Critical competitive methods, generic strategies, and firm performance

Abstract

This paper reports research findings on the relationship between competitive methods, generic strategies, and firm performance. It was found that competitive methods in the banking industry correspond to Porter's generic strategy types and that a cost leadership strategy provides a statistically significant performance advantage over banks that are stuck‐in‐the‐middle. Alternatively, firms that used competitive methods to pursue a broad differentiation, customer service differentiation, or focus strategy were unable to realize a performance advantage over firms that are stuck‐in‐the‐middle. This study suggests that in the banking industry it may be difficult to generate superior returns using a differentiation or focus strategy.