Dynamic Capabilities and Strategic Entrepreneurship: A Study of Sri Lankan SMEs

Abstract

Strategic entrepreneurship has been widely acknowledged as the appropriate context representing the way of creating value in business organization. However, yet we do not fully understand the process of strategic entrepreneurship or elements of it that give rise to them and as such strategic entrepreneurship remains in need of further explanation. This study primary believes that any concept or business model is required to address the dynamic changes in the markets. Thus, this study explains the dynamic capability concept and its role in perpetuating entrepreneurial and strategic actions in the SMEs. The dynamic view of resource based theory is adopted from firm level framework used to identify the unique bundle of dynamic capabilities that promote firm’s entrepreneurial and strategic actions. The identified framework was validated from the empirical data gathered through the explorative questionnaire survey of 488 manufacturing SMEs in Sri Lanka. The finding suggests that SMEs are better able to address market challenges when they have strong dynamic abilities that engaged them in strategic entrepreneurship. The study thus encourages SMEs to create and develop dynamic capabilities, not only because it sustains their livelihood over generation, but because it also facilitates the entrepreneurial and strategic actions in creating the firm’s wealth.