Top Management Capabilities and Firm Efficiency: Relationship via Resources Acquisition

Abstract

Considering the deficiency of resources in SMEs, a number of studies have been shown interest in the determinants of external resources acquisition but the results are fragmented. Particularly, the role of Top Management Capabilities (TMC) in resource acquisition and efficiency in the SME sector has been neglected. This study discusses the role of TMC—being intangible resources in SMEs’ efficiency with a mediating role of resource acquisition. This research is quantitative in nature and collected cross-sectional data through a structured questionnaire from 311 owners and managers of Pakistani SMEs. After analyzing the model using AMOS, the results indicate that TMC significantly facilitate firms in resource acquisition and enhance their efficiency; however, resource acquisition partially mediates the relationship between TMC and SMEs efficiency. This research recommends that SMEs should focus on TMC (instead of blindly investing money in other strategies) in order to acquire valuable tangible and intangible that are necessary for long term survival and efficiency. Further implications are discussed for owners, managers and practitioners.