The effect of SMEs’ dynamic capability on operational capabilities and organisational agility

Abstract

Purpose: This study sets out to empirically investigate the effect of small and medium-sized enterprises’ (SMEs) dynamic capability on operational capabilities, organisational agility and performance while assessing the moderating role of environmental uncertainty.

Design/methodology/approach: Data were gathered from 288 company representatives from the South Korean provinces of Daegu and Gyeongbuk. Companies in Daegu and Gyeongbuk are purposively sampled as research subjects and classified as manufacturing and/or distribution, and other industries, with a questionnaire administered to firm representatives and employees. The proposed hypotheses are tested using structural equations modelling.

Findings/results: The study finds that dynamic capability has a significant positive effect on marketing capability, managerial capability, and technical capability, respectively. The study also discovers that marketing capability positively affects organisational agility. Furthermore, the findings show that technical capability influences organisational agility, which in turn affects innovation capability positively. The study also reveals that technological uncertainty moderates the relationship between dynamic capability and technical capability.

Practical implications: The outcome of this study implies that rather than reducing the scale or scope of support projects, the technical and management levels should be prepared in the institutional system so that disabled companies can acquire and strengthen more diverse capabilities and resources.

Originality/value: The research emphasises the significance of an organisation’s response to the external environment being agile, as customer needs and competitors’ products and services change frequently. It also reveals that marketing capability is a vital variable that influences organisational agility, regardless of business classification.