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Purpose -The purpose of this paper is to examine the relationship between a number of variables pertaining to core capability, competitive strategy and performance of construction small to medium size enterprises (SMEs) in China. Design/methodology/approach -The paper consists of a quantitative survey. It involves mainly the development of instrument and testing of the hypotheses. Findings -Core capability and competitive strategy are found to influence construction SMEs' performance. Moreover, there are positive relationships between core capability and competitive strategy. This suggests a need to align core capability and competitive strategy as a precondition for superior performance.Research limitations/implications -The paper has limitations as a result of data collection. A somewhat larger sample would obviously permit firmer conclusions to be drawn from the results of the statistical analysis. Originality/value -This paper will contribute to the literature on SMEs, strategic management and resource-based theory. This integration of scope is particularly new to the context of the Chinese construction industry. Similarly, this research will have implications for practice. The research findings help SMEs' managers to understand the impact of the unique resources of their enterprises and competitive strategy.

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