Discovery–driven capabilities in SMEs: A Kirznerian perspective on firm–level opportunity discovery and adaptation

Abstract

Small and Medium–Sized Enterprises (SMEs) rarely engage in resource reconfiguration processes. Instead, constrained by their size and scope, they typically renew their existing resources through ongoing adaptive engagement with their environment. This process raises questions whether the dynamic capability theory, which is largely grounded in Schumpeterian assumptions of intentional resource recombination and disruption, can adequately capture how SMEs adapt to strategic change. Building on a Kirznerian perspective of entrepreneurial opportunity discovery, this inductive qualitative study of 14 Dutch SMEs investigates how SMEs discover, mobilize, and adapt to opportunities while renewing their competitive advantage. Our study identifies three interrelated capabilities, (i) alertness, (ii) responsiveness, and (iii) resilience that operate as discovery–driven capabilities. These capabilities enable SMEs to identify overlooked opportunities, act swiftly, and adapt rapidly to strategic change. These findings advance entrepreneurship theory in two ways. First, by grounding discovery–driven capabilities as a firm–level extension of Kirznerian entrepreneurial discovery, we advance understanding of whether and how SMEs can possess dynamic capabilities and deepen our knowledge of capability deployment in SME contexts. Second, we contribute to literature by reconceptualizing alertness, responsiveness, and resilience, often studied in isolation, as interrelated, firm–level capabilities within a unified discovery–driven framework, thereby offering a new perspective for examining these capabilities in conjunction.