Impact of dynamic capabilities and firm characteristics on the firm performance of Vietnamese small and medium-sized retail enterprises

Within the research area of dynamic capabilities, one important context is SMEs, which are thought to be resource-poor and hence disadvantaged in the creation of such capabilities. We develop a model comprising of adaptive capability, entrepreneurial orientation, marketing capability and innovativeness, and investigate their link to firm performance using a sample of 243 Vietnamese retail-sector companies. We also include firm age and type (registered or traditional) in the hypotheses. The result of structural equation modelling indicates that entrepreneurial orientation and innovativeness are directly linked to firm performance in this context, whereas adaptive capability and marketing capability are indirectly linked. Additionally, firm age was found to link to performance. Our findings have implications to context-based research in dynamic capabilities for SMEs. They also suggest, particularly, that Vietnamese SMEs should strengthen their entrepreneurial orientations and innovativeness further to improve their performance.