Integrating a composition-based perspective into the study of strategic flexibility of emerging economy SMEs, we advance the concept of compositional strategic flexibility, which is a capability to combine ordinary resources in inputs, development, and markets. The latter underpin three key construct dimensions, which form a mediated relationship. Compositional strategic flexibility boosts productivity but at higher levels productivity declines due to complex interdependencies. The positive effect is heightened with industry dynamism but dampened with higher marketization. The nature of the construct, performance effect, and contextual boundary conditions are confirmed in a sample of 1,294 SMEs from multiple regions in China.
