Competitive strategy and performance of family businesses: moderating effect of managerial and innovative capabilities

Abstract

The study examines how managerial and innovative capabilities moderate the relationship between competitive strategies and performance using data from 265 micro and small family firms in a developing economy – Ghana. We argue that in spite of challenges associated with small and micro family firms; they can build on available organizational capabilities to draw out superior gains from their strategic operations. The strategic behavior of the sampled family firms was examined using Porter's generic typologies. The results of the study were mixed and interesting. The findings indicate that a small and micro family firm looking to pursue either low-cost position or differentiation should focus on building strong internal managerial capabilities. Meanwhile, highly innovative family firms looking to build on competitive strategies should consider focusing on differentiation strategy than on cost leadership strategy.