Strategy-performance Relationship Research Articles

Assessing Competitive Strategies in UK Manufacturing SMEs

In this comprehensive study, we delve into an exhaustive examination of effective competitive strategies tailored for small to medium-sized enterprises (SMEs). The principal objective of this research centers on scrutinizing the strategic orientation of UK Manufacturing SMEs. Conducting an extensive literature review, we critically evaluated Porter's framework and identified several gaps in its applicability. Notably, critiques assert that the model inadequately captures the intricate nature of strategic behavior within real organizations and fails to provide a fully accurate representation of strategy-performance relationships. Empirical research further highlights the model's limitations, indicating its inability to facilitate the desirable combination of competitive strategies by firms. To address the outlined objectives, we employed a semi-structured questionnaire in our investigation. The ensuing analysis involved the application of factor and cluster analysis to identify strategic variables currently employed by SMEs in the manufacturing domain. Our data analysis revealed a divergence from the adoption of Porter's single generic strategies. Instead, the findings supported the utilization of mixed strategies that integrate elements from both differentiation and low-cost strategies. Significantly, these hybrid approaches were found to be associated with enhanced firm performance. This study contributes valuable insights into the nuanced landscape of competitive strategies within the UK SMEs, shedding light on the dynamic interplay between strategic choices and firm performance.

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

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.

Analyzing the strategy–performance relationship in Germany – can we still use the common strategic frameworks?

PurposeThis study examines the strategy–performance relationship within publicly traded German firms. Strategic management literature provides several strategic frameworks that offer guidance on promising strategies. However, given major changes, such as globalization, managers wonder whether strategic frameworks are still applicable.Design/methodology/approachThe authors employ principal component analysis (PCA) to measure competitive strategy and analyze a sample of 6,037 firm-years among 651 firms between 2000 and 2019.FindingsWhile the authors find evidence for the existence of efficiency-based strategies, differentiation-based strategies and mixed strategies, only differentiation-based strategies are positively related to performance.Originality/valueThe study’s results contribute to the discourse on the strategy–performance relationship, as they provide insights into promising strategies that are of interest to researchers and practitioners. Further, the authors introduce a new measure of competitive strategy based on PCA.

Moderating effect of carbon accounting systems on strategy and carbon performance: a CDP analysis

Carbon emissions bring significant risks and opportunities, and organisations have responded by adopting different strategies and environmental control systems, such as carbon accounting systems (CASs). However, it remains unclear whether a CAS can help reduce emissions, and what role is played by a CAS in the relationship between carbon strategy and carbon performance. Therefore, this paper analyses the strategy-accounting-performance nexus by drawing on 1672 firm-year observations of firms participating in the CDP in 2014 and 2015. The results suggest that the quality of a CAS is influenced by strategic choices; with a proactive carbon strategy being associated with a higher quality CAS. Further, proactive strategies and CASs are found to be associated with carbon savings and emissions reduction. The results indicate a moderating role of CASs on the strategy-performance relationship, with carbon strategy enabling higher carbon savings and lower emissions intensity in the presence of a high-quality CAS. Our findings suggest that formulation of carbon strategies and establishment of carbon measures can drive effective carbon mitigation.

State-owned enterprises’ performance in Indonesia: a strategic typology perspective

PurposeState-owned enterprises’ (SOEs) goals are perceived as two-sided blades, providing goods or services to the public on one side and escalating the government’s wealth on the other side. Treating the SOEs, government encounters the problem of injection strategy or privatize them. At the same time, managers have the option to formulate the SOEs strategy to boost performance. By using Miles and Snow’s typology strategy and the above factors, this paper investigates those impacts on Indonesia’s SOEs’ performance. This study aims to propose strategic typology as the main predictor with other variables such as the size, ownership structure, market competitiveness and capital subsidy on SOEs.Design/methodology/approachThe study uses archived SOEs’ financial data from 2014 to 2018 to predict the financial performance using ordinal logistic regression analysis. The additional factors, such as firm size, ownership structure, market concentration and capital subsidy, are incorporated.FindingsThe result demonstrates that SOEs strategic typology, market concentration, size, ownership structure and capital subsidy significantly affect Indonesia’s SOEs’ performance.Originality/valueTo the best of the authors’ knowledge, this paper is the first elaborating government policies for SOEs, such as capital subsidy and state ownership, on the perspective of Miles and Snow’s strategy-performance relationship. Correspondingly, the paper contributes to examine the Indonesian characteristic SOE type with the performance. No single study has previously explored this relationship in the context of SOE in Indonesia.

The context, strategy and performance of the American safety net primary care providers: a systematic review

PurposeThe objective of this research is to synthesize evidence on the relationship between context, strategies and performance in the context of federally qualified health centers (FQHCs), a core safety net health services provider in the United States. The research also identifies prior approaches to measure contextual factors, FQHC strategy and performance. Gaps in the research are identified, and directions for future research are provided.Design/methodology/approachA systematic review of peer-reviewed journal articles published between the years 1997 and 2017 was conducted using a bibliographic search of PubMed, Business Source Premier and ABI/Inform databases.Findings28 studies were selected for the analysis. Results supported associations among contextual factors (organizational and environmental) and FQHC strategy and FQHC performance. The research also indicates that previous research was primarily emphasized on clinical performance with less focus on other types of FQHC performance. In addition, there exists a wide variability in terms of measuring context, FQHC strategy and performance.Originality/valueOperating in resource-scarce and highly constraining environments, FQHCs have demonstrated the ability to stay innovative and competent as serving often unhealthier and costlier patient populations. To date, there has been no study that reviewed the relationships between context, FQHC strategy and FQHC performance. In addition, there is an absence of consensus on how context, FQHC strategy and FQHC performance are measured. This study is the first that examined context–strategy–performance relationships in the context of FQHCs.

Competitive strategies and international new ventures’ performance: Exploring the moderating effects of internationalization duration and preparation

The purpose of this article is twofold: to bring back to discussion the importance of strategy as a key element for international new ventures (INVs) to achieve higher international performance and to assess the relevance of contingency perspective, particularly two organizational contingency factors (internationalization duration and internationalization preparation), in moderating the strategy–performance relationship. The framework developed addresses the effects of four competitive strategies (cost leadership and innovation-based, marketing-based, and quality- and service-based differentiation) as determinants of INVs’ international performance. In addition, internationalization duration and internationalization preparation are included as moderators of these relationships. The hypotheses were tested using a sample of 319 INVs. The findings show that marketing and quality and service differentiation strategies are associated with higher INVs’ international performance and that internationalization duration and internationalization preparation play relevant moderating effects. JEL CLASSIFICATION: M13; M16

Are Strategic Frameworks Still Applicable? Analyzing the Strategy-Performance Relationship in Germany

This study examines the strategy-performance relationship within publicly traded German firms. Strategic management literature provides several strategic frameworks that offer guidance on promising strategies. However, due to major changes such as globalization and fundamental differences between the strategic frameworks, managers wonder whether strategic frameworks are still applicable and, if so, which one is the right one. We introduce a new measure of competitive strategy and analyze a sample of 4,364 firm-years among 543 firms between 2006 and 2017. Our results suggest common strategic frameworks such as the approach of Miles and Snow’s (1978) still fits to the corporate landscape in Germany. We find strategies based on efficiency or differentiation as well as combinations of both to be associated with superior performance within the industry. Our results contribute to the discourse on the strategy-performance relationship as our results provide insights into promising strategies that are of interest for researchers and practitioners.

The mediating role of decentralization between strategy and performance

Purpose The purpose of this paper is to empirically examine the mediating role of decentralization in the relationship between a firm’s strategy and its performance in the context of an advanced economy where the chief corporate strategy is differentiation. Design/methodology/approach The study uses data collected by an online survey targeting a stratified sample of 1,238 private firms operating in Denmark. The empirical analysis was carried out by estimating a structural equation model. Findings The key finding was that a decentralized organization (DO) can act as a mediator between a firm’s differentiation strategy and its performance. A multi-group analysis revealed that the mediating impact of decentralizing was affected by contingency factors such as firm size, strategic clarity, degrees of business environment risk and industry competition. Thus, a DO can be said to play a more important role in larger firms, in firms with less strategic clarity, and in companies with multiple plants. Research limitations/implications Although the study offers empirical evidence from a relatively large and representative sample of firms, the specificity of the context should be noted. In particular, firms in Denmark, while facing strong competition, do not compete with low costs. Clearly, studies of the mediating role of decentralization in low-cost strategy environments would be an important next step. Practical implications Several implications of the findings for organizational design and creation of beneficial conditions for strategy implementations are discussed. Originality/value The novel contribution of the study lies in the focus on decentralization as a mediator in the strategy–performance relationship. While previous research has shown that strategy is related to decentralization, and that decentralization is associated with higher performance, an empirical analysis of the relationship between the factors in the strategy-decentralization-performance path had not previously been undertaken.

Strategic Consistency, Flexibility and Reactors: A Comparative Analysis

There is debate in the literature that whether firms should adapt consistent or flexible strategy for competitive advantage? The proponents of both arguments provide substantial evidence in their favour. This study aims to investigate the strategy-performance relationship in this context using financial data of joint stock firms from textile sector of Pakistan applying Miles and Snow typology. The results show that majority of the firms are adapting strategic consistency. Firms with consistency in their strategies produced better results than firms following flexible strategies. Both consistent and flexible strategies outperformed reactors. Although, there is variation in the performance of the strategic types due to the variation in firm size, the effect of firm size is not significant.

Strategic orientations, knowledge management (KM) and business performance

PurposeDespite the huge amount of studies that have investigated the strategy–performance relationships and knowledge management (KM)–performance relationships, there is little consensus regarding the nature of these connections. By reviewing related literature, some notable limitations and inconsistent results are highlighted in extant studies. To address these challenges, this study aims to explore the effects of strategic orientation and KM mechanisms on business performance.Design/methodology/approachThe study conducted an empirical investigation of 227 small- and medium-sized enterprises (SMEs) to explore the relationship between strategy−performance and KM−performance. Business strategy is conceptualized as a comparative construct with six dimensions, KM is conceptualized by two types of KM mechanisms of technical and non-technical KM mechanisms and business performance is measured by four dimensions of balanced scorecard (BSC). The cluster analysis was used to explore different aspects of these three constructs.FindingsUsing cluster analysis, the results indicate that firms with high level of analysis, defensiveness, futurity and proactiveness in strategic orientation have better performance and also the high level of both KM mechanisms another important finding shows that firms with more KM mechanisms have high performance and technical mechanisms have more predictor role on performance.Practical implicationsThis research also has prescriptive implications for strategic managers and KM practitioners. The finding enhanced the understanding of the relationship between strategic orientations, KM and performance. The results assist managers to assess business performance regarding strategic orientations and KM mechanisms of the firms. Therefore, it helps firms to improve strategic resource allocation and exploit KM investment by considering ideal pattern of the performance.Originality/valueBy reviewing strategic management and KM literature, it is revealed that there are little studies about how the interaction of strategic orientation and KM influences business performance. The main contribution of the study is exploring the profile of the firms by considering their strategic orientation and KM mechanisms and their impact on business performance. This study provides an empirical evidence about interaction of strategic orientations, KM mechanisms and business performance in SME context, which is merely investigated in previous researches.

Strategy and the Institutional Envelope

Classical approaches to strategy are built around two dominant pillars to explain firm performance: industry structure and firm strategy and capabilities. Firm performance is typically seen as a result of a “fit,” or complementarity, between industry structure and firm strategic choices. We supplement the classical model of strategy with a third pillar, that of the institutional envelope. We argue that the institutional envelope, as its name suggests, is a pervasive influence on the strategy-performance relationship. Both firm strategy and industry structure are simultaneously shaped by, and shape, the institutional envelope, which is both a primitive to and product of firm strategy and industry structure. It also moderates the relationship between firm strategy and industry structure. Institutional considerations are therefore not simply a subfield of strategy research. The institutional envelope is a critical component of any consideration of strategy. Theories of industry structure and strategic choice are insufficient without a fully formed model of the institutional envelope at their very foundation. All strategies, market or non-market, are consciously or unconsciously related to their institutional envelope—being tailored to conform to the institutional envelope or tailoring the institutional envelope to suit them. We see this institutional project that we are advancing as nothing less than the third great wave of strategy research, building off the previous waves emphasizing industry structure and firm choice and resources. It is in the context of this institutions-based strategy model that we preview the papers in the special issue.

The role of firm-specific factors in the strategy-performance relationship

PurposeThis paper aims to attempt to bring together various organisational aspects that have never been collectively investigated before in the strategic management literature. Its main objective is to examine the relationship between “strategic orientation” and “firm performance”, in the light of two firm-specific factors (“distinct manufacturing capabilities” and “organisational structure”). The proposed research model of the present study is built upon the resource-based view (RBV) of the firm and the organisational aspect of the VRIO framework (the “O” from the VRIO model).Design/methodology/approachThe study proposes a newly developed research model that adopts a four-factor approach, while examining a number of direct and indirect effects. The examination of the proposed research model was made with the use of a newly developed structured questionnaire that was distributed on a sample of Greek manufacturing companies. Research hypotheses were tested using the structural equation modelling technique. The present study is explanatory (examines cause and effect relationships), deductive (tests research hypotheses), empirical (collects primary data) and quantitative (analyses quantitative data that were collected using a structured questionnaire).FindingsThe empirical results suggest the coexistence of three distinct categories of effects on “firm performance”: strategy or “utility” effects, depending on the content of the implemented strategy; firm-specific effects, depending on the content of the organisational resources and capabilities; and organisational effects, depending on the implemented organisational structure. More specifically, the statistical analysis underlines the significant mediating role of “strategic orientation” and the complementary role of “organisational structure”. Finally, empirical results support the argument that “strategy follows structure”.Research limitations/implicationsThe use of self-reported scales constitutes an inherent methodological limitation. Moreover, the present study lacks a longitudinal approach because it provides a static picture of the subject under consideration. Finally, the sample size of 130 manufacturing companies could raise some concerns. Despite that, previous empirical studies of the same field, published in respectable journals, were also based on similar samples.Practical implicationsWhen examining the total (direct and indirect) effects on “firm performance”, it seems that the effect of “organisational structure” is, almost, identical to the effect of “distinct manufacturing capabilities”. This implies that “organisational structure” (an imitable capability) has, almost, the same contribution on “firm performance” as the manufacturing capabilities of the organisation (an inimitable capability). Thus, the practical significance of “organisational structure” is being highlighted.Originality/valueThere has been little empirical research concerning the bundle of firm-specific factors that enhance the impact of strategy on business performance. Under the context of the resource-based view (RBV) of the firm, the present study examines the impact of “organisational structure” on the “strategy-capabilities-performance” relationship, something that has not been thoroughly investigated in the strategic management literature. Also, the present study proposes an alternate measure for capturing the concept of business strategy, the so-called factor of “strategic orientation”. Finally, the study adopts a “reversed view” in the relationship between structure and strategy. More specifically, it postulates that “strategy follows structure” and not the opposite (“structure follows strategy”). Actually, the empirical data supported that (reversed) view, challenging the traditional approach of Chandler (1962) and calling for additional research on that ongoing dispute.

Strategic patterns and firm performance: comparing consistent, flexible and reactor strategies

PurposeFirms face the paradox of adapting change and remaining stable to control uncertainty simultaneously to maintain their competitive position because both aspects are essential for the firm’s effectiveness. This has raised a debate in the contemporary literature that whether firms should remain consistent or adapt flexibility in their strategic choice to produce better performance? The supporters of both the arguments provide substantial evidence in their favor. The purpose of this paper is to investigate the strategy-performance relationship in this context along with contingent effect of firm size and industry.Design/methodology/approachEmpirical analysis using seven years financial data of 307 joint stock firms from 12 industries is done by applying Miles and Snow strategic typology. Scoring method is used to classify the strategic orientation of the firms. Univariate and multivariate regression models are applied to investigate the influence of strategy, firm size, and industry on firm performance both individually and collectively.FindingsThe results show that most of the firms in Pakistan are consistent in their strategic stance (43 percent) followed by flexible (40 percent) and reactors (17 percent). The mean differences in the performance of consistent, flexible, and reactor strategies show that both consistent and flexible strategies performed equally well and outperformed the reactors. However, there is significant variation in the performance of the strategic types due to the variation in firm size and industries whereas the contingent effect of firm size, industry, and strategy is statistically insignificant.Originality/valueThe methodology used for the identification of transition of strategic stance of the firms over time to know the consistent, flexible, and reacting behavior of the firms from archived data is the important contribution to the literature. The methodology can be replicated in longitudinal studies for identification of strategic groups in typological research.

Strategy-performance relationships

PurposeThe extant literature has challenged the original idea that pure strategy leads to superior performance. This shift has raised the question whether pure strategy is still superior to hybrid strategy? The purpose of this paper is to investigate the strategy-performance relationship in this context and the performance of pure, hybrid, and reactor strategies is compared.Design/methodology/approachScoring method is used for identification of strategic types. ANOVA, univariate, and multivariate regression models are applied for empirical analysis using seven-year financial data of 307 Pakistani joint stock firms from 12 industries.FindingsThe results show that firms in Pakistan practice hybrid and reactor strategies rather than pure strategies. Overall, defending and analyzing strategies perform better than the prospecting strategies. However, the performance of the strategic types varies among industries and firm size. Strategy and firm size are the better predictors of firm performance.Originality/valueThe proposed methodology can be replicated to identify strategic groups and strategic orientations proposed by typological classifications when longitudinal studies are carried out. The process for identification of pure, hybrid, flexible, consistent, and reactor strategies is a key contribution to the literature.

PERAN TEKNOLOGI DALAM IMPLEMENTASI STRATEGI MANUFAKTUR PADA PERUSAHAAN MANUFAKTUR DI INDONESIA: STUDI DENGAN PENDEKATAN KONTINGENSI

Expanding global competition, rapidly changing market and technology, increasingcomplexity and uncertainty are creating a new competitive environment. To be successful in this globally competitive and rapidly changing environment, organization must formulate strategic plan that is consistent with their investment and technology. This research was conducted to investigate the relationship among manufacturing strategy, technology adoption, and firm performance. Data were collected through mailed questionnaires (525 questionnaires) and direct survey in 25 firms. The questionnaires were sent to 550 CEOs of manufacturing firm in Indonesia. A hundred and six responses returned and made a response rate of 19.27%. The study finds different results for hard and soft technology. Hard technology moderates the relationship between manufacturing strategy and operational performance, as a quasi moderator variable. On the other hand, soft technology has an impact on the manufacturing strategy-performance relationship as an independent predictor variable, but it does not moderate the relationship between manufacturing strategy and operational performance.Keywords: manufacturing strategy, technology adoption, operational performance, technology

Relationship between competitive strategy and construction organisation performance

Purpose The purpose of this paper is to examine the possible moderating role of organisational characteristics (organisational structure, management style and decision-making style) in the relationship between strategy and organisational performance among large construction organisations in South Africa. Design/methodology/approach The study adopted a quantitative research approach using a questionnaire survey to obtain data from 72 large construction organisations in South Africa. Using hierarchical multiple regression, the paper examines the relationship between the constructs discussed in the study. Findings The internal characteristics of the organisation form the vital basis for achieving optimal performance. The results obtained from the analysis revealed that decision-making style directly influences the measure of organisational effectiveness, while it could also be inferred that organisational characteristics partly moderate the relationship between competitive strategy and organisational performance. The findings indicate that internal characteristics is one of the means through which organisational strategic factors and contextual aspects are organised to achieve greater organisational performance levels. Originality/value The findings have theoretical implications for strategic management literature in construction as it extends the scope of research on strategic management from assessing a set of individual management practices to evaluating a complex mechanism that connects internal characteristics and competitive advantage. It is believed that this study will contribute positively to the role of organisational characteristics in the competitive strategy-performance relationships in large construction organisations in South Africa and to the ongoing discussion on emerging strategic management issues in construction.

Business strategy and firm performance: a multi-industry analysis

Purpose– The purpose of this paper is to investigate the strategy-performance relationship in a multi-industry setting for joint stock firms operating in Pakistan using Miles and Snow typology. The impact of firm size and industry on performance along with strategy is also investigated. The empirical research evidence on strategy-performance relationship for Miles and Snow typology is updated as well.Design/methodology/approach– Scoring methodology is applied for identification of strategic types, including the reactor strategy. The consistency of the firms over time is also checked. Seven year archived financial data of 320 Pakistani joint stock firms from 12 industries are used for analysis. Descriptive statistics and analysis of variance is used for analysis.Findings– Hybrid strategies are practiced by firms rather than pure strategies. The distribution of strategic types is uneven. There are mixed results for performance difference among strategic types for different industries and firm size. Defending and analyzing strategies are better than the prospecting strategies. Reactors performed better in some industries as well.Originality/value– Proposed scoring methodology can be applied to identify all strategic types including reactors in the longitudinal studies. This can be replicated for other typologies or strategic group classifications. The process for identification of reactor strategy through a consistency check is a unique contribution to the literature, especially when archived financial data are used.

Strategy-performance linkage: methodological refinements and empirical analysis

Purpose Strategic typologies are applied to investigate strategy–performance relationship. The typology of Miles and Snow (1978) is one of them, but the methodology applied for identification of strategic types for archival financial data is questionable on three grounds: no standard procedure for categorization of strategic types; identification of reactor strategy is always ignored; and the behavior of firms’ strategic orientation over time is under-researched. Besides, the assumptions that viable strategies are expected to perform equally well, outperform reactors and distributed evenly are not overwhelmingly supported. The purpose of this paper is to address these issues. Design/methodology/approach A refined scoring methodology is developed and used for identification of all strategic types, including reactors, by investigating the consistency of the firms over time. Empirical analysis using seven years of data of 121 joint stock firms of the textile sector in Pakistan is performed to test the assumptions regarding presence, distribution and performance of strategic types. Findings There is significant difference in the distribution of the strategic types. Pure defenders and pure prospectors are non-existing, whereas a reasonable number of reactors are present. Overall difference in performance among strategies is generally insignificant and viable strategies outperformed reactors. The effect of size on performance is also insignificant. However, there is variation in performance of strategies with variation in size. Strategy is the better predictor of performance than size. Originality/value The transition of strategic stance of the firms over time and the identification of reactor strategy from archived financial data are the important outcomes of the proposed methodology. The proposed methodology can be used for any longitudinal study for identification of all possible strategic types and can also be used for any other typological research.

"Diversification, Internationalization and Institutional Context"

This study investigates the role of institutional context in the strategy-performance relationship for Chinese business groups, particularly for diversification and internationalization. Theoretica...