Perceiving ‘capability’ within dynamic capabilities: The role of owner-manager self-efficacy

Abstract

This article combines two popular, yet separate concepts: dynamic capabilities and self-efficacy. Both are concerned with ability/capability and offer potentially valuable synergies. As such, our in-depth qualitative study based in three micro-enterprises in the United Kingdom investigates, ‘what role(s) may owner-manager perceived self-efficacy play as a micro-foundation of dynamic capabilities in micro-enterprises?’ Our findings show that perceived self-efficacy can influence dynamic capability enactment in multifaceted ways and even suggest that in some cases, perceived self-efficacy is a crucial component of dynamic capabilities, without which there may be no such capability. These insights help open up the black box of dynamic capabilities by contributing important knowledge to the growing body of research into the micro-foundations of such capabilities. Furthermore, our study illuminates the importance of idiosyncratic micro-foundations of dynamic capabilities in micro-enterprises and expands extant knowledge of the potential effects of self-efficacy in the small business and entrepreneurship domain.