Managing uncertainties toward sustainability of SMEs in Malaysia : dynamic capabilities perspectives

Abstract

Sustainability issues have become critical problems plaguing SMEs worldwide. Undoubtedly, SMEs contribute largely to many countries' development; hence, they should take measures to ensure a sustainable competitive advantage. Based on this concern, this study was conducted to examine the effect of resources (tangible and intangible) on SMEs' sustainability in Malaysia. Dynamic capabilities (digitalisation and humanisation) have been identified as the mediating factor. At the same time, environmental uncertainties were considered as a moderating factor in the relationship between tangible and intangible resources and sustainability. This study applied a quantitative method, which was then supported by a qualitative method. For the quantitative data, questionnaires were distributed to respondents face-to-face and 338 responses were selected using a random sampling method and analysed using SPSS and AMOS. Based on structural equation modelling, the study found that tangible and intangible resources are significantly related to sustainability, and dynamic capabilities mediate the relationship between tangible and intangible resources and sustainability. In addition, environmental uncertainties play a moderate role in the relationship between tangible and intangible resources and sustainability. Qualitative data were then collected through interviews to support and explore the results obtained through this quantitative analysis. A total of 5 subject matter experts were involved in the interview. The result highlights the importance of practical resources and capabilities, learning new technologies and practices, enhancing dynamic resources, valuing tangible and intangible resources, and humanisation and digitalisation towards ensuring SMEs' sustainability. The results also support the mediation role of dynamic capabilities and the moderation of environmental uncertainties in the relationship between resource capabilities (tangible and intangible) and SMEs' sustainability. Furthermore, the study's findings assert that adopting proactive risk assessment frameworks can help stakeholders in Malaysian SMEs strengthen their support for sustainable growth by identifying and classifying potential financial, operational, market, and environmental risks by employing techniques like SWOT analysis and PESTEL analysis. It also helps by evaluating the probability and consequences of identified risks using qualitative and quantitative approaches, ranking risks according to their potential impact on business operations, creating and executing plans to reduce known risks, creating backup plans for critical risks to maintain business operations, keeping a constant watch on the risk environment and the effectiveness of mitigation strategies. The findings highlight the need to assist SMEs in implementing and managing the risk assessment framework by frequently updating the framework to align with changes in the business environment, delivering continual training on risk management and assessment methods to small and medium-sized enterprise (SME) owners and managers and providing support in the form of consultation and advisory services. The findings also suggest the benefits of establishing two-way communications between government agencies and Malaysian SMEs, sharing information and addressing the need for support, public trust, and business owners' awareness. Lastly, this study's findings can support SMEs and other related firms in ensuring sustainability and guide the government in developing policies related to SMEs and other related agencies