How Micro and Small Business Improve their Capabilities: Analyzing the Role of Absorptive Capacity

Micro, small and medium-sized enterprises (MSMEs) are fundamental to the progress of any economy. Presently, it is crucial to understand how this type of companies is able to improve their competitiveness. In this regard, this paper conceptually discusses how MSMEs improve their organizational capabilities and what it is the role of Absorptive capacity (AC) in doing that improvement. From our point of view, the organizational capabilities require a starting point, major capabilities which pave the path of development from the other capabilities. AC performs this role at the firm level. In this regard, for further developing the conceptual understanding about the management of MSMEs, it is relevant to conceptualize the organizational capabilities in terms of which are appropriate for MSMEs in order to manage knowledge. Thus, the main theoretical implication of this paper is the analysis of dynamic capabilities within MSMEs.