Thrive, not just survive: enhance dynamic capabilities of SMEs through IS competence

Small and mid‐sized enterprises (SMEs) are facing challenges in an increasingly fierce environment. This paper aims to explore the promise of information systems (IS) in enhancing the survival and competitiveness of SMEs in a dynamic environment. To address this issue, the paper draws upon the dynamic capability theory and develops a research model of IS‐enabled dynamic capabilities to examine the role of IS competence for enhancing SMEs dynamic capabilities in a competitive business environment.

An empirical study is conducted by using survey data from senior managers of 120 SMEs in China.

The analytic outcomes support the research model and confirm that IS competence significantly contributes to SMEs' dynamic capabilities for gaining competitive advantage.

This paper contributes to the literature on IS impact on dynamic capabilities of SMEs by incorporating IS competences into a research model of IS‐enabled dynamic capabilities and articulating the relationships between IS competences and dynamic capabilities of SMEs in a changing business environment. The research findings enrich dynamic capabilities theory by justifying IS as an enabling antecedent for organizational capability development. The findings may empirically convince SMEs owners and management to effectively invest in and deploy IS for enhancing SMEs' dynamic capabilities and performance.

A capability‐building perspective is used to examine how IS can leverage SMEs' capabilities to enhance their competitive advantage in a dynamic environment.