IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v128y2021icp109-123.html
   My bibliography  Save this article

Surviving an economic downturn: Dynamic capabilities of SMEs

Author

Listed:
  • Weaven, Scott
  • Quach, Sara
  • Thaichon, Park
  • Frazer, Lorelle
  • Billot, Ken
  • Grace, Debra

Abstract

This study examines dynamic capabilities contributing to SME survival and growth during an economic downturn. Adopting a qualitative approach using the collective, instrumental case-based method, we conducted forty interviews with both successful and unsuccessful franchisees and independent SMEs, business and franchising experts, and franchisors in Australia. A framework of SMEs’ success was developed. Under survival mechanisms, it confirms the importance of business owner characteristics and firm resources. Three dimensions of dynamic capabilities are sensing (business assessment and information acquisition), seizing (product portfolio decisions, and investment in technologies and human resources) and reconfiguring (innovation, decentralization and knowledge management). It was found that performative routine aspects were more dominant, demonstrating the flexibility and context-dependence in the deployment of dynamic capabilities among SMEs. The research fills a gap in the entrepreneurship literature by investigating SMEs’ dynamic capabilities in a turbulent market with a special focus on unravelling salient ostensive and performative routine aspects.

Suggested Citation

  • Weaven, Scott & Quach, Sara & Thaichon, Park & Frazer, Lorelle & Billot, Ken & Grace, Debra, 2021. "Surviving an economic downturn: Dynamic capabilities of SMEs," Journal of Business Research, Elsevier, vol. 128(C), pages 109-123.
    • Handle: RePEc:eee:jbrese:v:128:y:2021:i:c:p:109-123
    DOI: 10.1016/j.jbusres.2021.02.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296321000862
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2021.02.009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fainshmidt, Stav & Nair, Anil & Mallon, Mark R., 2017. "MNE performance during a crisis: An evolutionary perspective on the role of dynamic managerial capabilities and industry context," International Business Review, Elsevier, vol. 26(6), pages 1088-1099.
    2. Rozenn Perrigot & Dildar Hussain & Josef Windsperger, 2015. "An investigation into independent small business owners’ perception of franchisee relationships," Post-Print halshs-01238505, HAL.
    3. Rachel Doern & Nick Williams & Tim Vorley, 2019. "Special issue on entrepreneurship and crises: business as usual? An introduction and review of the literature," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 31(5-6), pages 400-412, May.
    4. Makkonen, Hannu & Pohjola, Mikko & Olkkonen, Rami & Koponen, Aki, 2014. "Dynamic capabilities and firm performance in a financial crisis," Journal of Business Research, Elsevier, vol. 67(1), pages 2707-2719.
    5. Lanlan Cao, 2011. "Dynamic capabilities in a turbulent market environment: empirical evidence from international retailers in China," Post-Print hal-00753739, HAL.
    6. Archibugi, Daniele & Filippetti, Andrea & Frenz, Marion, 2013. "Economic crisis and innovation: Is destruction prevailing over accumulation?," Research Policy, Elsevier, vol. 42(2), pages 303-314.
    7. Peter B. Robinson & David V. Stimpson & Jonathan C. Huefner & H. Keith Hunt, 1991. "An Attitude Approach to the Prediction of Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 15(4), pages 13-32, July.
    8. Kathleen M. Eisenhardt & Jeffrey A. Martin, 2000. "Dynamic capabilities: what are they?," Strategic Management Journal, Wiley Blackwell, vol. 21(10‐11), pages 1105-1121, October.
    9. Rebecca Henderson & Iain Cockburn, 1994. "Measuring Competence? Exploring Firm Effects in Pharmaceutical Research," Strategic Management Journal, Wiley Blackwell, vol. 15(S1), pages 63-84, December.
    10. David J. Teece, 2012. "Dynamic Capabilities: Routines versus Entrepreneurial Action," Journal of Management Studies, Wiley Blackwell, vol. 49(8), pages 1395-1401, December.
    11. Sidney G. Winter, 2003. "Understanding dynamic capabilities," Strategic Management Journal, Wiley Blackwell, vol. 24(10), pages 991-995, October.
    12. David J. Ketchen Jr. & Jeremy C. Short & James G. Combs, 2011. "Is Franchising Entrepreneurship? Yes, No, and Maybe So," Entrepreneurship Theory and Practice, , vol. 35(3), pages 583-593, May.
    13. Bhandari, Krishna Raj & Rana, Sudhir & Paul, Justin & Salo, Jari, 2020. "Relative exploration and firm performance: Why resource-theory alone is not sufficient?," Journal of Business Research, Elsevier, vol. 118(C), pages 363-377.
    14. Laufs, Katharina & Schwens, Christian, 2014. "Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda," International Business Review, Elsevier, vol. 23(6), pages 1109-1126.
    15. David J. Teece, 2007. "Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance," Strategic Management Journal, Wiley Blackwell, vol. 28(13), pages 1319-1350, December.
    16. David J. Collis, 1994. "Research Note: How Valuable are Organizational Capabilities?," Strategic Management Journal, Wiley Blackwell, vol. 15(S1), pages 143-152, December.
    17. Osiyevskyy, Oleksiy & Shirokova, Galina & Ritala, Paavo, 2020. "Exploration and exploitation in crisis environment: Implications for level and variability of firm performance," Journal of Business Research, Elsevier, vol. 114(C), pages 227-239.
    18. C. K. Prahalad & Gary Hamel, 1994. "Strategy as a field of study: Why search for a new paradigm?," Strategic Management Journal, Wiley Blackwell, vol. 15(S2), pages 5-16, June.
    19. Joon Mo Ahn & Tim Minshall & Letizia Mortara, 2018. "How Do Entrepreneurial Leaders Promote Open Innovation Adoption in Small Firms?," World Scientific Book Chapters, in: Wim Vanhaverbeke & Federico Frattini & Nadine Roijakkers & Muhammad Usman (ed.), RESEARCHING OPEN INNOVATION IN SMEs, chapter 5, pages 137-177, World Scientific Publishing Co. Pte. Ltd..
    20. Nick Williams & Tim Vorley, 2014. "Economic resilience and entrepreneurship: lessons from the Sheffield City Region," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 26(3-4), pages 257-281, May.
    21. Zouaghi, Ferdaous & Sánchez, Mercedes & Martínez, Marian García, 2018. "Did the global financial crisis impact firms' innovation performance? The role of internal and external knowledge capabilities in high and low tech industries," Technological Forecasting and Social Change, Elsevier, vol. 132(C), pages 92-104.
    22. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    23. Gonzalez-Diaz, Manuel & Solis-Rodriguez, Vanesa, 2012. "Why do entrepreneurs use franchising as a financial tool? An agency explanation," Journal of Business Venturing, Elsevier, vol. 27(3), pages 325-341.
    24. Porter, Michael E, 1979. "The Structure within Industries and Companies' Performance," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 214-227, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ganlin Pu & Md. Qamruzzaman & Ahmed Muneeb Mehta & Farah Naz Naqvi & Salma Karim, 2021. "Innovative Finance, Technological Adaptation and SMEs Sustainability: The Mediating Role of Government Support during COVID-19 Pandemic," Sustainability, MDPI, vol. 13(16), pages 1-27, August.
    2. Rakshit, Sandip & Islam, Nazrul & Mondal, Sandeep & Paul, Tripti, 2022. "Influence of blockchain technology in SME internationalization: Evidence from high-tech SMEs in India," Technovation, Elsevier, vol. 115(C).
    3. Khurana, Indu & Dutta, Dev K. & Singh Ghura, Amarpreet, 2022. "SMEs and digital transformation during a crisis: The emergence of resilience as a second-order dynamic capability in an entrepreneurial ecosystem," Journal of Business Research, Elsevier, vol. 150(C), pages 623-641.
    4. Perrigot, Rozenn & López-Fernández, Begoña & Basset, Guy, 2021. "Conflict management capabilities in franchising," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
    5. Behl, Abhishek & Jayawardena, Nirma & Nigam, Achint & Pereira, Vijay & Shankar, Amit & Jebarajakirthy, Charles, 2023. "Investigating the revised international marketing strategies during COVID-19 based on resources and capabilities of the firms: A mixed method approach," Journal of Business Research, Elsevier, vol. 158(C).
    6. Liguo Lou & Yongbing Jiao & Joon Koh, 2021. "Determinants of Fan Engagement in Social Media-Based Brand Communities: A Brand Relationship Quality Perspective," Sustainability, MDPI, vol. 13(11), pages 1-17, May.
    7. Nadia Zahoor & Yong Kyu Lew, 2022. "Sustaining superior international performance: Strategic orientations and dynamic capability of environmentally concerned small‐ and medium‐sized enterprises," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1002-1017, March.
    8. Shahid Latif & Safrul Izani Mohd Salleh & Mazuri Abd. Ghani & Bilal Ahmad, 2023. "Developing Management Accounting Systems as a Change Process for Economic Sustainability: A Case of Sportswear Manufacturing SME," South Asian Journal of Business and Management Cases, , vol. 12(2), pages 207-221, August.
    9. Theoneste Manishimwe & Lukman Raimi & Chidnma Julius Azubuike, 2022. "Customer-centric influence of entrepreneurial marketing on business performance of hotels in Nigeria during the COVID-19 crisis," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(6), pages 668-683, December.
    10. Islam Elgammal & Mashhour Hani Baeshen & Ghada Talat Alhothali, 2022. "Entrepreneurs’ Responses to COVID-19 Crisis: A Holistic Dynamic Capabilities Perspective in the Saudi Food and Beverage Sector," Sustainability, MDPI, vol. 14(20), pages 1-22, October.
    11. Omar. A. Alghamdi & Gomaa Agag, 2023. "Boosting Innovation Performance through Big Data Analytics Powered by Artificial Intelligence Use: An Empirical Exploration of the Role of Strategic Agility and Market Turbulence," Sustainability, MDPI, vol. 15(19), pages 1-19, September.
    12. Fanar Shwedeh & Ahmad Aburayya & Raghad Alfaisal & Ayotunde Adetola Adelaja & Gbemisola Ogbolu & Abid Aldhuhoori & Said Salloum, 2022. "SMEs’ Innovativeness and Technology Adoption as Downsizing Strategies during COVID-19: The Moderating Role of Financial Sustainability in the Tourism Industry Using Structural Equation Modelling," Sustainability, MDPI, vol. 14(23), pages 1-18, December.
    13. Marina Rybalka & Michael Spjelkavik Mark, 2023. "Innovation Pattern Heterogeneity and Crisis Resilience," Businesses, MDPI, vol. 3(2), pages 1-24, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Khurana, Indu & Dutta, Dev K. & Singh Ghura, Amarpreet, 2022. "SMEs and digital transformation during a crisis: The emergence of resilience as a second-order dynamic capability in an entrepreneurial ecosystem," Journal of Business Research, Elsevier, vol. 150(C), pages 623-641.
    2. Hirokazu Kano, 2021. "The dilemma and its solution of deep uncertainty in the dynamic capabilities framework: Insights from modern Austrian economics," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(3), pages 605-611, April.
    3. Schriber, Svante & Löwstedt, Jan, 2018. "Managing asset orchestration: A processual approach to adapting to dynamic environments," Journal of Business Research, Elsevier, vol. 90(C), pages 307-317.
    4. Ferreira, Jorge & Coelho, Arnaldo & Moutinho, Luiz, 2020. "Dynamic capabilities, creativity and innovation capability and their impact on competitive advantage and firm performance: The moderating role of entrepreneurial orientation," Technovation, Elsevier, vol. 92.
    5. Mitręga, Maciej & Choi, Tsan-Ming, 2021. "How small-and-medium transportation companies handle asymmetric customer relationships under COVID-19 pandemic: A multi-method study," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 148(C).
    6. Krammer, Sorin, 2021. "Navigating The New Normal: Which Firms Have Adapted Better To The Covid-19 Disruption?," MPRA Paper 109485, University Library of Munich, Germany.
    7. Wittenstein, Daniel, 2020. "Champions of digital transformation? The dynamic capabilities of hidden champions," ZEW Discussion Papers 20-065, ZEW - Leibniz Centre for European Economic Research.
    8. Fred Strønen & Thomas Hoholm & Kari Kværner & Linn Nathalie Støme, 2017. "Dynamic capabilities and innovation capabilities: The case of the ‘Innovation Clinic’," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 13(1), pages 89-116.
    9. Mohamed Mansouri & Cheklekbire Malainine & Hayat Souti & Ikram Cadimi, 2022. "Dynamic capabilities, competitiveness and performance of small and medium-sized enterprises: a systematic literature review [Capacités dynamiques, compétitivité et performance des petites et moyenn," Post-Print hal-03794567, HAL.
    10. Hai Guo & Zhuen Yang & Ran Huang & Anqi Guo, 2020. "The digitalization and public crisis responses of small and medium enterprises: Implications from a COVID-19 survey," Frontiers of Business Research in China, Springer, vol. 14(1), pages 1-25, December.
    11. Makkonen, Hannu & Pohjola, Mikko & Olkkonen, Rami & Koponen, Aki, 2014. "Dynamic capabilities and firm performance in a financial crisis," Journal of Business Research, Elsevier, vol. 67(1), pages 2707-2719.
    12. Garcia Martinez, Marian & Zouaghi, Ferdaous & Garcia Marco, Teresa & Robinson, Catherine, 2019. "What drives business failure? Exploring the role of internal and external knowledge capabilities during the global financial crisis," Journal of Business Research, Elsevier, vol. 98(C), pages 441-449.
    13. Cleverton Rodrigues Fernandes & André Gustavo Carvalho Machado, 2019. "Technology Transfer Capability: development dynamics in higher education institutions," Brazilian Business Review, Fucape Business School, vol. 16(1), pages 1-15, January.
    14. Rui Silva & Cidália Oliveira, 2020. "The Influence of Innovation in Tangible and Intangible Resource Allocation: A Qualitative Multi Case Study," Sustainability, MDPI, vol. 12(12), pages 1-22, June.
    15. Sabina Tasheva & Bo Bernhard Nielsen, 0. "The role of global dynamic managerial capability in the pursuit of international strategy and superior performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-20.
    16. Simone Sehnem & Adriane A. Farias S. L. de Queiroz & Susana Carla Farias Pereira & Gabriel dos Santos Correia & Edson Kuzma, 2022. "Circular economy and innovation: A look from the perspective of organizational capabilities," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 236-250, January.
    17. Inigo, Edurne A. & Albareda, Laura, 2019. "Sustainability oriented innovation dynamics: Levels of dynamic capabilities and their path-dependent and self-reinforcing logics," Technological Forecasting and Social Change, Elsevier, vol. 139(C), pages 334-351.
    18. Liliya Oxtorp, 2014. "Dynamic managerial capability of technology-based international new ventures—a basis for their long-term competitive advantage," Journal of International Entrepreneurship, Springer, vol. 12(4), pages 389-420, December.
    19. Sheshadri Chatterjee & Ranjan Chaudhuri & Antonino Galati & Demetris Vrontis, 2021. "Adoption of Ubiquitous CRM for Operational Sustainability of the Firms: Moderating Role of Technology Turbulence," Sustainability, MDPI, vol. 13(18), pages 1-18, September.
    20. Jason Li-Ying & Yuandi Wang & Lutao Ning, 2016. "How do dynamic capabilities transform external technologies into firms’ renewed technological resources? – A mediation model," Asia Pacific Journal of Management, Springer, vol. 33(4), pages 1009-1036, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:128:y:2021:i:c:p:109-123. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.