The relationship between strategic orientations and firm performance: is environmental munificence the missing link?

Abstract

PurposeThe aim of this study is to examine the effect of strategic orientations on firm performance moreover, to assess the role of environmental munificence as a moderator for the link between strategic orientations and firm performance.Design/methodology/approachThis study designed as quantitative research method. Data were collected by structured questionnaire and included 185 managers from various industries in Israel. The analysis of this study was done by Smart PLS-SEM 3 software. Based on the resource-based view (RBV) of the firm, the authors view departmental characteristics (conflicts and connectedness) as antecedents of strategic orientations (customer and competitor). These, in turn, affect firm performance, defined here with two facets: behavioral (team spirit and commitment) and bottom-line performance.FindingsThe analysis results show that customer and competitor orientations affect bottom-line performance. However, only customer orientation affected team spirit and employee commitment. Finally, environmental munificence had a limited moderation role, affecting the relationship between competitor orientation and between behavioral outcomes (team spirit and commitment).Originality/valueThis study defining the importance of firm's strategic orientations as key capabilities for achieving competitive advantage.