An Empirical Research On The Relationship Among The Network Embeddedness, Dynamic Capabilities And The Growth Of The SMEs In Northeast China

SMEs play an important role in the national economy. In recent years, theenvironment for the development of small and medium-sized enterprises and theprivate economy has been improved greatly, and the policy system for the promotionof small and medium-sized enterprises and private economic is maturing, so that thesmall and medium-sized enterprises and the private economy develop rapidly, whichpromote the development of local and national economy. SMEs are the main force topromote the local and national economic growth among various countries, as well asto promote innovation and employment. But in recent years Chinese SMEs arefacing serious survival crisis in development, especially after the internationalfinancial crisis in2008, they face many predicaments such as the fast rising of inputcosts, difficulties in financing, the dropping of sales and profits and so on. With thedevelopment of economic globalization, technology innovation, enterprises arefacing more complex environment, therefore SMEs face much fiercer marketcompetition. The survival and growth of SMEs will be affected by the unprecedentedopportunities and challenges. How to adapt to the current business environment,obtain and maintain competitive advantages becomes an urgent question for thesurvival and existence of SMEs.With the emerging of network organization and the network theory, the viewthat the enterprise is embedded in the social network has received more and moreattention. And previous studies suggest that the embeddedness of a enterprise playsan important role in business. Network embeddedness provides a new approach for the researches on SMEs. Network embeddedness reflects the position of theenterprise in the social network, the depth and width of the relationship between thecorporate and its stakeholders. Network embeddedness exists in the whole process ofthe corporate lifecycle, and the different embeddedness leads to differentperformance and results that have an important impact on the survival anddevelopment of enterprises.Dynamic capabilities theory focuses on how the enterprise integrates resourcesin order to gain competitive advantages in a turbulent external environment. Itanalyzes the relationship between business performance and the externalenvironment in a specific perspective and has aroused attention among scholars.Dynamic capabilities is essentially emphasizing the integration and reconstruction ofthe ordinary capabilities based on the analysis of the enterprise’s resources andcapabilities in order to adapt to the external turbulent business environment. It isimportant because it points out the driving force of sustainable development ofenterprises from a strategic perspective. Studies have shown that dynamiccapabilities have an important impact on the survival and development of theenterprise. The relationship between dynamic capabilities and growth of SMEs isworthy of further study.Thus both network embeddedness and dynamic capabilities will influence thefirm growth. And the two processes are not separately. Network embeddedness hasan important influence on the dynamic capabilities by influencing the resourcesacquisition and integration activities in the network, so network embeddedness mayaffect the growth of the enterprise though the dynamic capabilities.For the northeast old industrial base of China, due to some problems caused bythe traditional planned economic system has greatly effected the development of theeconomy, SMEs play an significant role in the new industrialization path in theNortheast China. Therefore, this paper chooses the SMEs in the Northeast China asthe research sample and analyze the the relationship among network embeddedness,dynamic capabilities and the growth of SMEs in order to have a better understanding the current situation of SMEs, as well as provide reference basis for the relevanttheorical and empirical studies. Based on the related literature, we proposed atheoretical model of network embeddedness, dynamic capabilities and the growth ofSMEs by entering environmental dynamics as a moderator as the externalenvironment has great impact on the business performance and it may change the theeffect of several variables. Through162valid questionnaires of the SMEs innortheast China, we analyze the data with the help of SPSS and AMOS. The resultsshow that:Firstly, network embeddedness has a significant positive impact on the growthof SMEs; the two dimensions of network embeddedness, structural and relationalembeddedness has direct positive impact on the growth of SMEs.Secondly, dynamic capabilities have a direct positive impact on the growth ofSMEs; the two dimensions of dynamic capabilities, environmental awarenesscapabilities and RandD capabilities have significant positive impact on the growth ofSMEs. However, organizational flexibility has no effect on the growth of SMEs.Thirdly, dynamic capabilities play an intermediate role between networkembeddedness and the growth of SMEs.Fourthly, we test the moderate effect of environmental dynamic. The resultsshow that the environmental dynamic plays a significant moderate role betweennetwork embeddedness and dynamic capabilities, the more environmental dynamic,the stronger impact that the network embeddedness on dynamic capabilities. But themoderate role of the environmental dynamic between dynamic capabilities and thegrowth of SMEs is not confirmed.The theoretical significance of this study are as follows: by analyzing therelationship among the network embeddedness, dynamic capabilities and the growthof SMEs of NortheastChina, this paper reveals the mechanism that how networkembeddedness affect the growth of SMEs through dynamic capabilities, andrevealing the conditioning factor of the relationship between network embeddedness and dynamic capabilities which enrich the theory and empirical research, and clarifythe nature of the variables.The practical significance of this study is providing the the developmentstrategies and recommendations of the development of private economy and SMEs,as well as the structure of industry upgrading for the northeast China. The SMEsshould pay attention to the role of network embeddedness and dynamic capabilitiesto gain better understanding on the business environment, identify marketopportunities and continuously improve their environmental adaptability and theability to resist risks. Thus they can obtain sustainable competitive advantage andestablish a sustainable growth model in order to promoting the coordinateddevelopment of economy and society for the rapid and sound development of theNortheast China.