Organizational Capabilities and Performance of SMEs in Dynamic and Stable Environments

Abstract

<jats:p> This study examines the correlation between the organizational capabilities and firm performance of SMEs in both dynamic and stable environments in Hong Kong. Organizational capabilities are measured in terms of innovative ability, quality-enhancing capability, cost-reduction capability and ‘organicity’. Organizational capabilities are hypothesized to correlate positively with firm performance and to be moderated by environmental dynamism. A sample of 71 SMEs was drawn from the chemical and computer industries, which represent stable and dynamic industrial environments respectively. The findings suggest that organizational capabilities can significantly explain the level of SME performance and the impacts of environmental dynamism on these relationships. </jats:p>

Effects of Relational Capabilities and Power Asymmetry on Innovativeness and Flexibility of Sub-Sahara Africa Small Exporting Firms

“…Thus, there is need to understand the performance of all players in GVCs so as to identify where local upgrading is required or hindered (Schmitz and Knorringa ). In this study, just as in extant small firm research firm performance has been used as a dependent variable (see Lau, Man, and Chow ; Sadler‐Smith et al. ; Swierczek and Ha ).…”

“…Thus, there is need to understand the performance of all players in GVCs so as to identify where local upgrading is required or hindered (Schmitz and Knorringa 2000). In this study, just as in extant small firm research firm performance has been used as a dependent variable (see Lau, Man, and Chow 2004;Sadler-Smith et al 2003;Swierczek and Ha 2003). Small business performance can be assessed by such measures as terms of financial performance, sales, market share, innovation, and human resources management (HRM) performance.…”

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“…Michael Porter's articulation of the "structure-conduct-performance" paradigm (for example, Porter 1985Porter , 1980Rumelt 1974) analysis of diversification and Jay Barney's (1991) essay articulat-ing the resource-based view of the firm are but a few examples of seminal strategic management research seeking to explain firm performance. Within SME research, the issue of firm performance has also taken a place of prominence as a dependent variable (for example, Lau, Man, and Chow 2004;Sadler-Smith et al 2003;Swierczek and Ha 2003;Covin and Covin 1990). Researchers attempt to understand the dynamics at work on the performance of firms because to do so may help to improve it.…”

“…For example, SME owners/managers may find it useful or necessary and unavoidable to pursue strategies that sacrifice (short-term) profitability for growth. Such risky strategies may be due to environmental conditions (Lau, Man, and Chow 2004;Covin and Slevin 1989) or to a particular time in the firm's development (Oviatt and McDougall 1994). Without the ability to reach a "critical mass" in revenue at some point in the early development of a firm, the issue of profitability in the traditional sense is moot.…”

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“…It means deliberately choosing a different set of activities to deliver a unique mix of value.' Firms must possess the necessary capabilities to enable them to reconfigure, renew and redeploy resources and capabilities constantly in order to capture changing opportunities more effectively (Foss et al, 2011;Lau et al, 2004). Competitive strategy, therefore, explores how firms operate to improve their performance (Lechner and Gudmundsson, 2014).…”