Does resource bricolage foster SMEs' competitive advantage and financial performance? A resource‐based perspective

Abstract

Small and medium‐sized enterprises (SMEs) in emerging economies strive to achieve and sustain their financial and competitive positions in a dynamic resource‐constrained environment. The concept of resource bricolage has received little attention in the literature on emerging economies. To fill this gap, we draw perspectives from the resource‐based view to examine the impact of resource bricolage on the competitive advantage and financial performance of SMEs in Pakistan. We argue that organizational innovativeness functions as a mediator in the relationship between resource bricolage, financial performance, and competitive advantage, while entrepreneurial orientation simultaneously moderates the relationship between resource bricolage and organizational innovativeness. We collected data from 398 SMEs in Pakistan and analyzed these relationships using the partial least squares method. Our results suggest that resource bricolage effectively promotes the financial performance of SMEs and helps them gain a competitive advantage. The relationship is mediated by organizational innovativeness, which accelerates financial performance and competitive advantage. Entrepreneurial orientation moderates the resource bricolage–organizational innovativeness relationship, but it is only effective when a high level of resource bricolage is in place. Our study suggests that SMEs operating under similar socioeconomic environments must efficiently focus on resources embedded in the firm and utilize them to achieve competitive advantage and enhance financial performance. Our study highlights the critical need for research on organizational innovativeness in emerging contexts and proposes significant theoretical and managerial implications.

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“…Furthermore, PLS-SEM is regarded as superior in assessing mediation compared to regression (Preacher & Hayes, 2004). Moreover, PLS-SEM is a choice of many recent studies (e.g., Abid et al, 2023;El-Garaihy et al, 2022;Feng et al, 2022;Luo et al, 2022;Sarwar et al, 2023;Singh et al, 2022) due to its reliable and consistent estimations. For these reasons, PLS-SEM is a good choice for this empirical study.…”

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