apply them to new use cases, which mainly focuses on resolving existing pain points”.

Although internal crises pose more salient and tangible threats, they also reveal opportunities to revisit the critical issues underlying them, thereby encouraging focal firms to initiate knowledge-broadening innovation in order to transform their internal systems and structures. Therefore, in addition to the threat-oriented framing of internal crises, firm managers may also perceive such crises as potential opportunities and thus follow problemistic search logic to seek substantial solutions across wider areas. In the context of innovation, as noted above, such searches often call for knowledge-broadening innovation that involves new knowledge or departures from existing knowledge (Jansen et al., 2006). The quality control manager of Firm D mentioned that because an internal crisis of product design failure led to a drastic sales decline, the firm also recognized the risks involved in the existing product and thus increased R&D expenditure to develop new products: “There has been an increase in R&D and marketing investment. We have focused on our R&D efforts and broadened our product offerings”. Indeed, focusing solely on knowledge-deepening innovation may help address internal issues more directly, but it overlooks broader opportunities to address them through more transformational changes. In this regard, a more balanced approach would be to supplement knowledge-deepening innovation with knowledge-broadening innovation, thereby promoting ambidexterity that spans paradoxical technology scopes.

We propose that external crises not only call for knowledge-broadening innovation as the primary response but also require knowledge-deepening innovation as a supplementary activity. As articulated above, external crises are general to many firms (rather than specific to focal firms) because they originate outside the firm, and thus have less direct and salient consequences but higher cause-and-effect ambiguity. Indeed, scholars widely acknowledge that external crises involve the opportunity to establish the first-mover advantage; i.e. if firm managers can seek proactive solutions to manage such crises effectively, they will gain the chance to occupy an advantageous position over competitors in the new business environment caused by the external crisis (Chen and Hambrick, 2012; Covin and Slevin, 1989). Based on the cognitive framing perspective, firm managers therefore tend to frame such crises as opportunities to stand out in crowded competition.

Within opportunity-oriented framing, firm managers will follow problemistic search logic to emphasize the demands for development and substantial changes as revealed by external crises. In the context of innovation, as articulated above, their pursuit of aspired development motivates them to engage in knowledge-broadening innovation to leverage wider opportunities in new and broader knowledge areas. Indeed, research shows that external crises disrupt organizational routines and create opportunities for transformative changes, requiring firms to explore new knowledge (König et al., 2021). Furthermore, as external crises typically signal issues beyond firms' organizational boundaries, solutions often lie outside their existing knowledge base, thus requiring them to engage in knowledge-broadening innovation to seek new knowledge. In our case studies, Firm B experienced an external crisis led by the tariff hikes. The CEO, when discussing the response to this crisis, stated that: “We have invested substantially in R&D. This is because our focus lies in differentiated products, often involving innovation, rather than standardized or generic offerings”. In particular, the CEO highlighted the importance of knowledge-broadening innovation: “[to address the crisis], we have been actively researching AI recently, including how to apply and implement AI within our industry and its specific sub-sectors”. Such initiatives do not directly fall within the firm's existing technology scope but represent a search in a domain outside its prior knowledge base. Firm E also experienced an external crisis, caused by technological sanctions during the US-China geopolitical tension. As a response, the company invested in developing new technology, i.e. magnetic transportation equipment, which represented knowledge-broadening innovation substantially different from the firm's previous technology. The supply chain manager at Firm E stated that: “Our current endeavor is to develop magnetic levitation logistics lines, which is the pinnacle of technology in this industry.”

Although external crises boost knowledge-broadening innovation and encourage the pursuit of broader development opportunities, they may also highlight specific issues that directly threaten firms' internal operations. For example, while the COVID-19 pandemic represented an external crisis that affected many firms, it also disrupted their internal routines, requiring them to adjust or refine their operations and structures (Shen and Sun, 2023). Therefore, in addition to framing internal crises as opportunities, firm managers may also frame them as potential threats. The CEO of firm B, when discussing the above-mentioned external crisis, commented that: “I believe survival is a critical consideration, closely linked to the company's cash flow. I believe maintaining a healthy cash flow in the accounts is crucial; otherwise, the company's very existence could be jeopardized”. Hence, following threat-rigidity logic, managers tend to engage in more controllable activities, relying on their prior knowledge or well-learned experience. In the context of innovation, as noted above, such activities often fall under knowledge-deepening innovation, which builds on existing knowledge for incremental refinement. Even if they initiate problemistic search for solutions to the specific issues, such searches often begin in areas which firms are already familiar with, and are based on knowledge-deepening innovation (Posen et al., 2018). That is, focusing solely on knowledge-broadening innovation may help pursue broader development opportunities revealed by external crises, but it fails to address more specific issues that directly threaten firms' internal operations. In this regard, a more effective approach is to supplement knowledge-broadening innovation with knowledge-deepening innovation, thereby enabling ambidexterity and retaining innovation activities across contradictory technology scopes.

Synthesizing the implications of each type of crisis articulated above (along a single dimension, either time or space), we next develop propositions to illuminate paradoxical innovation configurations in each of the four types of crises in our typology.

Imminent internal crises (imminent threats, internal sources). Based on the joint characteristics of imminent (P1) and internal crises (P3) articulated above, imminent internal crises require short-term knowledge-deepening innovation as the primary response and foster long-term knowledge-broadening innovation as a supplementary activity. Indeed, these crises result in a primary threat-oriented framing in both time and space dimensions, supplemented by an opportunity-oriented framing. In the time dimension, firm managers tend to engage in short-term innovation as the primary response, supplemented by long-term innovation (P1); while in the space dimension, they are likely to engage in knowledge-deepening innovation as the primary response, supplemented by knowledge-broadening innovation (P3). Research shows that product recalls led by internal product quality failures, a typical imminent internal crisis based on our typology, push firms to take rapid actions to refine their existing products and processes, aiming for quick solutions to address their quality failures and thus mitigate the threats (Anand and Mukherjee, 2024). For example, Boeing's 737 MAX crisis, triggered by faulty flight-control software, represents an imminent internal crisis that has led to dramatic financial and reputational damage. This crisis propelled Boeing to invest $1 billion in pilot training simulators and software updates, a short-term knowledge-deepening innovation built on its existing engineering systems. This example illustrates the primary innovation approach required in the face of imminent internal crises. Moreover, our case studies also illustrate short-term knowledge-deepening innovation as the primary response to imminent internal crises. Specifically, Firm D experienced a product design failure, an imminent internal crisis. Accordingly, the quality control manager at this firm emphasized the need to quickly improve their product design using their existing technologies, thereby underscoring the importance of short-term, knowledge-deepening innovation. Also, Firm H experienced unclear and uncertain sourcing strategies, which is an imminent internal crisis. As a response, the business segment manager suggests that the firm quickly increase R&D expenditure by 20% and hire more R&D employees, but their innovation primarily focuses on short-term, knowledge-deepening activities, such as refining and integrating their technologies to enhance applications.

As articulated above, in addition to the primary threat-oriented framing, firm managers can also perceive opportunities from such crises in both time and space dimensions, which will encourage them to engage in long-term knowledge-broadening innovation as a supplementary activity. To illustrate, Firm D's product design failure represented a typical imminent internal crisis. As a response, in addition to refining their existing product design through incremental refinement of their pre-existing technology, they also saw this failure as a potential opportunity for new product development, which involved long-term knowledge-broadening innovation. Overall, it is more effective to supplement short-term knowledge-deepening innovation with long-term knowledge-broadening innovation, thereby fulfilling ambidexterity and retaining paradoxical innovation activities.

Latent external crises (latent threats, external sources). Based on the joint characteristics of latent (P2) and external crises (P4) as articulated above, latent external crises not only encourage long-term knowledge-broadening innovation as the primary response but also call for short-term knowledge-deepening innovation as a supplementary action. Specifically, these crises elicit primary opportunity-oriented framing in both time and space dimensions, together with threat-oriented framing. In the time dimension, firm managers tend to engage in long-term innovation as the primary response, supplemented by short-term innovation (P2); while in the space dimension, they are likely to engage in knowledge-broadening innovation as the primary response, supplemented by knowledge-deepening innovation (P4). Taken together, in the face of latent external crises, the primary innovation responses are more likely to be long-term and knowledge-broadening. For example, the advancement of quantum computing represents a latent external crisis for IT companies. While quantum computing remains nascent, it may bring radical changes that render traditional computing architectures obsolete. In response to this crisis, NVIDIA has started to engage in long-term knowledge-broadening innovation activities in quantum computing, such as forming partnerships with quantum firms like Atom Computing. Our case studies also demonstrate the importance of long-term knowledge-broadening innovation in response to latent external crises. For example, Firm G viewed recent AI developments as a latent external crisis, prompting it to initiate AI-related innovation to build long-term competitiveness, even though such activities lie outside its existing knowledge base.

In addition to the primary opportunity-oriented framing, as noted above, firm managers can also perceive threats from such crises in both time and space dimensions, which will push them to engage in short-term knowledge-deepening innovation as a supplementary activity. To illustrate, the CEO of Firm C perceived gradually intensifying competition as a crisis; i.e. a latent external one, which, although not imminently survival-threatening, was likely to erode firm profitability over time. To attract more customers, the firm quickly established a new online promotional platform using its existing technologies and expertise, representing a short-term, knowledge-deepening innovation rather than waiting for further consequences. Overall, the proposition represents a more balanced approach, supplementing short-term knowledge-deepening innovation with long-term knowledge-broadening innovation, thereby fulfilling ambidexterity through paradoxical innovation activities.

While innovation configurations in imminent internal crises and latent external crises are straightforward (as predicted in P5 and P6), those in imminent external crises and latent internal crises are less clear. In this section, we illustrate such paradoxical patterns, emphasizing the contingent role of slack resources for shaping innovation configurations in these two types of crises.

Imminent external crises (imminent threats, external sources). Based on the joint characteristics of imminent threats (P1) and external sources (P4) articulated above, imminent external crises foster a primary threat-oriented framing in the time dimension but an opportunity-oriented framing in the space dimension, which may lead to conflicting, incompatible innovation configurations. Specifically, in the time dimension, firm managers tend to engage in short-term innovation as the primary response, supplemented by long-term innovation (P1); while in the space dimension, they are likely to engage in knowledge-broadening innovation as the primary response, supplemented by knowledge-deepening innovation (P4). Nevertheless, the primary responses in these two dimensions, short-term innovation and knowledge-broadening innovation, can hardly be compatible in practice because knowledge-broadening innovation, by nature, requires research into new knowledge and thus is more time-consuming. Therefore, we argue that either of the innovation configurations mentioned above (long-term knowledge-broadening innovation supplemented by short-term knowledge-deepening innovation or short-term knowledge-deepening innovation supplemented by long-term knowledge-broadening innovation) can be possible in response to imminent external crises, depending on which types of activities (long-term knowledge-broadening innovation or short-term knowledge-deepening innovation) are more feasible.

Latent internal crises (latent threats, internal sources). Based on the joint characteristics of latent (P1) and internal (P3) crises articulated above, latent internal crises foster a primary opportunity-oriented framing in the time dimension but a primary threat-oriented framing in the space dimension, thereby generating conflicting and incompatible innovation configurations across the time and space dimensions. Specifically, in the time dimension, firm managers tend to engage in long-term innovation as the primary response, supplemented by long-term innovation (P2); while in the space dimension, they are likely to engage in knowledge-deepening innovation as the primary response, supplemented by knowledge-broadening innovation (P3). Nevertheless, the primary responses in these two dimensions, long-term innovation and knowledge-deepening innovation, are often incompatible in practice because knowledge-deepening innovation builds on existing knowledge with incremental refinement and thus needs to be more time-efficient (and it may become meaningless if time-consuming). Therefore, again, we argue that either innovation configuration as mentioned above (long-term knowledge-broadening innovation supplemented by short-term knowledge-deepening innovation or short-term knowledge-deepening innovation supplemented by long-term knowledge-broadening innovation) can be possible in response to latent internal crises, depending on which types of activities (long-term knowledge-broadening innovation or short-term knowledge-deepening innovation) are more feasible.

The contingent effects of slack resources. Given that two innovation configurations (i.e. long-term knowledge-broadening innovation supplemented by short-term knowledge-deepening innovation and short-term knowledge-deepening innovation supplemented by long-term knowledge-broadening innovation) are both possible in the face of imminent external crises and latent internal crises, we identify conditions under which each configuration dominates. In this study, we focus on slack resources as a contingency because they not only shape firm managers' framing of crises and responses but also determine the extent to which firms can undertake the innovation activities triggered by the different types of crises. Indeed, scholars demonstrate that firms with more slack resources are more likely to adopt problemistic search logic in negative situations, while those with fewer slack resources tend to react more conservatively (Audia and Greve, 2006). Moreover, the importance of slack resources in supporting innovation activities has been consistently emphasized in our case studies. For example, the CEO of Firm C stated that: “If resources are insufficient, I might need to consider the fundamental issue of ensuring survival. Survival precedes development. If my resources are inadequate, discussing grand developmental ventures with employees would be highly impractical. I must have sufficient resources before I can articulate my plans”. Similarly, the supply chain manager of Firm E also emphasized that: “Given abundant slack resources, the primary consideration would be development. A focus would be placed on cultivating a core competitive advantage. For instance, this could involve creating a product within our industry that is uniquely available from us and cannot be procured from competitors, thereby establishing a distinct market position”.

Specifically, we suggest that more slack resources offer firms higher flexibility to pursue development opportunities and innovation activities with greater ambition (e.g. long-term and knowledge-broadening innovation), while firms with fewer slack resources need to allocate their limited resources to less ambitious and resource-consuming activities (e.g. short-term and knowledge-deepening innovation). Therefore, in the face of imminent external crises and latent internal crises, firms with more slack resources tend to pursue long-term knowledge-broadening innovation as their primary response, supplemented by short-term knowledge-deepening innovation. In contrast, firms with fewer slack resources will pursue short-term knowledge-deepening innovation as the primary response, supplemented by long-term knowledge-broadening innovation. To illustrate, the crisis experienced by Firm B, the tariff hikes, represented an imminent external crisis. Given the relatively adequate slack in the firm, the CEO prioritized long-term knowledge-broadening innovation, using AI to enhance long-term development: “We have been actively researching AI recently, including how to apply and implement AI within our industry and its specific sub-sectors”. Meanwhile, the CEO also emphasized the importance of survival, which requires cautious decision-making: “I believe survival is also a critical consideration … I believe maintaining a healthy cash flow is crucial, otherwise, the company's very existence could be jeopardized”. Furthermore, Firm E experienced the disrupted supply of a core component due to the US-China tensions, which also represented an imminent external crisis. Due to insufficient slack, the firm had to pursue short-term, knowledge-deepening innovation: “When facing sanctions on the laser modules, we directly offer clients a price reduction and propose alternative solutions by using domestically produced laser modules.” Moreover, “we implemented numerous process refinements, particularly within the project department”. Overall, we propose that firms' choice of innovation configurations during imminent external crises and latent internal crises depends on the level of slack they possess.

While previous studies have highlighted the positive effects of organizational crises on innovation (Huang et al., 2024; Oke and Nair, 2023), there is limited understanding of the nuances of crises and the paradoxes of innovation responses. Integrating insights from the paradoxical and cognitive framing perspectives, this study delves into paradoxical innovation approaches during crises along two dimensions: time (short-term vs. long-term orientation) and space (knowledge-deepening vs. knowledge-broadening). Correspondingly, we categorize organizational crises along the time (imminent vs. latent threat) and space (internal vs. external sources) dimensions to capture the nuances of organizational crises, thereby illuminating how firms manage paradoxical innovation configurations during each type of crisis.

This study contributes to the crisis management and innovation literature by providing a new typology of organizational crises and a comprehensive framework for understanding the paradoxical configurations of innovation across these types. First, this study enriches the conceptualization of organizational crises by introducing a comprehensive typology that captures the intricacies of crises across both time and space dimensions. Prior research has long grappled with the fragmented conceptualization of crises, which has hindered the development of a cohesive framework for coping with their heterogeneous impacts (Bundy et al., 2017; James et al., 2011; Pearson and Clair, 1998). Based on the sources of the crises (i.e. internal vs. external) and their manifestation (i.e. imminent vs. latent), we categorize four types of organizational crises: imminent internal crises, imminent external crises, latent internal crises, and latent external crises. In this regard, a key implication of our study is that we should understand organizational crises as a multidimensional concept. Such a nuanced understanding of organizational crises helps formulate more specific and effective responses tailored to the nature of the crisis, thereby mitigating threats and leveraging opportunities. In recent operations management studies, the reconfiguration of the supply chain in response to imminent (e.g. geopolitical events) and latent (e.g. economic uncertainty) crises has been a central theme (Charoenwong et al., 2023; Liang et al., 2024; Roehrich et al., 2025). Our crisis typology offers a framework for understanding the nuances of different response strategies (Bednarski et al., 2026).

Moving beyond previous typologies of organizational crises (Grewal et al., 2007; Gundel, 2005), our typology broadens the conceptualization of organizational crises by incorporating latent crises into the framework. The crisis management literature has disproportionately focused on managing imminent crises due to their disruptive prominence (Flammer and Ioannou, 2021; Liu et al., 2017; Raithel and Hock, 2021), but scholarly attention to latent crises, which are also prevalent in firm operations (as demonstrated in our case studies), remains nascent. While imminent crises require rapid threat containment to avert operational paralysis, latent crises, if left unaddressed, may jeopardize an organization's long-term viability. More importantly, latent crises exert less time pressure, allowing organizations to frame them as development opportunities that serve as catalysts for systemic change and improvement. Such opportunity framing not only mitigates defensive inflexibility but also fosters proactive adaptation to future vulnerabilities. Our conceptualization of latent crises aligns with previous studies on managerial interpretation of typical latent crises, such as technological discontinuities (George et al., 2006; König et al., 2021). By incorporating latent crises, our typology advances understanding of organizational crises by illustrating the possibility of both threat and opportunity framing during crises.

Second, this study enriches the innovation literature by offering a comprehensive framework for understanding crises as triggers of paradoxical innovation configurations. This framework aligns with previous research on learning from crises (Kalaignanam et al., 2013; Rerup, 2009) and innovation as a way to cope with crises (Huang et al., 2024; Oke and Nair, 2023). Learning from crises has been recognized as a critical catalyst for organizational transformation, enabling firms to overcome structural inertia and pursue innovation-driven adaptation (Sarkar and Osiyevskyy, 2018). Empirical research demonstrates that exogenous shocks create cognitive and operational imperatives for organizations to reevaluate existing practices, often catalyzing innovation through necessity-driven problem-solving (Huang et al., 2024). Collectively, this body of research suggests that crises serve as innovation triggers, compressing evolutionary timelines through experimentation and resource reconfiguration.

We extend this critical line of inquiry by theorizing a comprehensive framework for understanding the subtleties of paradoxical configurations of innovation in response to crises. In particular, the paradoxical framing of crises as both threats and opportunities leads to the juxtaposition of both threat-rigidity and problemistic search logics in guiding firm decision-making, thereby requiring a combination of contradictory types of innovation activities in both time (short-term-oriented vs. long-term-oriented) and space (knowledge-deepening vs. knowledge-broadening) dimensions. Based on our typology of organizational crises, we outline how to manage the paradoxical innovation configurations (with one type of innovation as primary and the other as supplementary) for each crisis type. Therefore, our propositions carry more fine-grained implications for innovation management. Given the importance of ambidexterity, firms should not only focus on the primary types of innovation activities that seem like natural responses to a crisis, but also consider the contradictory types as supplementary to formulate more balanced and comprehensive configurations. More specifically, our framework explicitly highlights the temporal nature of innovation activities by distinguishing between short- and long-term-oriented innovation. While scholars have provided important insights into the distinction of innovation activities in the technology scope dimension, we know relatively less about the temporal distinction among innovation activities. We illuminate in which condition (or for which type of crisis) firms should focus on short-term or long-term innovation (while using the other as a supplement). Our theory thus sheds light on the sequential and paradoxical nature of innovation capability development.

Finally, our study reveals the important role of slack resources in shaping the choice of innovation configurations. Consistent with previous studies that highlight their importance for dealing with crises (Bradley et al., 2011; Cheng and Kesner, 1997; Essuman et al., 2022; Manikas and Patel, 2016), we theorized that slack resources play a large role in steering the focus and framing of crises as threats or opportunities. We illustrate that when firms face multiple options for paradoxical innovation configurations (e.g. long-term knowledge-broadening innovation as the primary response, supplemented by short-term knowledge-deepening innovation, or vice versa), they may choose based on the level of slack resources available. A key implication is that, while different types of crises can call for firms to respond with various innovation configurations, their actual choice of configurations is constrained by the slack resources available to enable their innovation activities.

Our research offers key recommendations for managers to effectively manage crises and turn them into opportunities for innovation. First, we suggest that managers broaden their perspective on organizational crises to include not only imminent crises but also latent crises, which are often overlooked due to their gradual and less visible nature. Managers must recognize that latent crises—such as declining innovation capacity and eroding stakeholder trust—pose existential risks in the long-term if left unmanaged. To mitigate these risks, firms should institutionalize mechanisms for early detection, such as continuous environmental scanning, employee feedback systems, and predictive analytics to monitor indicators of emerging threats. By prioritizing latent crisis management, organizations can build resilience against long-term disruptions.

Second, managers should adopt a dual lens that recognizes crises as “forced opportunity”, in which the opportunity framing can trigger creative problem-solving. For instance, during latent crises, firms can channel resources into long-term innovation, such as investing in R&D for disruptive technologies or piloting new business models that address underlying vulnerabilities. To institutionalize this mindset, firms should embed innovation metrics into crisis response protocols, such as allocating a percentage of crisis budgets to experimental projects or rewarding employees for crisis-driven ideation. Ultimately, by framing crises as innovation triggers, managers can align short-term adaptations with long-term strategic renewal.

Finally, firm managers should also consider the level of slack resources they have when choosing innovation configurations in response to certain types of crises, especially those that make it difficult to decide which types of innovation to prioritize. In particular, when two or more options of paradoxical innovation configuration (e.g. long-term knowledge-broadening innovation as the primary response supplemented by short-term knowledge-deepening innovation, or vice versa) are possible to address the type of crises they face, they can choose the more ambitious and resource-consuming configuration when slack resources are sufficient and the less ambitious and resource-consuming one when they are lacking.

This research has several limitations that present future research opportunities. First, we focus on different types of innovation as responses to organizational crises, but innovation is not the only solution to crises. Firms might need to reallocate resources to other business functions or markets. In this regard, future studies can extend our framework by incorporating additional strategic responses to crises. Furthermore, our study does not cover the performance implications of the innovation responses, such as whether and to what extent the innovation helps address the crises. In this sense, future studies can examine how various post-crisis responses by firms (e.g. different types of innovation and additional strategic responses) can affect their competitive stance.

Additionally, while we incorporate the contingency role of slack in developing propositions for imminent external and latent internal crises, we do not systematically examine the contingency effects of slack across all types of crises within our framework. In fact, our propositions are subject to several other contingencies, including both organizational factors (e.g. resource portfolios, leadership style, and organizational culture) and contextual conditions (e.g. geographical regions, industries, and regulatory environments). We cannot cover these contingencies due to the scope limit of this study. In this regard, future work can extend our framework by incorporating more contingencies. Consideration of different types of slack also offers opportunities for future research.

Finally, although we use case studies to substantiate our proposition development, our study primarily focuses on developing theoretical propositions and does not involve systematic empirical testing. We thus call for future research to empirically test our framework, thereby furthering our understanding of the role of crises in shaping innovation configurations. Consistent with our configurational theorizing approach, we recommend that future research adopt research methods such as qualitative comparative analysis (QCA) to empirically examine our framework.

The authors acknowledge the insightful feedback and suggestions from the anonymous associate editor and reviewers.

The supplementary material for this article can be found online