How Dynamic Capabilities Affect the Effectiveness and Efficiency of Operating Routines under High and Low Levels of Environmental Dynamism

Abstract

In analysing data on the purchasing routines of 200 small and medium‐sized enterprises ( SME s), this study underscores the overall importance of dynamic capabilities as a way to understand differences in operating‐routine performance. The results suggest that dynamic capabilities have different performance effects in high‐dynamic and low‐dynamic environments. Dynamic capabilities enhance the effectiveness of operating routines under both high and low levels of environmental dynamism. Yet, when analysing the efficiency of operating routines, taking into account the costs of increased effectiveness, dynamic capabilities appear to pay off only under high levels of environmental dynamism.

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