Managerial Capabilities and Organizational Agility in Entrepreneurial Firms

Abstract

Organizations increasingly operate in volatile and uncertain environments that require rapid strategic responses and adaptive decision-making. Within this context, organizational agility has emerged as a critical capability enabling firms to sense environmental changes, reconfigure resources, and respond effectively to emerging opportunities. Despite extensive discussion of agility in the strategic management literature, the managerial mechanisms that enable agile organizational behavior remain insufficiently articulated, particularly in entrepreneurial firms where decision-making authority is often concentrated. This article develops a conceptual framework explaining how managerial capabilities enable organizational agility through the sequential mechanisms of strategic interpretation and resource reconfiguration. Drawing on insights from the dynamic capabilities perspective, managerial cognition research, and entrepreneurship literature, the study proposes that managerial capabilities function as micro-foundations that translate environmental signals into coordinated organizational action. Strategic interpretation enables managers to recognize opportunities and prioritize strategic initiatives, while resource reconfiguration allows organizations to realign and mobilize resources to implement adaptive responses. By integrating these mechanisms, the framework clarifies how entrepreneurial firms develop agility despite resource constraints. The article contributes to strategic management research by advancing a mechanism-based explanation of how managerial capabilities support adaptive organizational behavior in dynamic business environments.