Strategic renewal of SMEs: the impact of social capital, strategic agility and absorptive capacity

Abstract

PurposeThis research was carried out with the purpose to empirically test the model to explain the procedures concerned with the translation of social capital (SC) into strategic renewal (SR) of SMEs in developing economy like Pakistan. This procedure involves the mediating role of firms' strategic agility (SA) as well as the contingent effects of firms' absorptive capacity (AC).Design/methodology/approachThis study employed a cross-sectional design to evaluate the hypothesized model. To validate the moderated mediation model, data was collected from 519 CEOs, owners, finance managers and managing directors of 123 manufacturing units dealing in agricultural machinery (32 units), automobile accessories (16 units), pharmaceutical instrument (11 units), electrical equipment (25 units), IT related accessories (21 units) and garments (18 units).FindingsThe findings of the study confirm a positive association between SC on SR. Moreover, results also validate the mediating role of SA in the relationship between SC and SR. In addition, the moderating role of AC is also confirmed and presented this construct as a catalyst in the relationship between SC and SR.Practical implicationsThis research provides new endeavors for strategic management and strategic entrepreneurship literature by focusing on distinctive resources such as SC with its different facets. Therefore, it provides a new dimension and a roadmap that will be beneficial to the achievement of the objectives of SR.Originality/valueThe findings of this research have contributed to the streams of strategic management perspective by emphasizing upon the mediating mechanism how SC can be transformed into SR of SMEs through SA. Findings of the research also contribute to understand the moderating role of AC, and how its association with SC and SA augments the effects on SR of firms.

Social capital and corporate entrepreneurship: the role of absorptive capacity in emerging markets

“…The investigation of such relationships has produced a more inclusive picture of ways in which social capital theory, in conjunction with the knowledge-based view of the firm, absorptive capacity theory and CE theory, can be utilized to illustrate how firms can benefit from its inter-firm relations, and supply chain partners relations particularly. The current study contributes to the ongoing discussion on how absorptive capacity is enhanced through the different forms of social capital; enabling (Mahmood and Mubarik, 2020;Khan et al, 2020;Reid, 2019;Yang and Tsai, 2019). The study also investigates the distinct nature of absorptive capacity dimensions potential and realized-on corporate innovation, where recent research called for studying each dimension separately due to their different outcomes (Miroshnychenko et al, 2021;Siachou et al, 2021;Ahmed et al, 2020;Wang and Li, 2016;Leal-Rodriguez et al, 2014).…”

“…Absorptive capacity is a special capability that enables firms to recognize, value, assimilate and exploit the new external knowledge obtained from the external environment, and also from firms' various relationships (Mahmood and Mubarik, 2020;Rodrigo-Alarcon et al, 2018;Preston et al, 2017;Tortoriello, 2015;Zahra et al, 2009); enabling innovation (Reid, 2019;Preston et al, 2017;Tortoriello, 2015;Foss et al, 2013) and CE (Tortoriello, 2015;Zahra and George, 2002). As absorptive capacity capability is activated based on the recognition and exploitation of internal and external knowledge, it seems that social capital can play a fundamental role in enhancing absorptive capacity (Mahmood and Mubarik, 2020), and hence corporate entrepreneurial and innovative behaviors (Khan et al, 2020;Rodrigo-Alarc on et al, 2018;Preston et al, 2017;Li et al, 2014;Yim and Leem, 2013;Alguezaui and Filieri, 2010;Monnavarian and Ashena, 2009;Adler and Kwon, 2002). Traced back to the importance of unique firm resources in creating sustainable competitive advantage (Barney et al, 2001;Wernerfelt, 1984), social capital is one of the valuable firm resources that supports organizations that obtain information and knowledge, and to spot market opportunities (Preston et al, 2017;Li et al, 2014).…”

“…There is a clear role for social capital in fostering corporate entrepreneurial behaviors (Khan et al, 2020;Rodrigo-Alarc on et al, 2018;Preston et al, 2017;Li et al, 2014;Alguezaui and Filieri, 2010) and innovation capabilities (Jian and Zhou, 2015;Yim and Leem, 2013;Alguezaui and Filieri, 2010;Chisholm and Nielsen, 2009;Monnavarian and Ashena, 2009;Nahapiet and Ghoshal, 1998;Tsai and Ghoshal, 1998;Adler and Kwon, 2002;Yli-Renko et al, 2001). Social capital helps network members in spotting market opportunities and obtaining information (Preston et al, 2017;Li et al, 2014), as well as accessing valuable resources (Gordon and Cheah, 2014;Nahapiet and Ghoshal, 1998).…”

The role of dynamic capabilities and strategic agility of B2B high-tech small and medium-sized enterprises during COVID-19 pandemic: Exploratory case studies from Finland

“…Similarly, open innovation can promote strategic agility by speeding up new product development to meet nascent market opportunities, thus surviving in crisis times ( Chesbrough, 2020 ; Khan, Majid, & Yasir, 2020 ). Third, transforming capability involves challenging conventional routines for timely accommodation and adjustments ( Teece, 2007 ).…”

How to Realize Business Model Innovation for New Ventures? Psychological Capital and Social Capital Perspective

“…With the improvement of consciousness, entrepreneurs began to pay more attention to intangible capital, including SC and PC (Luthans et al, 2004 ; Bockorny and Youssef-Morgan, 2019 ). SC can be understood as the vertical connection, horizontal connection, and social connection between actors and other actors or organizations, and the ability to obtain rare resources through this connection (Khan et al, 2020 ). With the increase of market openness and transparency, and the enhancement of competitiveness, it is difficult for enterprises to stand out in the fierce industry competition only by their own internal resources and technology, which requires enterprises to broaden their social network relations, increase cooperation with other stakeholders, and can even cross industries to seek partners.…”