IMPACT OF DYNAMIC CAPABILITIES ON SMALL AND MEDIUM ENTERPRISES PERFORMANCE IN A VOLATILE ENVIRONMENT

Abstract

In present times the concept of dynamic capabilities has gained center of debate as it has been considered one of the ways to deal with the changing environmental turbulence which eventually lead to decline of organizational performance and competitive advantage of small and medium enterprises. In Sri Lanka especially in Batticaloa, the studies related to dynamic capabilities and organizational performance are rare and there is need to fill this empirical gap by investigating the influence of the dynamic capabilities of small and medium enterprises (SMEs) on organizational performance. The main objective of the study is to examine the relationship between dynamic capabilities and organizational performance on SMEs in Manmunai North Divisional Secretariat in Batticaloa. To achieve this objective, the target population was considered as SMEs in Manmunai North Divisional Secretariat in Batticaloa District. Questionnaires were issued to a sample of 160 SME owners. Descriptive, Pearson’s correlation and simple regression analysis were used to analyze the data. The findings of this study revealed that the dynamic capabilities have a positive and significant relationship with organizational performance of SMEs. By addressing the findings of this study SME owners could try to improve the dynamic capabilities in their business which can lead the businesses in achieving competitive advantages.