Investigating the Mediating Role of Operational Capabilities Between Organizational Capabilities and Organizational Performance of SMEs

Small and Medium-sized Enterprises (SMEs) face market competition, high labour costs, talent shortages, and innovation barriers, impacting their performance and competitiveness. Previous studies suggest that human capital, IT, and knowledge integration affect SME performance. Still, few studies address the impact of operational capabilities on employee-owned SMEs, with some showing contradictory results. This study investigates how operational capabilities mediate the effects of human capital, IT infrastructure, and knowledge integration on SME performance, focusing on employeeowned SMEs in Jiangsu Province, China. This quantitative research uses a stratified random sampling technique to collect data from personnel working at SMEs in Jiangsu as senior managers. Descriptive and demographic statistics are performed using SPSS version 24. The reliability, validity, and path coefficients are assessed using the PLS-SEM method using SmartPLS4. Results show that operational capabilities enhance the impact of these resources on performance and partially mediate their relationships. These findings highlight the importance of resource optimization and capability development, offering insights into improving SME competitiveness and supporting RBV and DCT theories.