The characteristics of the EU and Italian food market, dominated by evolving regulations, rise of new emerging countries, globalisation, advances in ICT and technology sector, increase of retailers’ bargaining power, and changes in consumer patterns, affect especially SMEs, which are forced to develop successful strategies in order to survive on the market. Thus, it is useful to understand the potential sources of competitive advantage for SMEs. Following the theoretical model of Resource-based View, we analysed the effect of SME capabilities on performance, by identifying the significant ones playing a leading role to reach a competitive advantage. In particular, four capabilities have been selected, according to literature: innovation, marketing, network, and acquiring information. The analysis is carried out in 67 food SMEs located in Lombardy, a Northern Italian region, by applying a Structural Equation Model. The results revealed that marketing, network and innovation capabilities positively affect the performance. In particular, process innovation should be exploited in SMEs to act incremental innovations. Moreover, adopting appropriate pricing policies and operating a right consumer targeting help SMEs in perform well, also if they spend time in acquiring information about the market and the other agents of the supply chain. Strong vertical relationships, besides facilitating the information flow, allow SMEs to control each stage of the chain and to monitor the quality level of products.


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