Abstract
Traditional research and literature reveal that organizations may acquire a competitive advantage and improve performance by enhancing their capabilities. However, none of them strongly emphasizes dynamic capabilities, and small and medium-sized firms (SMEs), particularly in South East Asia, have not been thoroughly examined in this area. Consequently, this study will investigate the impact of dynamic capabilities (innovative capability, absorptive capability, and adaptable capability) on the performance of small and medium-sized enterprises (SMEs). The responses of 322 SMEs in Thailand were analyzed quantitatively using multiple regressions. The findings indicated that all of them significantly impact the performance of SMEs. Nevertheless, SMEs should prioritize innovative capability by investing and paying more attention to innovation and creativity, followed by firms' adaptation and absorption capabilities.
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