Purpose Although dynamic capabilities have been extensively theorized, empirical evidence remains fragmented, leaving unresolved how managerial capabilities translate into performance and under what conditions. Integrating the dynamic capabilities view (DCV) with contingency theory, this study examines how dynamic managerial capabilities (DMCs) influence small and medium-sized enterprise (SME) performance through strategic flexibility (SF), moderated by market turbulence (MT). Design/methodology/approach Drawing on survey data from 536 SMEs across five service sectors in Jordan – an emerging-market context characterized by institutional voids and resource scarcity – partial least squares structural equation modeling (PLS-SEM) was employed to test a moderated-mediation model. Findings Results show that DMCs significantly enhance both strategic flexibility and performance. SF partially mediates the DMC–performance relationship, accounting for roughly one-quarter of the total effect. Moreover, MT strengthens the positive SF–performance link through second-stage moderation, indicating that flexibility yields greater value under turbulent conditions. Practical implications SME executives should institutionalize strategic flexibility by embedding systematic market monitoring, cross-functional coordination and rapid resource-reallocation routines. Policymakers should tailor capability-building initiatives to sectoral turbulence levels, fostering adaptive rather than static resilience. Originality/value This study advances understanding of how dynamic managerial capabilities generate performance by (1) validating strategic flexibility as the organizational mechanism linking managerial microfoundations to outcomes, (2) identifying market turbulence as a contextual amplifier of this mechanism and (3) demonstrating these dynamics in resource-constrained Jordanian SMEs where managerial agency compensates for institutional voids – thereby extending the theoretical and contextual boundaries of the dynamic capabilities view.
Almohtaseb et al. (Tue,) studied this question.