The Impact of Dynamic Capabilities on SME Sustainable Performance

Despite environmental and social goals being identified as key objectives for small and medium-sized enterprises (SMEs), extant literature lacks explanations on how these goals can be achieved next to sound economic outcomes. We argue that SME sustainability should be addressed through a process of continuous adaptation which can be facilitated by dynamic capabilities. We propose that in the unique situation of SMEs integration dynamic capabilities can simultaneously drive social, environmental and economic performances. The main contribution of our paper is that we address the debate on the (in)ability of SMEs to balance social, environmental and economic objectives, by integrating new insights from the dynamic capabilities literature. Our study is among the first to examine this debate with unique survey data of 297 SMEs in the Netherlands. The empirical results provide convincing support for our approach to the study of the implementation of all three pillars of sustainability in SMEs