The profit effects of product-market growth strategy: A financial services example

Abstract

The paper presents an empirical examination of the relationship of an organisation's growth strategy to performance. The study includes a sample of chief executive officers in the financial services sector, specifically credit unions. In particular, the relationship of product-market growth strategy to profitability is investigated while also controlling for firm size and the perceived environment. The authors find that product growth strategy has no impact on profits but that market growth strategy does significantly affect profitability. In particular, those firms that emphasise new markets in their growth strategies are the highest performers and are significantly more profitable than credit unions that emphasise growth through either emphasis of products, current markets, or both current and new markets.