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The purpose of this paper is to reveal and justify influential factors of dynamic capabilities on research organizations’ R&D and innovation performance.

Adoption of seminal D. Teece’s (1997) concept of dynamic capabilities and operationalized matrix of key performance indicators in the area of R&D and innovation allowed the construction of the strategic management model for research organizations, consequently tested by methods of statistical analysis.

The empirical findings reveal that there exists positive influence of the dynamic capabilities on research organizations’ R&D and innovation performance. Explicitly, sensing, seizing and re-configuring dimensions of dynamic capabilities have positive impact on R&D and innovation results; consequently, the peculiarities of their inter-dependencies are identified.

Delivered research is based on the investigation of Lithuanian research organizations’ dynamic capabilities and their impact on their R&D and innovation performance. Therefore, further research could be extended to foreign countries.

The model on management of research organization’s dynamic capabilities with the aim for better R&D and innovation performance is conceptualized and specified hereinafter. In the course of the research, constructed toolkit to eventually measure research organization’s R&D and innovation performance or use it as the set of key performance indicators in the benchmarking exercise is suggested.

The paper is one of the first to suggest novel application of dynamic capabilities’ view within the domain of research organizations.

This paper aims to examine the influence of the dynamic capabilities of small and medium enterprises (SMEs) on organizational performance, and the interaction between dynamic capabilities and organizational inertia in a volatile environment.

A quantitative survey was carried out in Lithuania's SME sector. In order to achieve the aim of this empirical research, a sample of 360 SMEs was analyzed.

This exploratory study offers a conceptual model for dynamic capabilities and organizational inertia in a volatile environment. The findings suggest that dynamic capabilities have positive effects on non-financial relative organizational performance, though no impact on financial relative organizational performance has been revealed. The authors argue that organizational inertia moderates dynamic capabilities and relative organizational performance.

One suggestion for further research is to investigate the interaction between dynamic capabilities and organizational inertia in a stable environment and to perform longitudinal research embracing a broader sample of organizations.

The study addresses a gap in strategic management literature and practice, examining the interaction between SME dynamic capabilities and organizational inertia in a volatile environment during an economic crisis.