SMEs’ dynamic capabilities and value creation: the mediating role of competitive strategy

Purpose: The purpose of this research is to explicate the role of dynamic capabilities in the ability of small- and medium-sized enterprises (SMEs) to create value and also investigate the relationship among different dynamic capabilities, competitive strategy and SMEs’ value sources. Design/methodology/approach: Empirical evidence based on a survey conducted on a sample of 441 UK-based SMEs was used to test the research hypotheses. Findings: The findings illustrate that sensing, learning, integrating and coordinating capabilities play a significant role in SMEs’ value creation, and competitive strategy mediates the impact of dynamic capabilities on value creation. Research limitations/implications: This study demonstrates the benefits of understanding the relationship among the four types of dynamic capabilities, competitive strategy and value creation. Moreover, this study contributes to the notion of the contingency nature of dynamic capabilities. Practical implications: It offers managers insight into the aspects on which to focus their efforts to enhance their firm’s capacity of value creation. Originality/value: While much of the prior studies have conceptually/qualitatively investigated the financial return of uni-dimensional dynamic capabilities of large firms in the manufacturing sector, this study made a significant effort to quantitatively examine the non-financial value potential of SMEs in service sector through four processes of dynamic capabilities. © 2020, Emerald Publishing Limited.