The impact of dynamic capabilities on the sustainability performance of SMEs

Despite environmental and social goals being identified as key objectives for small- and medium-sized enterprises (SMEs), the literature has not provided an explanation of how these goals can be achieved alongside stable economic outcomes. Several researchers have argued that sustainability performance should be addressed through a process of constant adjustment, which can be facilitated by dynamic capabilities. The aim of this study is to investigate the effect of integrative dynamic capabilities on the social, environmental and economic performance of SMEs. This study is among the first to investigate this effect and uses unique survey data from 297 SMEs in the Netherlands. The empirical results highlight the importance of external integrative dynamic capabilities for all three pillars of sustainability performance in SMEs. These findings contribute to the debate on the ability/inability of SMEs to balance social, environmental and economic objectives by integrating new insights from the dynamic capabilities literature. (C) 2019 Elsevier Ltd. All rights reserved.