Building organizational resilience in project-based SMEs through capability development: a process-based perspective

Purpose This study examines how organizational resilience develops in project-based small and medium-sized enterprises (SMEs) through interconnected capability-building processes rather than isolated antecedents. Although prior research has identified numerous structural and strategic correlates of SME resilience, limited attention has been paid to how resilience emerges from learning, cultural embedding and adaptive capability development. Addressing this gap, the study develops and tests a process-based capability-development framework linking operational practices, organizational learning, organizational culture, dynamic capabilities and organizational resilience. The purpose of this study is to clarify the selective pathways through which SMEs build adaptive capacity under conditions of environmental uncertainty. Design/methodology/approach The study uses survey data from 124 Canadian project-based SMEs and applies partial least squares structural equation modeling to examine the proposed capability-development relationships. The model tests the direct and indirect associations among operational practices, organizational learning, organizational culture, dynamic capabilities and resilience. Methodological rigor is ensured through reliability and validity assessments, non-response bias testing, marker-variable and common-latent-factor procedures and bootstrapped mediation analysis. The cross-sectional design supports the estimation of theoretically grounded associations while acknowledging limitations regarding temporal ordering. Findings Dynamic capabilities emerge as the most immediate organizational mechanism associated with resilience. Organizational learning is positively associated with organizational culture, organizational culture is positively associated with dynamic capabilities and project management and risk management are positively associated with learning. Diversification is positively associated with dynamic capabilities and indirectly associated with resilience through dynamic capabilities. In contrast, longer sequential mediation pathways were not supported, indicating that capability development is selective rather than universal. The results highlight how adaptive capacity develops through specific organizational processes rather than through broad, multi-stage capability chains. Research limitations/implications The cross-sectional design limits causal inference and prevents examination of how resilience unfolds over time. The sample is restricted to Canadian project-based SMEs, which may limit generalizability to other institutional contexts. Future research should use longitudinal or mixed-method designs to capture temporal dynamics, explore cross-country variation and examine how digital transformation and external shocks interact with internal capability-building processes. The findings refine process-based resilience theory by identifying which capability pathways matter most and which assumed sequential mechanisms do not hold empirically. Practical implications The findings suggest that SME resilience is strengthened primarily through internal capability-building rather than through external support alone. Managers should invest in project management routines, risk management practices, organizational learning mechanisms and adaptive cultural norms that facilitate knowledge integration and capability development. Policymakers should prioritize interventions that enhance managerial training, learning infrastructures and collaborative knowledge-sharing platforms. Because diversification contributes indirectly through dynamic capabilities, strategic variety should be accompanied by deliberate capability development to ensure adaptive benefits. Originality/value This study reframes SME resilience as a process-based organizational outcome emerging from learning, cultural embedding and dynamic capability development rather than as a direct consequence of resources or external support. It advances dynamic capabilities theory by examining learning and culture as microfoundational processes in project-based, resource-constrained SMEs. The capability-development architecture provides a nuanced explanation of how SMEs sustain adaptive continuity within enterprising communities. By identifying both supported and unsupported pathways, the study offers a refined, empirically grounded perspective on how resilience develops through selective organizational processes.