Environmental Scanning and SME Performance: A Strategic Analysis of Dynamic Capabilities and Resource-Based Perspectives in Kabwe District, Zambia

Abstract

This study investigates the impact of environmental scanning on the performance of small and medium enterprises (SMEs) in Kabwe District, Zambia. Grounded in the Resource-Based Theory (RBT) and Dynamic Capabilities Theory (DCT), the research evaluates the duration, frequency, and scope of environmental scanning activities among SMEs, exploring the processes involved and their effectiveness in enhancing business performance. Data were collected from 202 SME owners/managers through a structured Likert-scale questionnaire and semi-structured interviews. Quantitative data were analyzed using Structural Equation Modeling (SEM), while qualitative data were analyzed via Directed Content Analysis (DCA). The results indicate a positive relationship between environmental scanning and SME performance, though practical application of environmental scanning practices remains limited. The study recommends fostering a culture of experimentation, creativity, and continuous improvement, promoting cross-functional collaboration, and improving access to digital technologies and tools. Policy interventions to support SMEs in accessing financial, technological, and infrastructural resources are also suggested.