The influence of absorptive capacity and networking capabilities on small and medium enterprises

Background: In response to the ever-growing complexity in the business environment that has resulted from the dramatic technological transformation, businesses have altered the way they conduct business. The influence of the external business environment is increasing in significance, rendering traditional methods of operating business outdated and forcing the adoption of new methods. Objective: The aim of this study is to investigate how organisational capabilities influence small and medium enterprises’ (SMEs) operational performance (OP), by specifically looking at absorptive capacity (ACAP), networking capabilities (NCs) and customer relational capabilities (CRCs). Setting: This study was conducted in Zimbabwe and was spread across the 10 provinces, focusing on 388 randomly selected SMEs. Methods: Data were collected through self-administering questionnaires to respondents, using the drop-off or pickup technique and making telephonic follow-ups to increase the response rate. Analysis of the data in this study was largely quantitative in nature and it was performed using a two-step structural equation modelling approach. Results: The results of the study indicate that CRCs lead both ACAP and NCs to improve OP. Conclusion: This study enlightens both SMEs’ managers and policymakers on the significance of capabilities, as opposed to resources, in the growth of the SMEs sector.