Organizational capabilities and performance of SMEs in dynamics and stable environments

Theresa LAU, Wing Yan Thomas MAN, Ida CHOW

Research output: Contribution to journalArticle


This study examines the correlation between the organizational capabilities and firm performance of SMEs in both dynamic and stable environments in Hong Kong. Organizational capabilities are measured in terms of innovative ability, quality-enhancing capability, cost-reduction capability and 'organicity'. Organizational capabilities are hypothesized to correlate positively with firm performance and to be moderated by environmental dynamism. A sample of 71 SMEs was drawn from the chemical and computer industries, which represent stable and dynamic industrial environments respectively. The findings suggest that organizational capabilities can significantly explain the level of SME performance and the impacts of environmental dynamism on these relationships. Copyright © 2004 IP Publishing Ltd.
Original languageEnglish
Pages (from-to)221-229
JournalThe International Journal of Entrepreneurship and Innovation
Issue number4
Publication statusPublished - Nov 2004


Organizational performance
Small and medium-sized enterprises
Organizational capabilities
Environmental dynamism
Firm performance
Hong Kong
Chemical industry
Industrial dynamics
Computer industry


Lau, T., Man, T. W. Y., & Chow, I. (2004). Organizational capabilities and performance of SMEs in dynamics and stable environments. The International Journal of Entrepreneurship and Innovation, 5(4), 221-229.


  • Industrial environment
  • Organizational capabilities
  • Small business
  • Firm performance