Entrepeneurial strategy making, dynamic capabilities & small firm growth

• Main Author: Dousios, Dimitrios
• Published: University of East Anglia 2010
• Subjects: 338.0068
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.539351

Theory on entrepreneurship suggests that the relationship between an entrepreneurial orientation and firm performance is positive. In explaining performance, entrepreneurship researchers have focused on its financial aspects, paying less attention on firm growth as a nonfinancial performance dimension. Moreover, when attempting to depict influences that reinforce this relationship, research attention emphasizes factors external to the firm, thus neglecting the effects of internal firm characteristics. In parallel, the resource based view, focusing on the nature and characteristics of internal firm assets, proclaims that the basis for achieving sustainable performance is related to the capacity to develop dynamic capabilities. As the debate on these higher order assets is emerging, the present study attempts to investigate their nature and performance implications by taking into account the unique physiognomy of small firms, presenting dynamic capabilities as aspects of firms' flexibility. Moreover, this study examines their complementary effects on the entrepreneurial orientation - small firm growth relationship, in terms of their moderating and collective effects. Drawing from a sample of 143 Greek small firms, analysis demonstrated that: a) an entrepreneurial orientation contributes to small firm growth, b) dynamic capabilities have positive effects on small firm growth, c) the entrepreneurial orientation - small firm growth relationship is influenced by dynamic capabilities and d) speed of responsiveness emerges as the most fundamental dynamic capability both in terms of its direct effects to performance as well as its moderating effect on the entrepreneurial orientation - small firm growth relationship. These results contribute to the entrepreneurship literature by demonstrating a unified picture that depicts a series of key competencies, offering a conceptual and empirical path to better understand the uniqueness of smaller organisations