Influence of competitive strategies on corporate performance of small and medium enterprises: a case from Nigeria

Solomon Kowo, Olalekan Sabitu, Ganiu Adegbite

Abstract


Purpose. The objectives of the study were to identify whether adoption of cost leadership strategy assist in reducing the cost operation of small and medium enterprises and also to determine the effect of differentiation strategy on the sales turnover of SMEs, Series of questions were asked using the questionnaire adopted by the researcher.

Methodology / approach. Two hypotheses were proposed and tested in the study. Samples of 125 were drawn. The data were analyzed using simple frequency tables and regression analysis. However, for the purpose of this study the Statistical Package for Social Sciences (SPSS) was employed. To ensure the accuracy of the study this research used the Yamane formula in determining sample size. The coefficient alpha (Cronbach’s alpha) was used to test the reliability of the measurement scale.

Results. The study critically examined the influence Competitive Strategies on Corporate Performance of Small and Medium Enterprises. The research found out that cost leadership strategy has significant effect on cost reduction of small and medium enterprises indicating that when firms are adopt good cost leadership strategy, they tend to reduce their cost of operations.

Originality / scientific novelty. The results of regression analysis revealed that adoption of competitive strategies usually impacts positively on the performance of the SMEs and that competitive strategy has significant relationship on company’s market share. Therefore it is important for small and medium enterprises to learn more innovative ways of pleasing and satisfying the needs of employees at work to increase sales turnover of their business.

Practical value / implications. This study has further proven that organizations achieve a great efficiency gain by engaging in high differentiation strategy by creating products to respond to the evolving market. Based on the above findings, it is recommended that Competitive Strategies should be adopted in a way that would boost the performance of the SMEs organizations in general.


Keywords


Competitive Strategies; Corporate Performance; differentiation strategy; SMEs.

Full Text:

PDF

References


Balsam, S., Fernando G. D. and Tripathy, A. (2011), The impact of firm strategy on performance measures used in executive compensation. Journal of Business Research, vol. 64, is. 2, pp. 187–193. http://dx.doi.org/10.1016/j.jbusres.2010.01.006.

Bentley, K. A., Omer, T. C. and Sharp, N. Y. (2013), Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research, vol. 30(2), pp. 780–817. http://dx.doi.org/10.1111/j.1911-3846.2012.01174.x.

Blackmore, K. and Nesbitt, K. (2013), Verifying the Miles and Snow strategy types in Australian small- and medium-size enterprises. Australian Journal of Management, vol. 38, is. 1, pp. 171–190. http://dx.doi.org/10.1177/0312896212444692.

Barney, J. B. and Hesterly, W. S. (2006), Strategic Management and Competitive Advantage Concepts and Cases. New Jersey: Pearson Prentice Hall.

Barney, J. (1991), Firm resources and sustained competitive advantage. Journal of Management, vol. 17, no. 1, pp. 99–120.

Barney, J. B. (1995), Looking inside for competitive advantage. Academy of Management Executive, vol. 9(4), pp. 49–61. https://www.jstor.org/stable/4165288.

Chandler, A. D. (1962), Strategy and Structure. Cambridge, MA: Mt Tpress.

Chen, M-J. and Miller, D. (1994), Competitive attack, retaliation and performance: an expectancy-valence framework. Strategic Management Journal, vol. 15, is. 2, pp. 85–102. https://doi.org/10.1002/smj.4250150202.

Dierickx, I. and Cool, K. (1989), Asset stock accumulation and sustainability of competitive advantage. Management Science, vol. 35, no. 12, pp. 1504–1511.

Dess, G. G. and Davis, P. S. (1984), Porter's (1980) Generic Strategies as Determinants of Strategic Group Membership and Organizational Performance. Academy Management Journal, vol. 27, no. 3, pp. 467–488. http://dx.doi.org/10.2307/256040.

Griffin, R. W. (2008), Fundamental of Management: Texas A&M University.

Hitt, M. A., Ireland, R. D. and Hoskisson, R. E. (2007), Strategic Management-Competitiveness and Globalization. 7 ed. Ohio: Thomson South-Western.

Jennings, D. F., Rajaratnam, D. and Lawrence, F. B. (2003), Strategy-performance relationships in service firms : A test for equifinality. Journal of Managerial, vol. 15, no. 2, pp. 208–220. http://www.jstor.org/stable/40604426.

Jusoh, R. and Parnell, J. A. (2008), Competitive strategy and performance measurement in the Malaysian context: An exploratory study. Management Decision, vol. 46, is. 1, pp. 5–31. http://dx.doi.org/10.1108/00251740810846716.

Ketchen, D. J. (2003), Introduction: Raymond E. Miles and Charles C. Snow’s organizational strategy, structure, and process. The Academy of Management Executive, vol. 17, no. 4, pp. 94–96. http://www.jstor.org/stable/4166009.

Lee, J. (2003), Innovation and strategic divergence: an empirical study of the US pharmaceutical industry from 1920–1960. Management Science, vol. 49, is. 2, pp. 143–159. http://dx.doi.org/10.1287/mnsc.49.2.143.12745.

Lee, R. P. and Grewal, R. (2004), Strategic responses to new technologies and their impact on firm performance. Journal of Marketing, vol. 68, no. 4, pp. 157–171. https://doi.org/10.1509/jmkg.68.4.157.42730.

Miller, A. and Dess, G. G. (1993), Assessing Porter’s (1980) model in terms of its generalizability, accuracy and simplicity. Journal of Management Studies, vol. 30, is. 4, pp. 553–585. https://doi.org/10.1111/j.1467-6486.1993.tb00316.x.

Miles, R. E. and Snow, C. C. (1978), Organizational strategy, structure, and process. New York, NY: West.

Parnell, J. A., Koseoglu, M. A., Long, Z. and Spillan, J. E. (2012), Competitive strategy, uncertainty, and performance: An exploratory assessment of China and Turkey. Journal of Transnational Management, vol. 17, is. 2, pp. 91–117. http://dx.doi.org/10.1080/15475778.2012.676957.

Parnell, J. A., Long, Z. and Lester, D. (2015), Competitive strategy, capabilities and uncertainty in small and medium sized enterprises (SMEs) in China and the United States. Management Decision, vol. 53, is. 2, pp. 402–431. http://dx.doi.org/10.1108/MD-04-2014-0222.

Pertusa-Ortega, E. M., Molina-Azorín, J. F. and Claver-Cortés, E. (2009), Competitive strategies and firm performance: A comparative analysis of pure, hybrid and ‘stuck-in-the-middle’ strategies in Spanish firms. British Journal of Management, vol. 20, is. 4, pp. 508–523. http://dx.doi.org/10.1111/j.1467-8551.2008.00597.x.

Pertusa-Ortega, E. M., Molina-Azorín, J. F. and Claver-Cortés, E. (2010), Competitive strategy, structure and firm performance: A comparison of the resource-based view and the contingency approach. Management Decision, vol. 48, is. 8, pp. 1282–1303. http://dx.doi.org/10.1108/00251741011076799.

Porter, M. E. (1980), Competitive Strategy: Techniques for analyzing Industries and Competitors, New York: The Free Press.

Porter, M. E. (1985), Competitive Advantage. Creating and Sustaining Superior Performance, New York: The Free Press.

Porter, M. E. (1998), The Competitive Advantage of Nations. With a New Introduction by the Author, Macmillan Press Ltd.

Read, A. (2000), Determinants of successful organizational innovation: a review of current research. Journal of Management Practice, vol. 3, no. 1, pp. 95–119.

Richard, P. J., Devinney, T. M., Yip, G. S. and Johnson, G. (2009), Measuring organizational performance: Towards methodological best practice. Journal of Management, vol. 35, is. 3, pp. 718–804. http://dx.doi.org/10.1177/0149206308330560.

Salavou, H. E. (2013), Hybrid strategies in Greece: A pleasant surprise. European Business Review, vol. 25, is. 3, pp. 301–314. http://dx.doi.org/10.1108/09555341311314834.

Salavou, H. E. (2015), Competitive strategies and their shift to the future. European Business Review, vol. 27, is. 1, pp. 80–99. http://dx.doi.org/10.1108/EBR-04-2013-0073.

Saraç, M., Ertan, Y. and Yücel, E. (2014), How do business strategies predict firm performance? An investigation on Borsa Istanbul 100 Index. The Journal of Accounting and Finance, vol. 61, pp. 121–134.

Slater, S. F., Olson, E. M. and Finnegan, C. (2011), Business strategy, marketing organization culture, and performance. Marketing Letters, vol. 22, is. 3, pp. 227–242. http://dx.doi.org/10.1007/s11002-010-9122-1.

Zamani, S., Parnell, J. A. Labbaf, H. and O’Regan, N. (2013), Strategic change and decision making in an emerging nation: An exploratory assessment of Iranian manufacturing firms. Strategic Change, vol. 22, is. 5–6, pp. 355–370. http://dx.doi.org/10.1002/jsc.1945.

Veetil, N. M. (2009), Strategy Formulation and Implementation in Manufacturing Organizations: the Impact on Performance, PhD Thesis Submitted to the Middlesex University Business School London, UK.


Refbacks

  • There are currently no refbacks.


This journal is published under the terms of the Creative Commons Attribution Licens 4.0 International (CC BY 4.0).

 

© Agricultural and Resource Economics: International Scientific E-Journal, 2015–2018.