Exploratory Study on Relationship between Entrepreneur Characteristics and Dynamic Capabilities in Export SMES

Abstract

Small and medium-sized enterprises (SMEs) play a key role in economic and social development of any country. However, research has revealed that SMEs in Sri Lanka suffer from poor sustainability and low performance compared to other countries. According to the literature, SME performance is associated with directly unobservable owner and firm factors which are based on internal capabilities. With the ever-increasing dynamism of the market and increased competition from large multinational companies, it is essential for the SMEs to adapt to the environment promptly. Dynamic capabilities of export SMEs must be more amplified and leveraged than those of a firm with a less ambitious, purely domestic SMEs. Given the strong position of entrepreneur in the SME context, this study argues that antecedents to dynamic capabilities can be found at the individual entrepreneur level. It identifies entrepreneurial orientation, human capital and social capital of the entrepreneur as key characteristics at the individual level. This research used a quantitative research methodology and a randomly selected sample of 197 export SMEs in Sri Lanka were analyzed. The results were analyzed using partial least squares–structured equation modelling (PLS–SEM). This study empirically established that entrepreneur characteristics positively influence development of organizational dynamic capabilities. The outcome of this research will enhance the understanding of SME capability development process.

The role of entrepreneurship on the foundations of dynamic capabilities

“…Insert Table 3 here Figure 2 shows that the standardized path coefficient for 'Entrepreneurship' and 'Knowledge Management' relationship is the highest coefficient found (.640) with 41% of variance accounted for by its predictor, suggesting a strong positive relationship between these two variables as supported by Mudalige, et al, (2016). A strong positive relationship was also found between 'Human Resources Capabilities' and 'Strategic Decision Flexibility' (.51).…”

“…Teece (2007Teece ( :1319) also suggests that "enterprises with strong dynamic capabilities are intensely entrepreneurial" and Newey and Zahra (2009) underlines the interaction between entrepreneurship and dynamic capabilities. The antecedents of dynamic capabilities can be perceived at the individual entrepreneur level (Mudalige, Ismail & Malek, 2016). As such, dynamic capabilities are guided by a proactive entrepreneurial logic and perform a more expansive or critical role in the adaptation of firms than previously considered by other researchers.…”

A systematic literature analysis on entrepreneurial orientation and business performance

“…BP is sometimes described as the successful phase of action or collection of the actions or intention by the Small and Medium Enterprises (SMEs) in a country (Raimond, 2016) while it is acknowledged as the best criteria for evaluation and measurement of the efficiency and effectiveness of the SMEs within a given time period. It is stated that especially in Europe, SMEs serve a vital role (Mudalige, Ismail & Malek, 2016) with nearly 23 million that amounts to 99% of all running businesses, employing 75 million employees representing more than 80% of the employment rate in certain sectors (Priyanath & Premaratne, 2014). Statistics indicate that SME sector of Sri Lanka as a developing country also has a contribution of 80% of all business categories, to the established businesses (Gamage, 2014).…”

“…Statistics indicate that SME sector of Sri Lanka as a developing country also has a contribution of 80% of all business categories, to the established businesses (Gamage, 2014). Therefore, SMEs are considered as the back bone of the many economies too (Mudalige, Ismail & Malek, 2016). Hence, this discussion is very important in the current context, exposing an outstanding alertness for the sustainable growth of most of the countries.…”

The Relationship between the Chief Executive Officer’s (CEO) Social Capital and Dynamic Capabilities: A Meta-Analysis of its Moderators

“…Nonetheless, results have wide unexplained heterogeneity. Correlations reported vary from zero (e.g., Boso et al, 2013; Chen et al, 2015;Wei et al, 2011) to .6 (e.g., Mudalige et al, 2016; Rodrigo-Alarcon et al, 2018; Yu et al, 2019). Consequently, there is a gap concerning the correlation of CEO social capital with dynamic capabilities, and the moderator variables that explain the heterogeneity in the results.…”