Supplying large firms: The role of entrepreneurial and dynamic capabilities in small businesses

Abstract

Drawing on the concepts of ‘entrepreneurial’ and ‘dynamic’ capabilities, this study examines the capabilities that allow small firms to operate as suppliers to large organizations in the public and private sectors. Interest in this topic is fuelled by academic speculation about the extent to which such supply chain relationships can facilitate the growth of small firms and by current policy initiatives to promote small firm-friendly procurement practices. Based on the evidence from 18 small firms, the study shows how entrepreneurial and a variety of dynamic capabilities are intertwined in subtle and complex ways, and how the development of one shapes and is shaped by the development and use of the other. In doing so, the article contributes to identifying small firm capabilities that together underpin a higher-order dynamic capability required to supply large firms and to the debate on the nature and types of such capabilities.