A Dynamic Capability Framework for Strategic Purchasing in SMEs

Thesis Abstract

In the context of global competitive pressures and volatile supplier markets, small and medium-sized enterprises (SMEs) face challenges in aligning purchasing capabilities with dynamic market demands, which constrains their ability to innovate, reduce costs, and sustain competitive advantage. This study addresses the problem that traditional procurement practices are static and ill-equipped to respond to rapid changes in supplier capabilities, disruptions, and shifting customer requirements. The aim is to develop and validate a Dynamic Capability Framework for Strategic Purchasing in SMEs that enables firms to orchestrate sensing, seizing, and reconfiguring activities within supply networks to sustain performance. The specific objectives are (i) to identify the core dynamic capabilities required for strategic purchasing in SMEs; (ii) to conceptualize a framework that integrates sensing, learning, and reconfiguration processes with supplier relationship management; (iii) to examine how organizational routines, information systems, and external partnerships influence capability development; (iv) to evaluate the impact of the dynamic capability framework on purchasing performance outcomes such as cost efficiency, supplier reliability, and innovation; and (v) to provide practical guidelines for SME managers to cultivate and deploy dynamic purchasing capabilities. The study tests theoretical propositions derived from the dynamic capabilities view (DCV) and the resource-based view (RBV), integrating insights from transaction cost economics and relational governance theories to explain how SMEs adapt purchasing strategies in dynamic contexts. A mixed-methods research design is employed. The quantitative phase surveys 240 SME purchasing managers across manufacturing and services sectors in three metropolitan regions to measure constructs including sensing capabilities (market and supplier monitoring), seizing capabilities (opportunity evaluation, agile decision-making), reconfiguring capabilities (supply base realignment, process modularity), and purchasing performance outcomes. Data are analyzed using structural equation modeling (SEM) to assess the validity of the proposed relationships and to test mediating effects of dynamic capabilities on performance. The qualitative phase conducts 40 in-depth interviews with senior procurement leaders to explore contextual factors, routines, and governance mechanisms that support capability development; interview data are analyzed through thematic analysis using a codebook aligned with the framework’s constructs. Triangulation of survey and interview findings enhances reliability and enriches interpretation. Plausible findings anticipate that a higher level of sensing capability positively influences both seizing and reconfiguring capabilities, which in turn significantly enhances cost efficiency, supplier reliability, and innovation outcomes. The analysis is expected to reveal that information systems integration (ERP, supplier portals, and analytics platforms) and formalized routines (standard operating procedures, cross-functional procurement teams) serve as critical enablers of dynamic capabilities in SMEs. Moderating effects are anticipated for firm age, industry dynamism, and network embeddedness, with younger SMEs showing greater benefits from agile sensing and reconfiguration, while mature SMEs leverage established governance mechanisms to sustain performance gains. The study may identify boundary conditions where excessive reconfiguration incurs switching costs that dampen performance unless accompanied by governance alignment and supplier development programs. Contributions to knowledge include (i) a parsimonious yet theoretically grounded Dynamic Capability Framework for Strategic Purchasing tailored to SMEs, integrating DCV with RBV and relational governance; (ii) empirical validation of the proposed model in diverse SME contexts, contributing to the scarce evidence on dynamic purchasing in smaller firms; (iii) practical implications for SME managers, including a diagnostic instrument to assess and develop sensing, seizing, and reconfiguring capabilities; and (iv) policy and ecosystem insights on how regional networks and supplier development initiatives can support SME capability advancement. The study concludes that sustained competitive advantage for SMEs in volatile markets hinges on deliberate development of dynamic purchasing capabilities, underpinned by integrated information systems, adaptive governance, and active supplier collaboration. Recommendations include (a) investing in cross-functional sensing teams and real-time data analytics; (b) creating agile sourcing protocols and rapid decision-making processes; (c) institutionalizing supplier development and modular procurement arrangements; and (d) fostering regional supplier networks and knowledge-sharing platforms to bolster SME dynamic capabilities.