The managing director and the development of dynamic capabilities : An application of enactment theory

Purpose – This research aims at examining the role of the managing director in the development of dynamic capabilities at SMEs. Design/methodology/approach – The paper used a mixed‐methods approach and conducted case studies at 13 SMEs. The primary sources of data were semi‐structured interviews, which were supplemented by quantitative data from a postal survey and content analysis of the companies' websites. Findings – The paper suggests that managing directors “enact” in the development of dynamic capabilities, if they believe that dynamic capabilities are a source of competitive advantage. If they do not appreciate the importance of dynamic capabilities they can get trapped in a vicious circle. Research limitations/implications – This research focuses especially on small firms, and it is unlikely that the findings can be applied to large firms. Practical implications – The key managerial implication is the threat of a vicious circle if the development of dynamic capabilities is neglected. Originality/value – This paper draws the dynamic capabilities framework and the enactment concept together, suggesting that managerial decisions and behavior affect dynamic capabilities at an organizational level, which then drives firm performance.