The managing director and the development of dynamic capabilities

Purpose This research aims at examining the role of the managing director in the development of dynamic capabilities at SMEs. Design/methodology/approach The paper used a mixed‐methods approach and conducted case studies at 13 SMEs. The primary sources of data were semi‐structured interviews, which were supplemented by quantitative data from a postal survey and content analysis of the companies' websites. Findings The paper suggests that managing directors “enact” in the development of dynamic capabilities, if they believe that dynamic capabilities are a source of competitive advantage. If they do not appreciate the importance of dynamic capabilities they can get trapped in a vicious circle. Research limitations/implications This research focuses especially on small firms, and it is unlikely that the findings can be applied to large firms. Practical implications The key managerial implication is the threat of a vicious circle if the development of dynamic capabilities is neglected. Originality/value This paper draws the dynamic capabilities framework and the enactment concept together, suggesting that managerial decisions and behavior affect dynamic capabilities at an organizational level, which then drives firm performance.