How Dynamic Managerial Capabilities, Entrepreneurial Orientation, and Operational Capabilities Impact Microenterprises’ Global Performance

Abstract

Microenterprises’ internal capability landscape and how it relates to the firms’ global performance (GP) is sparsely studied and understood. Discrete relationships between a capability and GP may have some empirical evidence, but how microenterprises’ capabilities quantitatively relate to each other and together to GP still had no answer. Our model investigates the impact of dynamic managerial capabilities (DMCs) and entrepreneurial orientation (EO) on operational capabilities (OCs), and of those on GP, moderated by competitive intensity (CI). The data were acquired in a survey by questionnaire to 402 Portuguese microenterprises and treated using covariance-based structural equation modeling. We confirm that DMCs and EO have a positive, statistically significant, and substantive impact on OCs, explaining over half its variance, where any relation to GP is fully mediated by OCs. Furthermore, we found that OCs hold a positive, statistically significant, and substantive impact on GP, explaining nearly a quarter of its variance. CI as a moderator, with a marginal effects analysis, shows limited significance in a short range of values and never any substantive significance. Our results highlight that, for a healthy microenterprise business ecosystem, a great deal of attention and capacitation must be given to microenterprises’ managers, specifically their DMCs, EO, and, eventually, OCs.