Abstract
PurposeThe purpose of this paper is to improve the appreciation of the moderating role of competitive intensity on the relationship between low-cost strategy and firm performance of restaurants.Design/methodology/approachThe study uses empirical data collected from 118 restaurants operators, Ghana. The effects of relationships and the interaction of low-cost strategy and competitive intensity were tested using regression analysis.FindingsThe findings indicate the existence of a significant positive relationship between low-cost strategy and firm performance. The effect of competitive strategy on firm performance was found to be partially significant. The findings revealed that competitive intensity does moderate the relationship between low-cost strategy and firm performance of restaurants.Practical implicationsImplications of the findings for restaurant operators suggest that effective application of low-cost strategy and monitoring and managing competitive intensity results in high performance.Originality/valueThis study contributes to the existing literature on low-cost strategy, competitive intensity and firm performance. More specifically, the interaction terms of low-cost strategy and competitive intensity have been explored in this study and can be used for further investigations.
Highlights
In spite of the importance of competitive strategies, research on the strategic activities of businesses in Ghana is taking shape
The effect of low-cost strategy on the financial performance of the restaurants (b = 0.609, p < 0.01) was significant according to model 2 results
The purpose of this study was to investigate the effects of innovative low-cost strategies and competitive intensity on performance of restaurants in Ghana
Summary
In spite of the importance of competitive strategies, research on the strategic activities of businesses in Ghana is taking shape. Agyapong and Boamah (2013) have studied the competitive nature of the business environment and their effect on the performance of firms in the country. Previous studies do not converge on the individual effect of innovation low-cost strategies among firms in Ghana; generally the significance of implementing coherent innovation strategies is supported by these extant studies. Acquaah (2011) find that low-cost strategies have a strong positive effect on performance; Acquaah and Agyapong (2015), Dadzie et al (2013) and Agyapong and Boamah (2013) found that strategic cost leadership does not extract strong effects on firm performance. Based on the inconsistency in the results, there is a need for further investigation
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