Dynamic Capabilities Associated with a Firm’s Growth in Developing Countries. A Comparative Study of Argentinean SMEs in the Software and Tourism Industries

Abstract

Although recent evidence suggests that the development of dynamic capabilities (DC) is a key factor to gain and sustain competitive advantages to promote firm´s growth, the question of how SMEs create, identify, and seize opportunities for growth have not been fully explored, particularly in developing countries with scarce resources. The aim of this study is to shed light on how SMEs develop capabilities to grow in the specific context of developing countries with resources constraints. To achieve a detailed description of the processes involved, this study applies a qualitative methodology based on a comparative case study of eight SMEs within the software and tourism industries in Argentine, which have been previously identified as dynamic sectors with high growth potential. Our findings suggest that SMEs develop DC mainly through an emerging process of iterative experimentation rather than through strategic planning. This process involves the coordination of organizational actions and resources, with managers playing a key role.

Dynamic capabilities and network benefits

“…Secondly, it contributes to extending the application of DC theory to very small firms, i.e. firms with less than ten employees, since so far most of the DC literature has concentrated on larger firms (D'Annunzio, Carattoli & Dupleix, 2015;Danneels, 2000;Deeds, DeCarolis & Coombs, 2000;Majumdar, 2000). In the present study, more than half of the firms have ten employees or less.…”

“…Borch & Madsen, 2007;Carlos, 2011;Døving & Gooderham, 2008), there is a tendency in DC theory to use larger firms as cases for the focus of attention. When DC are claimed to be founded in underlying organizational routines, for instance, and when we look at how these routines are described, they are such that they can only exist in larger firms (Deeds, Decarolis & Coombs, 2000;Majumdar, 2000;Danneels, 2011;D'Annunzio, Carattoli & Dupleix, 2015). By assuming that DC -understood as the three general functions referred to above -may be found to a larger or lesser degree in any firm, and that the micro-foundations underlying them may involve also individual skills (Helfat & Peteraf, 2009;Helfat & Peteraf, 2015), we envisage the possibility that even firms with only very few employees may be analysed using DC theory as a theoretical framework.…”

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“…Secondly, it contributes to extending the application of DC theory to very small firms, i.e. firms with less than ten employees, since so far most of the DC literature has concentrated on larger firms (D'Annunzio, Carattoli & Dupleix, 2015;Danneels, 2000;Deeds, DeCarolis & Coombs, 2000;Majumdar, 2000). In the present study, more than half of the firms have ten employees or less.…”

“…Borch & Madsen, 2007;Carlos, 2011;Døving & Gooderham, 2008), there is a tendency in DC theory to use larger firms as cases for the focus of attention. When DC are claimed to be founded in underlying organizational routines, for instance, and when we look at how these routines are described, they are such that they can only exist in larger firms (Deeds, Decarolis & Coombs, 2000;Majumdar, 2000;Danneels, 2011;D'Annunzio, Carattoli & Dupleix, 2015). By assuming that DC -understood as the three general functions referred to above -may be found to a larger or lesser degree in any firm, and that the micro-foundations underlying them may involve also individual skills (Helfat & Peteraf, 2009;, we envisage the possibility that even firms with only very few employees may be analysed using DC theory as a theoretical framework.…”

Entrepreneurship and Tourism Through the Lens of Sustainability. Charting the Knowledge Base Through Bibliometric Analysis

“…(d) A fourth direction focuses on new approaches in the general theory of entrepreneurship, such as dynamic capabilities (D'Annunzio et al, 2015;Rodríguez et al, 2020) and entrepreneurs' capability to employ local physical and non-material resources in a more sustainable manner (Yachin and Ioannides, 2020), known as entrepreneurial bricolage (Fisher, 2012) or self-efficacy (Kornilaki et al, 2019), or the role of artificial intelligence in small and medium enterprises in tourism.…”