Abstract:
PURPOSE : This study interrogates the interfering role of absorptive capacity in the relationship between the
effectual actions of small businesses and their performance.
DESIGN/METHODOLOGY/APPROACH : Structured questionnaires were used to generate primary data from 685 small
businesses from a variety of sectors in South Africa. The data was used to interrogate the hypothesized
relationships using the partial least squares structural equation modeling technique.
FINDINGS : The findings report a significantly positive relationship between effectuation and small business
performance. Further, it is revealed that absorptive capacity partially mediates the relationship between
effectuation and small business performance.
RESEARCH LIMITATIONS/IMPLICATIONS : The limitations of this study include the use of primary data from a sample
of small businesses in South Africa and dependence on specific modeling techniques. The implications of this
research provide a deeper understanding of the mediating effects of absorptive capacity on the relationship
between effectual actions and small business performance.
PRACTICAL IMPLICATIONS : This study provides fresh insights into the mediating effects of the absorptive capacity
capability of small businesses in the continuous interaction between their effectual actions and performance.
As such, it highlights the connection between the growing theory of effectuation and existing theories in the
field of management sciences. This study enables the emergence of knowledge that could spur small businesses
to effectively navigate the endemic uncertainties prevalent in their contexts.
ORIGINALITY/VALUE : This study contributes to the understanding of the role of absorptive capacity in the
relationship between effectual actions and small business performance, thus adding value to the literature on
small business management.
