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

Abstract

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.