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Abstract
The rapid changes taking place in today’s business environment, necessitate that business firms should develop a somewhat wholistic approach to the marketplace to achieve their business objectives. The purpose of this study is to make propositional statements and propose a framework to be tested empirically in future studies. The researchers reviewed scholarly articles on the variables with the aim of stating valid propositions in line with theoretical perspectives. Based on dynamic capability theory, we proposed that there will be positive relationship among innovativeness, proactiveness, risk-taking and organizational capability which in turn will positively predict improved performance of small and medium enterprises (SMEs). We recommend that owners or managers of SMEs should take proactive majors, be innovative, take calculated risk, as well as improve their capabilities to achieve sustainable and superior performance over their competitors. In line with dynamic capability perspective, this paper extends research on SME performance by proposing a model which need to be tested empirically.