Dynamic capabilities, innovation and branding capabilities and their impact on competitive advantage and SME's performance in Portugal: the moderating effects of entrepreneurial orientation

Abstract

Purpose

The purpose of this paper is to understand the impact of dynamic capabilities (DC) (in the view of exploration and exploitation) on competitiveness and performance, considering the mediating role the innovation capability (IC) and branding capabilities (BC)on competitive advantage and firm’s performance and the moderating role of entrepreneurial orientation (EO).

Design/methodology/approach

This investigation proposes a theoretical model tested using structural equation modelling (SEM). Multi-group analysis was performed to understand the moderating role of. A questionnaire survey was developed to explore the relations between DC and innovation variable. For this study, 387 valid questionnaires were collected from a sample of Portugal SME’ firms. A 90-item questionnaire which consists to study the relationships among all the variables.

Findings

The results show that exists a positive direct and indirect influence of DC on competitive advantage and performance variables and mediating impact the IC and BC.

Research limitations/implications

This study has some methodological limitations affecting its potential contributions. As a cross-sectional study that captures one image in time, its ability to identify strict causality between variables is limited. Furthermore, the results are based on log collected from a key respondent, rather than broader actual data. The results are restricted to one country, Portugal. Some variables, such as ICs, may play a different role in other countries. Future research should initially target different countries. Such research could then test the generalizability of the results.

Practical implications

This study has important implications for the managers. It highlights the necessity of firms to develop superior strategic orientation of all their members and to invest in better resources and consequently superior capabilities as a way of achieving high levels of firm performance. Another implication from the study is that the firms should develop their marketing programs by focusing on developing innovativeness.

Originality/value

This study contributes to the understanding of the indirect and direct impact of exploration and exploitation variables, and the mediating role of ICs and BC on the competitive advantage and performance and the moderating effect of EO.

Citation

Ferreira, J. and Coelho, A. (2020), "Dynamic capabilities, innovation and branding capabilities and their impact on competitive advantage and SME's performance in Portugal: the moderating effects of entrepreneurial orientation", International Journal of Innovation Science, Vol. 12 No. 3, pp. 255-286. https://doi.org/10.1108/IJIS-10-2018-0108