DO DYNAMIC CAPABILITIES FACILITATE BUSINESS MODEL INNOVATION IN SMALL AND MEDIUM-SIZED CHINESE FAMILY COMPANIES?

Abstract

This study investigates whether small- and medium-sized enterprises (SMEs) under family influence (FI) can achieve business model innovation (BMI) through dynamic capabilities (DCs) as promoted by prior research. Overall, 259 small and medium-sized family firms in Southeastern China were examined and analysed using the partial least squares structural equation modelling (PLS-SEM) method. The findings showed a direct negative link between FI-DCs (sensing, seizing, and transforming capabilities), sensing capabilities—value capture, transforming capabilities—value proposition/value creation, and a positive link between seizing capabilities—value creation. Additionally, the negative moderation effect of environment dynamism was found between sensing capabilities—value capture, seizing capabilities—value creation, and transforming capabilities—value proposition. This research provides various new insights for practitioners and researchers in small and medium-sized family firms to achieve BMI through DCs. It develops an empirical, multi-dimensional hypothetical model from a micro perspective that includes the moderating role of the influencing relationship.