Corporate Responses to Macroeconomic Changes and Shocks (CBR project)


Aims and objectives

The aim of the project was to consider how changes in the macroeconomy and shocks influence managerial behaviour and corporate strategy. By focussing on two key high-technology sectors in the UK economy – aerospace and biotechnology – the project aimed to consider whether the development and commercialisation of technology was influenced by short-term economic fluctuations. The project used ‘real time’ case studies to analyse how companies were responding to changing economic conditions and shocks. This approach allowed tracking of the behaviour of the firms every two-three months using interviews with the companies in the sample combined with other data sources which provided details on corporate activities and finance (such as the Aerospace Market Observatory, Biocentury and Factiva). The benefit of such a methodology was that it allowed relevant issues to emerge and provided first hand information on causality that is unavailable in aggregate data and it generated a close familiarity with the firms and their circumstances.

Results and dissemination

The impact of economic change was apparent in both sectors studied. It particularly influenced the young firms in the biotechnology sector who were at ‘critical junctures’ in their development and required finance to grow. Many of these firms did not have the competences to cope easily with the changes in financial markets. Furthermore, the failure to acquire finance may prevent the commercialisation of technology and may have an impact on long-term growth. The companies in the more mature aerospace sector had ‘learned’ to cope with change and uncertainty and had developed competences and capacity to deal with such factors. This study suggests that when considering the microfoundations of macroeconomics, account should be taken of the variety of corporate responses to economic change and fluctuations. It also suggests that policy-makers should consider the cyclical nature of finance gaps in high-technology industries. This research has been disseminated through a range of publications and by presentations to academic, policy and practitioner audiences.

Project leader

  • Michael Kitson

Principal investigator

  • David Primost

Project status


Project dates



Journal articles

Kitson, M. and Primost, D. (2004) ‘Managing the business cycle – an evaluation of the strategies adopted by aerospace firms to manage the business cycle’, Mimeo.

Kitson, M. and Primost, D. (2004) ‘Selling science or snake oil?’ High-technology entrepreneurship during the business cycle’, Mimeo.

Kitson, M. and Primost, D. (2004) ‘Technological revolutions and financial systems: the case of biotechnology – evaluation of the incongruity between long-term technological developments and financial volatility’, Mimeo.

Book chapters

Kitson, M., Michie, J. and Sheehan-Quinn, M. (2003) ‘Markets, competition, cooperation and innovation’, in D Coffey and C Thornley (eds) Industrial and Labour Market Policy and Performance, Routledge.

Kitson, M (2003) ‘Failure followed by success or success followed by failure? A re-examination of British Economic Performance since 1950’ in R. Floud and P. Johnson (eds) The Cambridge Economic History of Britain, Cambridge University Press.

Kitson, M. and Wilkinson, F. (2003) ‘The state of competitiveness’ in A.Cosh and A.Hughes (eds), Enterprise Challenged: Policy and Performance in the British SME Sector 1999-2002, CBR, Cambridge.

Kitson, M. and Wilkinson, F. (2003) ‘Labour mobility, training and labour market flexibility’ in A.Cosh and A. Hughes (eds), Enterprise Challenged: Policy and Performance in the British SME Sector 1999-2002, CBR, Cambridge.

Other publications

Kitson, M. and Primost, D. (2002) Research for a film produced by the Cambridge-MIT Institute on the challenges facing the biotechnology sector