Developing Dynamic Capabilities: Conjunctive Effects of Entrepreneurial Orientation and Dynamic Managerial Capabilities

Abstract

Entrepreneurial orientation (EO) and dynamic managerial capabilities (DMCs) are beneficial to the development of organisational dynamic capabilities (DCs) in SMEs. Nevertheless, there is still a lack of detailed understanding of the development of DCs. No study has approached how DMCs with EO transfer to become organisation-wide DCs, much less with a configurational approach. This article considers the dimensions of DMCs: human capital, social capital and managerial cognition, and those of EO’s: innovativeness, risk-taking and proactiveness in conjunction. This is in contrast with the underlying assumption of independent effects. The authors survey Portuguese SMEs in a wide range of industries and treat the data through fsQCA, performing a necessity and sufficiency analysis for the presence and absence of DCs. The findings indicate that the dimensions of EO and DMCs are sufficient for consistently determining the presence of DCs in SMEs. Managerial cognition has a symmetric core role in their presence and absence. For the presence of DCs, innovativeness or proactiveness is additionally required.