Dynamic capabilities and SMEs competitiveness: the moderating effect of market turbulence

Abstract

This study aims to examine the effectiveness of individual dynamic capabilities (DC) constructs and whether they had comparable effects on a company’s competitiveness in market turbulence (MT). This study used quantitative methods to determine how the DC elements, sensing, learning, integrating and coordinating, influenced competitiveness, with the moderating role of MT during a real-time crisis. Survey data was gathered from 426 tourism small and medium-sized enterprises (TSMEs) in the United Arab Emirates and analyzed quantitatively. The study found that not all DC constructs were equally important in promoting competitiveness. TSMEs’ survival depended more on sensing and integrating capabilities than learning and coordinating capabilities, and on how these capabilities were used by managers or owners of TSMEs. The study found no moderation effect of MT. The generalizability of the results was hindered by the study’s focus on TSMEs in a single geographic location. The reasons for lack of proper mobilization of DCs constructs were not explored, but the data on the relative efficacy of DC constructs during a crisis significantly contributed to the literature. This study emphasized ways that companies could improve firm competitiveness during a crisis by deploying DCs to optimize operations. The implications for research, practical aspects and limitations are presented and discussed. Keywords: Business performance, Dynamic capabilities, Firm competitiveness, Market turbulence, Small and medium sized enterprises, SMEs