Strategic agility of Korean small and medium enterprises and its influence on operational and firm performance

Abstract

This study explores the nature and role of agility as a strategic intent and its influence on operational and firm performance. Combining field interviews with the literature review, we develop theoretical connections between strategic agility of Korean small and medium enterprises (SMEs) and its underlying dimensions (technology capability, collaborative innovation, organizational learning, and internal alignment). Then, we propose a conceptual model for investigating the nomological network of influences among strategic agility, operational performance (responsiveness), and firm performance. Firm performance is measured as two alternative dimensions—customer retention and financial performance. Using structural equation modeling, we conduct a group of confirmatory analyses to test the empirical associations hypothesized in the structural models. The analysis results indicate that Korean SMEs’ strategic intent toward agility has a positive influence on their operational performance and customer retention, but not on financial performance. Implications of the results are discussed in detail along with theoretical contributions and future research directions.