An SMEs’ perspective on the role of dynamic capabilities in bridging the gap for sustainability implementation

Abstract

"The circular economy is increasingly seen as essential to gaining a competitive advantage and reducing the effect of manufacturing on the environment. However, with mounting pressure on companies to adopt the three pillars of sustainability (economic, environmental, and social), many companies need help to convert the circular economy practices into a business model. The literature indicates that companies require dynamic capabilities to facilitate the transitions to implementing circular economy practices, but there needs to be more discussion on what capabilities are required and how to incorporate them. A qualitative research approach was taken to understand the dynamic capabilities that either help or hinder the development and implementation of sustainability initiatives in SMEs that have successfully transitioned. The findings indicate that a deeply embedded sustainability culture throughout these companies, driven by strategy and top management, is critical for incorporating sustainability. Furthermore, companies with sustainability at the core are willing to adapt and change anything within the business to take advantage of new opportunities provided they contribute to the sustainability vision of the company and are financial viable. Stemming from the capabilities within these companies, these companies have successfully incorporated the three pillars of sustainability into their business model. The main barriers inhibiting sustainability implementation are lack of access to capital, insufficient guidelines, standards and regulations, education and an understanding of how to incorporate sustainability into practice. This study contributes to the literature by identifying four sensing, four seizing and six reconfiguring building blocks of microfoundations of dynamic capabilities found in SMEs that have successfully transitioned. These may guide SMEs to incorporate sustainability practices within these companies. The limitation of this study is that interviews were conducted with top-level managers and heavily weighted toward the textile manufacturing industry in KwaZulu Natal."