The impact of dynamic capabilities and time-based competitive advantage on SME performance: The role of organisational structure and entrepreneurial orientation

The aim of this thesis is to examine how dynamic capabilities are used by small and medium-sized enterprises (SMEs) to increase performance. Specifically, it explores the mechanism by which the dynamic capabilities of SMEs affect firm performance through time-based competitive advantage. It also examines important factors that facilitate and enhance the deployment of SME dynamic capabilities, including organisational structure and entrepreneurial orientation. Data obtained from a sample that comprised 482 United Kingdom–based manufacturing and service SMEs were evaluated through a quantitative survey. Using partial least squares modelling, the analysis indicated the existence of a partial mediating effect of time-based competitive advantage on the dynamic capabilities and SME firm performance relationship. The analysis also identified a partial mediating effect of dynamic capabilities on the positive relationship between organisation structure (organicity) and time-based competitive advantage. An interesting finding was that, in the context of SMEs, an organisation structure that is more mechanistic in nature encourages greater time-based competitive advantage; however, in the presence of dynamic capabilities, an organic structure is preferred. This thesis discusses possible reasons for these results. Further, a partial mediating effect of dynamic capabilities on the positive entrepreneurial orientation and time-based competitive advantage relationship was also found. The moderating influence of organisation structure on the positive dynamic capabilities and time-based competitive advantage relationship was supported. However, the hypothesised moderating influence of entrepreneurial orientation on the positive dynamic capabilities and time-based competitive advantage relationship was not supported. This thesis has outlined the mechanism by which SMEs can develop dynamic capabilities and use them to generate greater time-based competitive advantage, as well as increase firm performance. It thus makes an empirical contribution to the emerging body of research on dynamic capabilities in the SME context. Several theoretical contributions and managerial contributions are also further outlined