Structural Reconfiguration of Firms toward Industrialization in Southeast Asia

Small and Medium Manufacturing Enterprises have emerged to play a crucial part in the context of industrialization and globalization, despite fierce competition and rapid change. However, in the extant studies, what drives Southeast Asia enterprises to reconfigure themselves and how well they cope with external challenges remains to be determined. Therefore, this research investigates structural reconfiguration as dynamic capabilities and conducts an empirical study for small and medium manufacturing firms in Southeast Asia. The World Bank Enterprise Survey, conducted between 2014 and 2016, collected information from 1,184 manufacturing firms used in the research on structural reconfiguration. The hierarchical regression model helps to create prediction equations to test structural reconfiguration as the mediators of organizational efficiency and business environment on firm performance. The findings demonstrate how structural reconfiguration is influenced by organizational efficiency and business obstacles. Furthermore, labor efficiency and competitive obstacles provide the most significant moderating effect on structural reconfiguration through dissolution. Finally, structural recombination has the potential to improve firm performance through direct and indirect impacts. Plain language summary 1. This research discusses the challenges that small and medium manufacturing enterprises in Southeast Asia face in the context of globalization and industrialization. To survive in such a complex environment, these businesses must have resilience, managerial abilities, and structural flexibility. The study highlights the importance of reconfiguring organizational structures as dynamic capabilities to maintain evolutionary fitness, explore new opportunities, and achieve innovation efficiency. 2. The paper aims to contribute to the literature on dynamic capabilities by investigating the direct and indirect roles of organizational efficiency and business environmental obstacles in motivating various forms of structural reconfiguration. 3. The research analyzed 1,184 SMMEs-SEA from diverse industries between 2014 and 2016 using a cross-sectional approach to understand how business environment obstacles influenced structural reconfiguration. 4. The study found that reconfiguring organizational structure through recombination is associated with a positive outcome and can help businesses adapt to high environmental obstacles and develop an appropriate strategy to sustai