Managerial capability, business strategy, and performance: the role of external factors

Abstract

ABSTRACT The purpose of the paper is to investigate (1) the mediating role of business strategies in the managerial capability-performance relationship; and (2) the moderating roles of environmental contingents including market turbulence, technology turbulence, and competitive intensity on the indirect managerial capability-performance relationship through business strategies. The study uses primary data collected from manufacturing firms (n = 203) in a Sub-Saharan nation to examine this vital relationship. Using Hayes PROCESS, the findings reveal that whereas the differentiation strategy effectively mediates the managerial capability-performance relationship, cost leadership offers no mediation effects. Furthermore, the findings show that the contingent role of the three selected environmental conditions on the strategy-performance relationship is positive but insignificant. This implies that although these external factors positively moderate the relationship, weaken the business strategy-performance relationship, signifying a buffering relationship.