Adaptive Strategy: The Missing Link Between Skilled Human Capital and Sustainable Performance of the United Kingdom SMEs

Small and medium enterprises all over the world are facing challenges associated with sustainability. In the United Kingdom the government is highly concerned about sustainability and has made special laws which create several challenges. The purpose of this study is to identify the role of skilled human capital in achieving sustainable performance of small and medium enterprises. Moreover, considering the environmental challenges, small and medium enterprises need to change their strategies on a continuous basis. Additionally, considering the inconsistencies in the literature regarding the relationship between skilled human capital and sustainable performance of small and medium enterprises, adaptive strategy is added to the framework. The resource-based view of firms provides theoretical support for this research. To support the mediating role of adaptive strategy, we integrate the dynamic capability view with the resource-based view. Although the mediation is partial, it is significant and cannot be ignored. For evaluating the framework, the data have been collected from 384 small and medium enterprises operating in the main cities of the United Kingdom using convenience sampling. The results confirmed the direct relationship between skilled human capital and sustainable performance of small and medium enterprises. Likewise, adaptive strategy partially mediates the relationship between skilled human capital and sustainable performance of small and medium enterprises. The research adds several practical and theoretical implications for academics as well as practitioners. The study ends up with limitations and recommendations for the future studies.