Developing dynamic capabilities through resource accretion: expanding the entrepreneurial solution space

Abstract

We report our findings from the analysis of crisis episodes that resulted in the development of new capabilities in eight small firms. When dealing with resource constraints in periods of crisis, entrepreneurs engaged in a number of actions to develop their firms' capabilities. By accreting resources such as knowledge, skills and other assets, entrepreneurs were able to expand their repertoire of potential solutions and change the firm's learning trajectory. Our contribution is to describe the process of resource accretion (the gradual accumulation and integration of resources) through grafting and bonding of capabilities into the firm's ambit, which is dependent on the proximities, salience and relationships of resources. We observe three patterns within the accretion pathways of the eight firms in the study, namely the combination of coping mechanisms, the extension of networks, and the reprisal of previously successful solutions. These activities support resource accretion and the subsequent expanded solution space where entrepreneurs begin the process of embedding new capabilities. Such coping routines are necessary antecedents for the development of nascent dynamic capabilities in small firms.

Keywords::

• small firms
• practice
• crisis
• resources
• dynamic capabilities
• routines

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

^1. The authors confirm that they contributed equally to the development of this paper.

^2. We focus on ‘small firms’ (10–49 employees) because they lack the resources and structures of more established medium-sized enterprises (see Curran and Blackburn 2001; Blackburn and Kovalainen 2009).