The mediating effect of cost leadership on the relationship between market penetration, market development, and firm performance.

Abstract

The main objective of this study is to examine strategic alignment and implementation perspective of manufacturing based of SMEs in Nigeria. The study established the strategic match between firm’s growth strategy, competitive strategy, and performance. Specifically, this paper aims to investigate the effects of market penetration strategy, market development strategy and cost leadership strategy on performance. Hence, this study employed cross-sectional survey design; SPSS and PLS-SEM were used for preliminaries and hypothesis testing. 277 usable questionnaires were collected from owners-managers of manufacturing based of SMEs. The findings of this study indicate that market penetration strategy and market development strategy significantly influence the firm performance of manufacturing based SMEs in Nigeria. Also, the result shows that market penetration and market development strategy have a significant impact on cost leadership strategy, which enhances firm’s competitiveness and competitive advantage. However, the result of mediating role of cost leadership strategy was established. The findings suggest that cost leadership strategy exert the relationship of market penetration & market development strategy and performance alignment. Therefore, owners-managers of manufacturing based of SMEs possibly make decisions considering their strategic orientation perspective collectively to integrate growth strategies and competitive strategy to sustain competitive advantage, improve competency and achieve superior performance.