Dynamic capabilities enable companies to change and reconfigure their strategies in order to adapt to the ever-changing business environment and maintain a sustainable competitive advantage. Given the importance of dynamic capabilities in today’s economy, the purpose of this study is to understand the role of strategic flexibility as a dynamic capability in the development of organisational capabilities. This study aims to explore the indirect effect between strategic flexibility and firm performance through three organisational capabilities: organisational learning, entrepreneurship and innovation orientation in SMEs. In order to test the conceptual model, we conducted quantitative research using survey data from 180 SMEs. The contributions are twofold. First, we developed a unique and distinctive model to assess the indirect relationship between strategic flexibility and firm performance. And second, we realised the value of organisational learning as a mediating variable as it strengthens the relationship between strategic flexibility and firm performance.

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Entrepreneurship,Organisational learning,Innovation orientation,Firm performance,Dynamic capabilities

• Economics and Business - Social Sciences