Abstract

In an uncertain and challenging environment, the small firm’s capability to better utilize their limited resources and capabilities can be a source of competitiveness. In this context two capabilities are of special importance, namely dynamic capability and ICT (Information and Communication Technology) capability. Dynamic capability is defined as a firm’s ability to integrate, build and reconfigure internal and external competences to address rapidly changing environments (Teece et al., 1997). During our literature review of dynamic capability, we identified three sub-parts, namely absorptive capability, adaptive capability, and networking capability. Using sub-facets to capture dynamic capability is consistent with prior research (Ahmed and Wang, 2007). Further, for small technological firms ICT capability also seems important for competitive advantage (Johannessen et al, 1999). We define ICT capability as a firm’s ability to mobilize and deploy IT-based resources in combination with other resources and capabilities (Bharadwaj, 2000). As both these concepts are a possible source for a firm’s competitive advantage, we expect them to influence the firm’s strategic orientation - conceptualized as entrepreneurial orientation (EO) - and ultimately firm performance. Thus, the overall purpose for this paper is to investigate the influence dynamic capabilities and ICT capabilities have on EO and firm performance.

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