The Impact of Strategy Flexibility on Business Model Innovation, Competitive Advantage, and Company Performance: A Study on the Sustainable Growth of the Small and Medium-Sized Enterprises in Iran
This study examines the role of strategic flexibility (SF) in supporting sustainable growth among small and medium-sized enterprises (SMEs) operating in an emerging economy context. Specifically, it investigates the relationships between SF, business model innovation (BMI), competitive advantage (CA), and firm performance (FP) in Iranian SMEs. Drawing on the Resource-Based View (RBV) and Dynamic Capabilities Theory (DCT), the study empirically examines a capability–innovation–performance model and contributes by extending existing theoretical relationships to the context of SMEs in an emerging economy. Using structural equation modeling (SEM), data were collected through 391 validated questionnaires from SMEs across different sectors in Iran. The findings reveal that SF has a direct and significant effect on both BMI and CA, while BMI positively influences CA and FP. However, CA does not show a significant direct effect on FP, suggesting that competitive positioning alone may be insufficient to generate performance outcomes in uncertain and resource-constrained environments. The results indicate that adaptive and innovation-oriented capabilities play a central role in enhancing long-term organizational resilience and sustainable performance among SMEs operating under institutional and market volatility.
Financial sustainability is a decisive condition for small and medium-sized enterprises (SMEs) because it determines whether firms can maintain liquidity, generate stable profitability, absorb shocks, and finance growth. Drawing on Dynamic Capability Theory and the Resource-Based View, this study examines how managerial capability contributes to SME financial sustainability through product innovation and how access to finance strengthens the innovation-sustainability relationship. The research used a quantitative survey design involving 350 SME owners and managers in West Java, Indonesia, selected through purposive sampling. Data were collected using a structured seven-point Likert questionnaire and analyzed with Partial Least Squares Structural Equation Modeling (PLS-SEM). The results show that managerial capability has a strong positive effect on product innovation (beta = 0.727; t = 19.755; p < 0.001), product innovation positively affects financial sustainability (beta = 0.411; t = 4.876; p < 0.001), and managerial capability directly improves financial sustainability (beta = 0.231; t = 5.422; p < 0.001). Product innovation significantly mediates the effect of managerial capability on financial sustainability (indirect effect = 0.299; t = 5.742; p < 0.001), while access to finance positively moderates the effect of product innovation on financial sustainability (beta = 0.218; t = 3.108; p = 0.002). The findings support a Dynamic Capability-Based Financial Sustainability Model for SMEs, suggesting that managerial capability becomes financially meaningful when translated into innovation and supported by adequate financial access. The study contributes to strategic management, entrepreneurship, and SME sustainability literature by clarifying the capability-innovation-finance mechanism through which SMEs improve long-term financial viability in an emerging economy context.
Keywords: managerial capability; product innovation; access to finance; financial sustainability; SMEs; dynamic capability; PLS-SEM
Duduh Sujana, Nugraha Nugraha, D. Disman et al.· Jurnal Ilmiah Manajemen Kesa...· 0 citations
Financial performance of small and medium-sized enterprises (SMEs) is investigated in this study as a dependent variable, with green entrepreneurial orientation (GEO) as the independent variable, green innovation capabilities (GIC) as the mediating variable and regulatory framework as the boundary condition. The study draws on the resource-based view, dynamic capability theory and institutional theory to fill this gap and provide a more integrated explanation of how SMEs translate their environmental orientation into measurable outcomes in the business (Coelho et al., 2024; Anin et al., 2024). The theoretical framework used was the tool of data collection, which was carried out by a structured questionnaire and analyzed with SPSS 26.0 and SmartPLS 4.0 for SME owners and managers in Zhengzhou, China, with a total of 384 subjects. The results show that GEO has positive effects on enterprise performance and that this effect is partially mediated by GIC. Further results indicate that the GEO-performance relationship is enhanced by supportive regulatory conditions. The study adds to the literature by connecting the concepts of green strategic orientation, innovation capability and institutional support in one empirical model. It provides practical directions for SME managers who are looking for performance improvements as a result of eco-innovation, and for policymakers responsible for creating the policy environment for sustainable entrepreneurship.
Pingping Qiao, Abdul Rahman Jaaffar, Mohd Sufli Yusof· Journal of Governance and Re...· 0 citations
Small and Medium Enterprises (SMEs) constitute the backbone of Indonesia's economic system by contributing substantially to employment generation, regional development, innovation, and inclusive economic growth. Despite their strategic importance, many Indonesian SMEs continue to experience persistent challenges associated with environmental uncertainty, limited organizational capabilities, technological disruption, increasing competitive intensity, and institutional constraints. These challenges require SMEs not only to adapt to changing business environments but also to develop sustainable competitive advantages capable of improving organizational performance over time. Drawing upon the Resource-Based View (RBV) and Dynamic Capability Theory (DCT), this study develops an integrated conceptual framework explaining how business environment influences SME performance directly and indirectly through competitive advantage.
Unlike previous studies that primarily examine environmental factors as isolated antecedents of organizational performance, this study conceptualizes business environment as a multidimensional construct encompassing both internal organizational resources and external environmental conditions. Competitive advantage is proposed as the strategic mechanism through which SMEs transform valuable organizational resources and adaptive capabilities into superior market performance. The proposed framework highlights the strategic role of dynamic capabilities in sensing environmental opportunities, seizing emerging market potential, and continuously transforming organizational resources to sustain competitiveness in highly dynamic markets.
This study adopts a quantitative explanatory research design involving Indonesian SMEs. Structural Equation Modeling using Partial Least Squares (PLS-SEM) is proposed to evaluate the hypothesized relationships among business environment, competitive advantage, and firm performance. Business performance is assessed using multidimensional indicators, including sales growth, market expansion, profitability, capital growth, and organizational sustainability.
The study contributes theoretically by integrating Resource-Based View and Dynamic Capability Theory into a comprehensive model suitable for explaining SME competitiveness in emerging economies. Practically, the findings are expected to provide valuable managerial insights for SME owners and policymakers seeking to strengthen organizational resilience, enhance competitive positioning, and improve long-term business sustainability amid rapidly evolving economic conditions.
Indra Jaya Nugraha, Isagani M. Tano, Epimaco A. Cabanlit, J.· Journal of Managerial Scienc...· 0 citations
Background: Small and medium enterprises (SMEs) in emerging economies encounter resource constraints, impairing performance. In this digital age, resource scarcity is a significant barrier to SMEs competing effectively in the global market.
Aim: The study addresses a critical knowledge gap regarding how SMEs can leverage network capabilities (NCs) to enhance the effectiveness of digital ambidexterity (DA) and improve SME business performance (SME BP).
Setting: The article examined the role of NC in the relationship between DA and SME BP.
Method: The study employed a quantitative cross-sectional design, sampling 370 owners and managers. The data were analysed through regression analysis.
Results: Digital ambidexterity had a significant direct positive effect on the mediator variable, NC. Network capability had a significant positive effect on SMEs’ BP. When the mediator variable NC was controlled for, the mediation analysis indicated that DA was a significant predictor of SMEs’ BP.
Conclusion: Policymakers should promote SMEs’ DA onboarding initiatives by offering tax breaks to collaborations between large firms and indigenous SMEs. Small and medium enterprises in emerging economies should utilise their networking capabilities to support DA initiatives.
Contribution: The findings are significant for SME managers and owners, who should carefully utilise networks to increase their DA and business performance.
D. Chigori, W. Chinyamurindi, E. Rungani· South African Journal of Eco...· 0 citations
The study aims to examine the relationship between international entrepreneurial orientation (IEO) and international performance (IP) of internationalized small and medium-sized enterprises (SMEs) in the Slovak Republic. Given the scarcity of empirical research on the managerial dimensions influencing this relationship, the study also aims to investigate the moderating effect of dynamic managerial capabilities (DMCs) as a higher-order variable and its components in the IEO-IP nexus. The theoretical framework is grounded in the resource-based view and capability-based view, which posit that firm-specific resources and capabilities are critical sources of competitive advantage.
Data were collected via a questionnaire survey administered to 145 internationalized SMEs in the service and industrial sectors. The analysis used a robust statistical method, structural equation modelling through partial least squares, which is suitable for modeling complex relationships and managing smaller sample sizes.
The results reveal that IEO is directly associated with the IP of SMEs. Moreover, DMCs, as a multidimensional construct, exert a statistically significant moderating effect on the IEO-IP relationship. Regarding the specific components of DMCs, social capital and managerial cognition significantly reinforce the connection between IEO and international performance, while human capital does not exhibit a significant effect.
The study’s theoretical contribution lies in validating the role of DMCs as a complex construct in augmenting international performance in conjunction with IEO. It also identifies the differential effects of the three DMCs components in the IEO-IP framework, offering nuanced insights into their moderating roles. The research underscores the importance of strategic business orientation and DMCs for SMEs operating in the global market. Finally, managerial implications and directions for future research are proposed.
N. Jankelová, Katarzyna Piwowar‐Sulej, A. Romanová· European Business Review· 0 citations
The main objective of this study is to analyze and demonstrate the influence of Digital Strategy, Market Competition, Government Support, and Digital Transformation on the business performance of SMEs in North Sumatra Province. The research employs an explanatory research approach, which aims to explain the position of the variables under study and the relationships between them. Data were collected from SME actors in North Sumatra Province, using a sample of 175 respondents. The data analysis technique applied in this study is Structural Equation Modeling (SEM). The results of the study demonstrate that Digital Strategy, Market Competition, and Government Support have a positive and significant effect on Digital Transformation. Government Support and Digital Transformation have a positive and significant effect on Business Performance. Digital Transformation serves as a significant mediating variable between external factors (Digital Strategy, Market Competition, and Government Support) and SME business performance. The contributons of these findings are crucial for long-term business sustainability, as effective digital strategies and strong external support help SMEs adapt to market, technological, and regulatory changes.
Alexander Romario Bukit, E. Rini, Beby Karina Fawzeea Semiring· Social Sciences Journal· 0 citations
