Sleeping giants: why do some SMEs choose dormancy as a strategy?

We consider dormancy, taken from the biological state of being, as a period in an organism’s (or business’) life-cycle when growth, development, and (in business, as in animals) physical activity are temporarily stopped. This minimizes metabolic activity and therefore helps an organism to conserve energy. Dormancy tends to be closely associated with environmental conditions, and organisms can synchronize entry to a dormant phase with their environment through predictive or consequential means. Predictive dormancy occurs when an organism enters a dormant phase before the onset of adverse conditions e.g. decreasing temperature is used by plants to predict the onset of winter; just as declining environmental conditions can be used by businesses to predict a downturn in trade. Consequential dormancy occurs when organisms enter a dormant phase after adverse conditions have arisen; in nature, commonly found in areas with an unpredictable climate; or in business, after a recession. Our interest is therefore in why some SMEs choose to register as ‘dormant’? There are a number of possible explanations but, until now, research has not focused on the nature of these companies. That is the purpose of our paper, and the research gap that we wish to address.