The effects of dynamic capabilities and strategic orientations on SME performance: A study in manufacturing firms

This study has designed to explore the financial performance of SMEs located in Turkey. The main purpose of the study is to understand the role of dynamic capabilities and strategic orientations in enhancing firms' performance. To provide a more holistic perspective, certain characteristics of the environment (munificence and heterogeneity) have also been scrutinized in relation to performance. The study was conducted in 326 small and medium size enterprises operating in Adana province. The data for this study was collected through structured questionnaires from managers of those companies investigated. The findings suggest that dynamic capabilities have affected SMEs' performance positively. Only one out of three strategic orientations examined, market orientation, has been proven as a significant and positive predictor of firm performance. The relationship between the remaining two strategic orientations, entrepreneurial orientation and technological orientation, and performance was insignificant. Furthermore, the firms' performance was better in a munificent environment but not in a heterogeneous one. The study is promising as it addresses both organizational and environmental simultaneously factors related to performance. The findings are also expected to guide managers to reconfigure resources and capabilities to respond to environmental changes in a more quick way. Keywords: SMEs, performance, dynamic capabilities, strategic orientations, environmental heterogenity, munificience