Make Do or Renew? How Market Turbulence Reshapes the Sources of Competitive Advantage in Pakistan's Textile Industry

The exporters of textiles from Pakistan have to compete on value as they have to deal with record energy costs, new tariff barriers, and fluctuating demand from buyers. This study is about what resource-deployment practices (innovation, knowledge management and entrepreneurial bricolage) generate a competitive advantage for these firms. It also poses the question of how two factors affect those effects: absorptive capacity (internal) and market turbulence (external). The model is an integration of the resource-based view, dynamic capabilities perspective and contingency theory. A total of 113 bed-linen and upholstery manufacturers' owners and senior managers responded to the survey. Systematic random sampling was used to select the firms from a population of 362 members of the association. Partial least squares structural equation modelling (PLS-SEM) and 5000 bootstrap subsamples were used to test the hypotheses. Entrepreneurial bricolage had the most significant impact on competitive advantage (β = 0.338, p = .001), with innovation being the second most significant impact (β = 0.172, p = .038). There was no significant direct effect of the knowledge management. Absorptive capacity did not moderate any of the three relationships. Market turbulence took a dual impact on the market. It increased the innovation–advantage relationship (β = 0.212, p = .047) and significantly reduced the bricolage–advantage relationship (β = −0.434, p = .006). The model accounted for 65.1% of the variance in competitive advantage. The contribution of the interaction terms was 6.7 percentage points (f² = 0.19). The study illustrates how bricolage and innovation are not synonymous strategies for gaining an edge. Bricolage is better suited to stable markets and innovation is better suited to markets that churn. This boundary condition will help clarify resource arguments such as "making do" with resources on hand. It also provides a guideline to textile exporters as to when to be resourceful and when to invest in renewal.