The role of strategic flexibility and dynamic capabilities on family business performance

Abstract

Background: Dynamic capabilities is a key strategic tool that family businesses can practice to enhance their business performance. Although family business research in South Africa has advanced over the last 10 years, there are still limited studies uncovering the impact of dynamic capabilities within family businesses.

Aim: The aim of this research is to identify the mediating effect of strategic flexibility between the relationship of dynamic capabilities and family business performance.

Setting: The study focussed on family businesses located in the Eastern Cape of South Africa.

Method: The study followed a quantitative research approach. Data were collected using the questionnaire from a total of 347 respondents. The Hayes macro mediation model was used as the statistical analytical technique to ascertain the link.

Results: The results revealed that strategic flexibility positively mediates the relationship between dynamic capabilities and family business performance. The strategic flexibility mediating relationship between scenario planning and family business performance was the strongest correlation of the five dynamic capabilities tested (environmental scanning, scenario planning, knowledge creation, culture, and formal organisation).

Conclusion: Family businesses are urged to develop a dynamic capabilities model that emphasises their strategic flexibility. Specific focus should be placed on scenario planning aligned with strategic flexibility to ensure that businesses can anticipate and prepare for opportunities and threats.

Contribution: This study contributes practical recommendations on the development and implementation of a dynamic capability model for family businesses.