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Building dynamic capabilities of small and medium-sized enterprises through relational embeddedness: evidence from China

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Listed:
  • Yina Zhang

    (Xidian University)

  • Jiancheng Long

    (Xidian University)

  • Wu Zhao

    (Xidian University)

Abstract

In a highly volatile environment, i.e., the bottom of the pyramid (BOP) context, small and medium-sized enterprises (SMEs) can develop and adapt their resource bases through partner relations, extending the emerging theorization of dynamic capabilities. We explore the detailed nature and antecedents of these dynamic capabilities based on a multicase study by tracing the development of 6 BOP-oriented SMEs in the pharmaceuticals, animal husbandry, agricultural product processing, and distribution fields. The research was conducted between June 2019 and November 2020. First, our rich qualitative data indicate two distinct types of dynamic capabilities that are pivotal for short-term performance advantage and sustainable competitive advantage. Adaptation dynamic capability relates to activities of resource deployment and renewed operational capability, which is supported by local legitimacy and trust mechanisms, constructed by strong ties with noncommercial partners. Shaping dynamic capability relates to activities of path-creation and innovation capability, which is supported by the heterogeneous information and cost advantages, generated by weak ties with commercial partners. Second, SMEs give priority to the development of adaptation dynamic capability as the basis of shaping dynamic capability, while their sequencing explains how SMEs create, leverage, and enhance them over time.

Suggested Citation

  • Yina Zhang & Jiancheng Long & Wu Zhao, 2023. "Building dynamic capabilities of small and medium-sized enterprises through relational embeddedness: evidence from China," Electronic Commerce Research, Springer, vol. 23(4), pages 2859-2906, December.
    • Handle: RePEc:spr:elcore:v:23:y:2023:i:4:d:10.1007_s10660-022-09579-z
    DOI: 10.1007/s10660-022-09579-z
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