The Resource-Based View, Dynamic Capabilities and Sme Performance For Smes To Become Smart Enterprises

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ABAC ODI Journal Vision. Action. Outcome. Vol 7 (2) July-December 2020
The Resource-Based View, Dynamic Capabilities and SME Performance

for SMEs to Become Smart Enterprises
Orisa Chumphong
Research Assistant, PhD, Faculty of Management Sciences, Prince of Songkla University
Hat Yai, Songkla Thailand.
Suwit Srimai
Asst. Prof. Dr., Lecturer of Faculty of Liberal Arts & Management Sciences, Prince of
Songkla University, Surat Thani Campus, Surat Thani, Thailand.
Wisanupong Potipiroon
Asst. Prof. Dr., Director of Ph.D. Program in Management, Faculty of Management
Sciences, Prince of Songkla University, Hat Yai, Songkla Thailand.
Abstract
This article explores critical areas for enhancing the competitiveness of SMEs in the
globalized economy. Due to the fiercer nature of current competitiveness, the business
sector has to adapt and enhance their capability in response to rapid environmental changes.
This article explores the Resource-Based View (RBV) and Dynamic Capability perspective
and their effects on the performance of small and medium-sized enterprises (SMEs). This
review shows that the concept of RBV contributes to driving SME performance. Dynamic
capability, which is part of the management process, also helps in stimulating RBV to
enhance the performance of SMEs and their competitive advantages. Additionally, this
article provides several useful implications for policy that is related to the development of
SMEs. It will, hopefully, contribute to the process of developing effective strategies within
their organizations. It will also be of great value for researchers and practitioners who are
involved in the SME sector.
Keywords: resource-based view, dynamic capabilities, strategy, small and medium-

sized enterprises
Introduction
In today's world, the business environment has changed rapidly (Teece, 2007) and
countries across the globe have become much more interconnected and interdependent
(Sull, 2007). Organizations have thus been under severe pressure to continually improve
their performance in order to compete in the world market (Becker & Gerhart, 1996;
Dany, Guedri, & Hatt, 2008). In several developing countries, a vital mechanism in
driving economies to grow up rapidly is small and medium-sized enterprises (SMEs).
SMEs focus on creativity, innovation, technology, high-quality service, and continuously
developing new technologies. SMEs now play a vital role in increasing dynamic
economies in the industrial sector. They can significantly develop economic progress in
many countries (Bendickson, Muldoon, Ligouri, & Midgett, 2017). As highlighted in
many academic studies, the development of SMEs is one of the most viable strategies to
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achieve national development goals. Not only do they play an important role in
supporting economic growth at the societal level, but they can also provide a more
sustainable environment that is focused on the micro-level of economic development
(Bendickson et al., 2017). Besides, SMEs constitute an important part of the economy as
they generate increases in innovation, gross domestic product (GDP), the export industry
as well as employment opportunities (Baumol & Strom, 2007; Birch, 1987; Mazzarol,
Volery, Doss & Thein, 1999). In general, previous research has substantiated that SME
development is integral to achieving long-term and sustainable economic growth
(Bendickson et al., 2017). In Thailand, SMEs have played a significant role in promoting
economic growth and equitable, sustainable development that is connected to all types of
economic activities. Thai SMEs have created major sources of employment as well as
generating a significant increase in domestic and exported income. As a result of this, the
Thai Government has incorporated the development of SMEs as an integral element of its
future national economic and social development plans. In particular, they plan to
establish SMEs that will provide financial assistance, boost their capabilities, and connect
them to the current globalized economy (Jones & Pimdee, 2016). The Thai Government
has recognized the necessity and criticality of SMEs with Dynamic Capabilities and will
fully support their advancement and development.
Although Thailand is enriched with generous natural resources and geographical

locations, the Thai SMEs are limited in many aspects. In particular, SMEs face some
obstacles in developing their capacities. As indicated by the office of SMEs Promotion
(2019), these difficulties include (1) their inability to access the international market as a
result of poor product quality that falls below required market standards, (2) a critical
shortage of skilled employees, specifically leadership and managerial skills as well as
effective financial and human resources management, (3) a shortfall of key strategies for
retaining long-term employees, (4) inadequate training and development procedures
within each organization (5) an absence of essential highly-effective technology and
equipment (6) and finally, a lack of sufficient funds to enable them to meet these
important criteria. Most of Thailand's SMEs are family-based businesses that, to a certain
degree, are directly responsible for them lacking the relevant resources and expertise
needed to meet these key elements that are essential for the success of their businesses.
The majority of the owners of SMEs utilize their personal work experiences, abilities, and
skills to set up their businesses, which, in essence, are ideal. However, the hard reality is
that, as the business starts to grow and expand successfully, their lack of critical
management skills and expertise often leads to their SME's downfall. The advent of the
ASEAN Economic Community (AEC) has generated an increase in additional challenges
now facing SMEs (Petri, Plummer & Zhai, 2012), and, for this reason, Thai SME owners
must brace and prepare themselves for this imminent transformation.
In such a competitive environment, Thailand's business sector has got to introduce

and implement very strong strategies and procedures to ensure they possess the required
strengths and key aspects that will exceed international standards; this is to ensure that
Thai SMEs are not only able to adjust to this rapid change with ease, but also to guarantee
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long-term success for their businesses. The business sector should be able to use all the
resources and expertise within their organizations effectively and efficiently (Barney,
Ketchen, & Wright, 2011). To achieve this, SMEs should ensure their products and
services are of an exceptionally high standard and quality that will accelerate their
business growth and also have the full potential to meet the supply-and-demand needs
required by their clients professionally and ethically that will guarantee them a greater
competitive advantage and, ultimately, ensuring their business is effective and successful.
The Resource-Based Views and Dynamic Capability strategy play a vital role in assisting
SMEs in choosing the correct strategies to implement for their business. RBV is one
aspect of strategic management (Lu, Shen, & Yam, 2008), which is divided into two
parts. The first part emphasizes the strategies for improving business
productivity and boosting operational efficiency, and the second part is the internal strategy
formulation required to achieve superior business performance (Dansoh, 2005). Over the
years, scholars have reported that both approaches have definite advantages to creating
organizational success and lead to a competitive advantage in a climate of rapid change
(Barney, 1991; Teece, 2007).
From a review of past and present literature where the focus was on the success of
these practices in large corporations and organizations (Crook, Ketchen, Combs & Todd,
2008), it can be concluded that the Resource-Based theory can be used as an approach to
enhance the performance of SMEs. The resource-Based theory is the factor that creates an
organization's managerial process through strategies that essentially lead to higher
business performance (Huselid, 1995).
Besides, prior research carried out on Dynamic Capabilities has shown distinct
improvements in an organization's existing internal operations capability as a result of
various external changes having been made. The results of the study found that Dynamic
Capabilities have a direct impact on marketing technology and the business performance
of the organization. Accordingly, the study result of Iansiti and Clark (1994) and Clark
and Fujimoto (1991) illustrated that Dynamic Capability could enhance the development
and ingenuity of new products in an organization. It can also be used as an indicator to
measure organizational performance, which, in turn, may lead to positive business
performance.
The review of the current literature reflects that the positive effects of the
Dynamic Capability on organizational performance are based in the Resource-Based
View (RBV). Particular emphasis in this article highlights and confirms the successful
improvements of the SME's performance across all economic sectors. This article aims to
review the key concepts of Dynamic Capabilities as the mediator linking Resource-Based
View theory and performance of SMEs. It enhances and adapts the ability of the SME
sector to gain and maintain a close competitive advantage in a rapidly changing business
environment. Using this knowledge provides an effective guide on formulating
strategies for positive development in Thailand. It will hopefully contribute to the process
of developing effective strategies in organizations and be of great value for researchers
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and practitioners involved in the SME sector and are based on the conceptual framework,
shown in Figure1 below.
Figure 1
The Conceptual Framework of the Effect of Resource-Based View (RBV) Theory and
Dynamic Capabilities on Performance of SMEs
Resource-Based Dynamic SMEs

View Capabilities Performance
Resource-Based View Theory
From the Resource-Based View (RBV) perspective, a resource can be classified as

a 'source of competitive advantage' as long as the resource will add value to the firm, is
unique and rare, and hard to be imitated to add originality and value (Barney, 1991).
Resources that are valuable, rare, inimitable, and non-substitutable (VRIN) (Barney,
1991; Wernerfelt, 1984) form a basis for a firms' survival (Pfeffer & Salancik, 1978) and
sustainable growth (Barney, 1991). Firms that use VRIN are more likely to develop
internal resources that are difficult to replicate by outside organizations (Barney, 1991).
VRIN can generate these resources through human resources management practices such
as the selective selection of workers, improved training quality and skill development,
improved commitment and motivation, and the synergistic effects of each of these
practices (Becker & Huselid, 2006). These internal resources can provide the basis for
small firms to produce superior products and services, enabling them survival and growth
potential (Barney, 1991). These internal resources can promote organizational survival
and create added growth.
Despite its popularity in the extant literature, RBV has also received much
criticism. One important critique is that this perspective tends to operate at a very general
level of abstraction, simply suggesting that people or 'human resources' have the potential
to be a source of competitive advantage and, as a result, HR systems are important. Thus,
this perspective merely infers that organizational performance is based on the value of
talented employees as a source of competitive advantage.
Resources are necessary for the survival of the firm (Pfeffer & Salancik, 1978).
They are also are necessary for growth (Barney, 1991). Capabilities are unique resources
that the organization could deploy that are difficult to imitate, substitute for, have value,
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and are rare (Barney, 1991). The RBV argues that the firm's competitive advantage lies in
its valuable, rare, imperfectly imitable, and non-substitutable resources (Barney, 1991;
Wernerfelt, 1984). This perspective is predicated on the notion that firm-level resources
are heterogeneous and that the differences in combinations of resources over time lead to
sustainable competitive advantage (Amit & Schoemaker, 1993; Barney, 1991; Eisenhardt
& Martin, 2000). One of the key elements cited as a potential lever of sustainable
competitive advantage is a human resource (Barney, 1991; Delery, 1998). Human
resources are viewed as potentially fitting the VRIN typology, as they allow organizations
to garner profitability enhancements that help to build a sustainable competitive
advantage (Chadwick & Dabu, 2009).
The results of the study of more than 29,000 SMEs found that RBV is the
process that has been implemented between strategy and operations, which can
automatically enhance organizational performance effectively (Crook et al., 2008).
Furthermore, the study of Wernerfelt (1984) and Mintzberg et al., (2005), concurred that
in order to be a leader, creating strategies should start with the development of the
organizational performance in the following areas: 1) Guidelines for using resources to
create products that make the difference appropriately, 2) Classification of resources to be
related to resource positioning, 3) Shows the relationship balance between existing
resources and the development of new resources, and 4) Acquisition of resources is
comparable to buying a group of rare resources in an incomplete competitive market,
making the most stable factors increase your trading and reduce the loss of products.
The conceptual framework of RBV theory, therefore, focuses on the relationship between
strategy and resources in the organization through the conceptual framework of the so-
called VRIO of Barney (1991) presented as follows.
Figure 2
The VRIO Conceptual Framework of Barney (1991)
- Valuable
- Rare Competitive Performance
- Resources Advantage
- Capabilities
- Valuable
- Rare Sustained
Competitive Sustained
- Inimitable Performance
- Non-substitutable Advantage
- Resources
- Capabilities
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To successfully build a competitive advantage in an organization, it should be

generated from 4 characteristics. Without any 1 of these four characteristics, a sustainable
competitive advantage will not be reached in an organization. It might just happen to have
a permanently sustainable competitive advantage.
In the past, organizational management strategies were divided into two groups.
The first group focused on the market power which was the competitive force's approach
(Teece, Pisano, and Amy Shuen (1997) and the second group emphasized the importance
of organizational effectiveness, RBV, which focused on competitive advantage using the
existing resources in the organization (Barney et al., 2011). Focus on external changes
that result in existing resources and capabilities of the organization may not be able to
create competitive advantages anymore, thereby, causing the concept of Dynamic
Capabilities to play a role in supporting these gaps, which were divided into two
categories, namely strategizing and economizing (Teece et al., 1997). These categories
are summarized in Table 1 as follows;
Table 1
Paradigm and characteristics in strategic management
Paradigm Analysis Characteristics Strategic Management
Competitive Force ● Industries ● Strategizing ● Structure Condition

● Business ● Condition
● Product ● Competitive
positioning
Strategic Conflict ● Business ● Strategizing ● Interaction
● Product
Resource-based ● Resources● Economizing ● Substitutability
Dynamic ● Process ● Economizing ● Gathering
Capability ● Position ● Collect
Perspective ● Inimitability
Note: Source Adapted from Teece et al. (1997)
Research over the past 20 years has summarized the overview of new
contributions to the development and implementation of the Resource-Based View as
follows (Barney et al. (2011);
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Figure 3
The Development and Implementation of the Resource-Based View
Inter linkages with other perspectives
Process of resource acquisition and development
The micro foundation of RBT
RBT and Sustainability
Method and measurement issues
Note: Source Adapted from Barney et al. (2011)
Dynamic Capabilities
Capabilities are the valuable assets of an organization (Peteraf, Di Stefano, &

Verona, 2013; Tartaglione & Formisano, 2018). It is the result of a learning and selection
process which relates to resources of gradual development. Teece et al. (1997) explained
that Dynamic Capabilities consist of two parts: 1) dynamic is defined as having the ability
to be consistent in a business change in response to innovations. 2) capability is defined
as the role of strategic management, which appropriates help to integrate resources to a
new resource group or so-called resource integration and reconfiguration. Furthermore,
both internal and external skills are required to meet the needs for adapting to change in a
rapidly changing environment, and consist of 3 elements: 1) the process of solving
complex problems, 2) training, and 3) probability duration of trust (Schreyögg &
Kliescheberl, 2007). Besides, Schiuma, Lerro, and Moustaghfir (2008) illustrated that the
concept of Dynamic Capabilities plays a vital role in the expansion, through an
organization's ability to change and improve their performance better than their
competitors in the long-term. Additionally, the focus should be on the processes in the
organization to create new knowledge development. An important capability that must be
developed in any organization is to create new competency levels for self-development.
Besides, Teece et al. (1997) indicate that organizations can change their resources and
capabilities, which in turn leads to increased Dynamic Capabilities, particularly in market
fluctuations, which can be transferred from one model to another.
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Furthermore, Cavusgil, Seggie, and Talay, (2007) explained that Dynamic

Capabilities fall into four categories, as follows:
1) The organization and strategic processes are the reorganizations, the design
process, creating knowledge resources, and new process applications.
2) Learning with Teece et al. (1997) explains that learning is repetitive and that
testing of jobs can create better faster performances, which is different from the
Resource-Based View theory of static learning.
3) Organizational path dependence can help an organization learn about gaining
competitive advantages from the past to the present and into the future.
4) Assets are the process of imitation in terms of experience, conceptual
framework, systems, process, succession, and best practice.
A survey of over 600 Australian SMEs found that SMEs following large
enterprises in terms of strategy, innovation, and infrastructure, which include higher
culture, innovation, and external structure as well, are the key drivers behind the success
of their operations (Ternivka, 2010). Following the study of Wang, Senaratne, and Rafiq
(2015), which examines the effects of success traps on Dynamic Capabilities and
performance in the context of business strategies, found that market dynamics can lead to
improved financial strategies. At the same time, a survey of 113 England high-tech SMEs
found that developing Dynamic Capabilities with more internal than external factors
creates variables that are turned into positive impacts on the SME's performance.
Furthermore, the study of Wu (2007), who focused on the relationship between the
resources, i.e., dynamic abilities and performance during rapid change, found that
resources have a positive effect on organizational performance. Technologies can also be
evaluated by measuring innovation speed, market response, production efficiency, and
flexibility.
Additionally, Wang et al. (2015) examined the different types and sizes of
relationships of high-tech SMEs, such as communication technology, aviation,
pharmaceuticals, and chemical businesses, and found that these businesses are the high-
order of dynamic abilities, their findings revealed a positive effect on the relationship
between financial performance (in terms of sales and revenue); as well as on high product
orders that impact positively on the research and development department (R&D), which,
in turn, enables the improvement of operating results for innovations and dynamic
abilities (Lin & Wu, 2014). Therefore, it is a key role in the organization to gain further
advantage in long-term competition. Prieto and Revilla (2006) explain that creating new
knowledge for the organization using existing knowledge clearly shows that organizations
with Dynamic Capabilities are successful in building a competitive advantage over other
organizations, ultimately leading to long-term sustainable performance (Cohen &
Levinthal, 1990). Indeed, the continual development of Dynamic Capabilities can also
reduce conflict in the workplace (Schreyögg and Kliescheberl (2007).
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SMEs Performance
Performance is the activities relating to strategies and plans in order to achieve

organizational goals by focusing on input and output (Romzek, 2000). Stuart-Kotze
(2006) defined organizational performance as achieving goals by implementing
capabilities to get results. Likewise, Singer and Edmondson (2006) explained that
organizational performance is defined simply as achieving your goals. The organizational
performance consists of KPI (indicators). Some dimensions may be important for one
organization but not important for another organization. Performance measurement
systems assist the organization with understanding company effectiveness, perceiving
current situations, and assessing the efficiency of the strategies and the levels of success
in the business. The study of organizational performance can be separated into two
sections: 1) to examine the best way to develop and operate the business and 2) to predict
business performance (Teece et al., 1997). Neely, Adams & Kennerley, (2002) pay
attention to the balance between the performance measurement system and the dynamic
system. Cagnazzo, Taticchi, and Brun (2010) explained that SME businesses do use
some of these instruments to measure their financial situations, such as Return on
Investment (ROI) and (ROE) which are successfully used in large corporations.
The structural differences are found in the three planning strategies: 1) marketing,
2) entrepreneurship, and 3) learning (Barney, 1991). Hoq and Chauhan (2011) proposed
that strategic planning can dramatically increase the success of SMEs. Furthermore,
Teece, Pisano, and Shuen (1997) consider the strategy planning proposed to integrate an
organization's capability as well as create both internal and external capabilities. They
also considered that strategic planning is a part of organizational culture, value, and
behavior, which has various perspectives and ideas that assist in achieving success for
SME businesses.
Whereas Terziovski (2010) defined the forms of SMEs performance measurement

as follows: 1) the number of product characteristics, 2) successful launching of new
products, 3) entering their target market, 4) reduction of loss, 5) increased market
opportunities, 6) prompt and on-time delivery of products, 7) creation of product
innovations, 8) development of processes and performance, and 9) quality improvement.
During previous decades, several dimensions of performance measurement

followed internal and external factors under the Resource-Based View theory (RBV).
This theory focuses more on the value of resources, rareness, imitability, as well as being
non-substitutable, which improved competitive and work performances to Dynamic
Capabilities highlighted the strengths and weaknesses of their businesses, examined the
need to increase production volumes as well as predict the future potential for the
business's survival and its operational stability. Nowadays, various performance
measurements are covering several dimensions, utilizing both internal and external
factors, while creating an organizational balance for sustainable growth. The dimensions
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of performance measurement linking from the past to the future can be summarized in
Table 2.
Table 2
Dimensions of Performance Measurement
Year Performance Measurement systems Dimensions of performance measurement

1985 Sink and Tuttle Performance ● Efficiency ● Quality of work-life
Measurement model (Kirkendall, ● Effectiveness ● Innovation
2008) ● Quality
● Profitability
● Productivity
1988 The Strategic Measurement Analysis ● Marketing ● Productivity
and Reporting Technique system ● Financial ● Quality
(Cross & Lynch, 1988) ● Customer
● Flexibility
● Delivery
● Timing process
● Cost
1989 World Class Manufacturing ● Quality ● Production time
Performance Measurement system ● Delivery ● Flexibility
(Maskell, 1991)
● Cost
1991 Skandia Business Navigator (Wingren, ● Financial ● Process
2004) ● Customer ● Development
● Human
Resources
1992 Balanced Scorecard BSC (Kaplan & ● Financial ● Internal process
Norton, 1992) ● Customer ● Growth and learning
1997 Knowledge-based Measurement Measurements Intangible assets
Model (Sveiby, 1997) ● Development ● Employee performance
and growth ● Internal Structure
● Effectiveness ● External Structure
● Stability
1998 Comparative Business Scorecard ● Value of ● Satisfying of stakeholders
(Kanji, 1998) Stakeholders
● Learning
process in an
organization
2002 Performance Prism (Neely et al., ● Satisfying of ● Competency
2002) stakeholders ● The benefits of
● Strategy stakeholder
● Process
2003 Dynamic Multi-dimension ● Financial ● Personnel
Performance framework (Maltz, ● Marketing ● Future
Shenhar, & Reilly, 2003)
● Process
2008 Measuring Performance of Small-and- ● Goal • Competitive value
Medium Sized Enterprises: The ● Systems • Financial
Grounded Theory Approach resource
(Chong, 2008)
● Stakeholder
2010 Innovative Practice its Performance ● Innovation ● Customer and supplier
Implication in Small and Medium Strategy relationships
Enterprises (SMEs) the Manufacturing ● Formal Structure ● Technological capabilities
sector: A Resource-Based ViewView
(Mile Terziovski, 2010)
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2015 Developing a lean supply chain • Financial ● Internal business

performance framework in an SME: a ● Customer ● Innovation and learning
perspective based on the balanced
scorecard
(Afonso & do Rosário Cabrita, 2015)
2019 Translating Knowledge management • Financial ● Innovation and learning
into performance: the role of ● Social and environmental
• Customer
performance measurement systems
(Asiaei & Bontis, 2019) ● Internal business
Note: Source Adapted from Ravelomanantsoa, Ducq, and Vallespir (2019) and Srimai,
Radford, and Wright (2011)
The factors mentioned above are per Hudson and Smith (2000). SMEs' work
performance measurement should have dynamics that relate to the business. This
perspective leads to redefining what performance is and has influences on how a
performance management system must be constituted (Ravelomanantsoa et al., 2019). In
the same way, plans and activities should be designed, created, and prepared specifically
for each SME based on their products and services (Holtby & Thorstenson, 2000).
Relationships between Resource-Based Views, Dynamic Capabilities, and SME

Performances
Dynamic Capabilities are the part of the Resource-Based View theory that define
the competitive advantage in an environment where the technology is volatile, by
considering both touch and untouchable processes (Wang & Ahmed, 2007). The
evolution is outlined as follows in Figure 4:
Figure 4
The Method of Determining Relationships Between Resources, Organizational

Capabilities, Dynamic Capabilities, and SME Performances
SMEs Performance
Organization’s Dynamic Capabilities
Organizational Capability Strategies
Organizational Capabilities
Resource-Based
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Note: Source Adapted from Wang and Ahmed (2007)

Wang and Ahmed (2007) pointed out that the relationships between resources,
organizational capabilities, Dynamic Capabilities, and work performance originated from
internal factors within the Resource-Based View of the business as it is the basic function
of the organization. The processes and capabilities can be developed as resources of
sustained competitive advantage, which linked to Barney's VRIO framework (1991),
affirming that it can lead to the capabilities building competitive advantage. For instance,
revenues achieving company objectives can lead to the core competencies being
developed as Dynamic Capabilities, which, in turn, affects the sustained work
performance.
Teece et al. (1997) proposed that the differences in the operation of organizations
that have developed Dynamic Capabilities would be far more successful than both the
work performances and new competencies in other organizations who have not. Teece et
al. (1997) also noted that Resource-Based View is accessing competitive strategies. On
the other hand, Dynamic Capabilities extend knowledge and comprehensive strategies at
the organizational level by focusing on enhancing values from the resource's center,
which has added value against the competition. Menguc and Auh (2006) studied the
market competition levels using the Resource-Based View theory. The finding confirmed
that if an organization improves its new structure, it will generate better marketing ideas,
which then become Dynamic Capabilities. From this, it can be interpreted that the form of
knowledge relating to society can generate Dynamic Capabilities and a response-
changeable business environment (Marcus & Anderson, 2006).
Dynamic Capabilities are the capabilities to select the resources, to build the
integration and to abandon resources (Eisenhardt & Martin, 2000), and the relations in
renewable learning and adaptation (Teece et al., 1997). Otherwise, basic factors and
Dynamic Capabilities can support the superior idea of operation for long-term work,
including business adaptation skills, production processes, and decision power.
Teece (2007) pointed out that Dynamic Capabilities are self-based learning,
research and sourcing, innovation, and pursuing profitability and are related to the
selection and implementation for production. Business failure could lead to ideas for
success and new concepts. This study is following Bowman and Ambrosini (2003), who
proposed the way for building Resource-Based View on the Dynamic Capabilities
perspective.
Dynamic Capabilities Integrated basic organization through adopting to build

resources in organizational levels that are separated into the following six categories: 1)
Adaptation of external structures which support the business activities, 2) Adaptation of
suitable external processes, 3) Utilization of existing resources, 4) Encouragement for
learning and acquiring new updated knowledge, 5) Innovative Creativity, 6) Using the
perspective of Dynamic Capabilities indicated Resource-Based View. From Lin and
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Wu's study (2014), Meta-analysis was used to determine the relations of SME business
work performances. This study confirmed that non-substitutable resources do enhance
business performance. Whereas, substitutable resources (nonVRIN) do not affect the
development of Dynamic Capabilities and are, therefore, not necessary for business
performance Dynamic Capabilities(Lin & Wu, 2014).
As a result, the management of Resource-Based View and Dynamic Capabilities

are deemed to be the main components of success evaluation and are used to analyze the
competency of many different organizations. The management system of Resource-Based
View and Dynamic Capabilities can be used to create suitable strategies for all
organizations and businesses. Also, the relationship evolution of Resource-Based View,
Dynamic Capabilities, and work performance are repeatedly identified over vast periods
and studies. Resources developed from internal factors are the fundamental elements
required in order to generate Dynamic Capabilities and emerge in the form of potential
work performance (Barney et al., 2011; Gerschewski, Rose, & Lindsay, 2015; Hyvonen
& Tuominen, 2006; Srimai et al., 2011; Wang & Ahmed, 2007).
Conclusion
Overall, this article is based on literature that highlights the crucial role of
Resource-Based View and Dynamic Capabilities in order to assist SMEs in Thailand to
enhance the performance of their organizations. This study enhances the literature on
dynamic capabilities and resource-based view, improving our understanding of the
conditions under which approach is converted into superior performance in the context of
SMEs. This study further implies and recommends that CEOs or SME owners who wish
to accomplish successful performance should provide more support and encouragement
towards the development of unique abilities and skills for their employees. This
development should be with its existing resources coupled with innovative drives to
achieve Dynamic Capabilities in order to increase organizational performance and foster
greater economic growth of SMEs. As such, any SMEs, who intend to become and
remain outstanding, sustainable, and advantageous in the current economic climate, have
to ensure that all aspects of organizational support are fulfilled. This approach is more
likely to be the key to motivating their day-to-day workforce and, consequently, leading
to healthy and successful organizational performance. Although SMEs constitute a major
source of employment, they face many inherent difficulties in developing their capacities
to meet the demands of the changing business environment. As indicated by The Office
of SMEs Promotion (2019), owners of family-owned businesses tend to lack management
skills as well as the knowledge strategies that are required to attract and retain skilled
employees. Although, indeed, owners of SMEs usually utilize their personal work
experiences to start their businesses, the hard reality is that when their businesses grow
bigger, good management skills become indispensable. Thus, the government needs to
equip SMEs (and their top leaders) with the necessary resources and skills that could be
141
used to meet these inherent challenges. Continuous building networks or communities of

practices among SMEs that would allow them to access and share valuable knowledge
strategies and experiences could be an effective way to overcome these challenges.
SMEs should also give rise to unique, innovative thinking to ensure their
products are original and attractive to consumers. In order to achieve this, it may be
deemed necessary to utilize such approaches in their organizations. CEOs or SME owners
should clearly define guidelines for motivating their employees to develop innovative
new ideas, which, in turn, will lead to higher levels of customer satisfaction. This article
can jointly benefit CEOs or SME owners about achieving Dynamic Capabilities, which
affect employee loyalty and performance, offer greater competency and efficiency
procedures, and increased levels of organizational performances. Thus, CEOs or SME
owners should be considered dynamic capacity as distinctive strategies for support the
innovative performance of SMEs (Eikelenboom & de Jong, 2019; Rodríguez‐Serrano &
Martín‐Armario, 2019; Tartaglione & Formisano, 2018).SMEs that implement the value
of resources, rareness, imitability, and non-substitutable are more likely to achieve higher
growth and, therefore, be better positioned to reap the performance benefits and rewards
in the future (Barney, 1991; Bendickson, Muldoon, Ligouri, & Midgett, 2017;
Gerschewski et al., 2015; Mudalige, Ismail, & Malek, 2019; Pittino, Visintin, Lenger, &
Sternad, 2016; Rodríguez‐Serrano & Martín‐Armario, 2019; Schreyögg & Kliesch‐Eberl,
2007; Wang & Ahmed, 2007). These insights may be useful for any business practitioners
or CEOs who are proposing to enhance organizational performance throughout their
entire organization.
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The Resource-Based View, Dynamic Capabilities and SME Performance

Keywords: resource-based view, dynamic capabilities, strategy, small and medium-

Although Thailand is enriched with generous natural resources and geographical

In such a competitive environment, Thailand's business sector has got to introduce

Resource-Based Dynamic SMEs

Resource-Based View Theory

From the Resource-Based View (RBV) perspective, a resource can be classified as

The VRIO Conceptual Framework of Barney (1991)

To successfully build a competitive advantage in an organization, it should be

Paradigm and characteristics in strategic management

Paradigm Analysis Characteristics Strategic Management

Competitive Force ● Industries ● Strategizing ● Structure Condition

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Inter linkages with other perspectives

Process of resource acquisition and development

The micro foundation of RBT

RBT and Sustainability

Method and measurement issues

Note: Source Adapted from Barney et al. (2011)

Capabilities are the valuable assets of an organization (Peteraf, Di Stefano, &

Furthermore, Cavusgil, Seggie, and Talay, (2007) explained that Dynamic

Performance is the activities relating to strategies and plans in order to achieve

Whereas Terziovski (2010) defined the forms of SMEs performance measurement

During previous decades, several dimensions of performance measurement

Dimensions of Performance Measurement

Year Performance Measurement systems Dimensions of performance measurement

2015 Developing a lean supply chain • Financial ● Internal business

Relationships between Resource-Based Views, Dynamic Capabilities, and SME

The Method of Determining Relationships Between Resources, Organizational

Organization’s Dynamic Capabilities

Organizational Capability Strategies

Note: Source Adapted from Wang and Ahmed (2007)

Dynamic Capabilities Integrated basic organization through adopting to build

As a result, the management of Resource-Based View and Dynamic Capabilities

used to meet these inherent challenges. Continuous building networks or communities of

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