The role of social capital in augmenting strategic renewal of SMEs: does entrepreneurial orientation and organizational flexibility really matter?

Abstract

PurposeThe objective of this study is to evaluate the key issues that how social capital augments the initiation of strategic renewal through the mediating role of entrepreneurial orientation and the moderating role of organizational flexibility. In the context of Small and Medium Enterprises (SMEs) of developing economies, the study developed and tested the theoretical model of strategic renewal for analyzing its major outputs.Design/methodology/approachThis study utilized cross-sectional design and employ quantitative approach. The data were collected from the owner, managers and executive directors of pharmaceutical SMEs of Pakistan. The study used statistical analysis of correlation and regression for the analysis of data.FindingsThe study discovered that entrepreneurial orientation mediates the positive relationship of social capital and strategic renewal. Moreover, high organizational flexibility strengthens the association between social capital and strategic renewal of SMEs.Originality/valueThis research contributes to the body of knowledge by providing empirical evidence that how to thrive the mechanism of strategic renewal. The study further provides understanding of the effects of organizational social capital, entrepreneurial orientation and organizational flexibility on strategic renewal.