Dynamic Capabilities: An Exploration of How Small Firms Renew Their Resource Base

Proceeding of Wayamba International Conference (p. 160). Kuliyapitiya, Sri Lanka: Wuyamba University of Sri Lanka, 2014

1 Pages Posted: 26 Dec 2014

See all articles by Shuhua Hu

Shuhua Hu

Wuhan University of Science and Technology - School of Management

P.M.B Jayathilake

Rajarata University of Sri Lanka - Department of Business Management

Date Written: December 24, 2014

Abstract

The concept of dynamic capabilities evolved from the resource based view of the firm enlightens that capacity of a firm to purposefully create, extend or modify its resource base to become a source of superior performance, and may enable the firm to achieve sustainable competitive advantage. This study aims to extend the concept of dynamic capabilities by exploring the resource renewal process of the small firms. Building on the emergent literature on dynamic capabilities, we suggest a multidimensional construct with three factors: resource coordination & integration, learning and strategic completive response capabilities. A multivariate analysis (Structural Equation Modeling) of survey responses of 488 firms belong to manufacturing SMEs in Sri Lanka indicates that underlying constructs of dynamic capabilities help firm to renew their resource bases. A positive direct impact of firm capabilities on competitive advantage is revealed in addition to the positive influence of the capabilities to the entrepreneurial and strategic actions of the firm. A key implication is that the dynamic capabilities have a more expansive and vital role in the adaptation of small firms in today’s business world than ever considered. The findings have valuable implications for practitioners and academics.

Keywords: Keywords: Competitive advantage, Dynamic capabilities, Entrepreneurship, Small firms.

Suggested Citation

Hu, Shuhua and Jayathilake, Bandula, Dynamic Capabilities: An Exploration of How Small Firms Renew Their Resource Base (December 24, 2014). Proceeding of Wayamba International Conference (p. 160). Kuliyapitiya, Sri Lanka: Wuyamba University of Sri Lanka, 2014, Available at SSRN: https://ssrn.com/abstract=2542647

Shuhua Hu

Wuhan University of Science and Technology - School of Management ( email )

Wuhan
China

Bandula Jayathilake (Contact Author)

Rajarata University of Sri Lanka - Department of Business Management ( email )

Mihintale
Sri Lanka

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