Are pure or hybrid strategies right for new ventures in transition economies?

Abstract

This article examines the role of strategic intensity or commitment to a chosen course of action, and the impact of pure versus hybrid competitive strategies on competitive performance in transition economies, using survey data ( N = 333) from Bulgaria. We find that strategic intensity is positively related to performance; firms that deviate from pure cost leadership or differentiation and achieve a balance on both dimensions report superior performance. In a post hoc analysis of our data, we find preliminary evidence that strategic intensity may act as a mediator of the relationship between strategic type and performance.

SMEs’ Wealth Creation Model of an Emerging Economy

“…Overall model result show that 13% of the variation in wealth created was due to the strategy adopted by the SMEs. This result corroborate the finding of Maney, Manoloya, Harkins, and Gyoshey (2014) that strategic intensity is positively related to performance; firms that deviate from pure cost leadership or differentiation and try to achieve a balance on both dimensions. Such balance is observed in the r values for product differentiation (r=0.15**) and cost parity (r=0.01**).…”

“…For example: Escriba-Esteve, Sanchez-Peinado and Sanchez-Peinado (2008) establish positive and significant relationship between SMEs' strategic orientation and performance; Maney, Manoloya, Harkins, and Gyoshey (2014) find that strategic intensity is positively related with performance; firms that deviate from pure cost leadership or differentiation and achieve a balance on both dimensions report superior performance; they further report that strategic intensity may act as a mediator of the relationship between strategic type and performance. Asikhia and Jansen van Rensburg (2015) identify the main SMEs' strategies as; product differentiation, strategic entrepreneurship, niche strategy, cost parity, opportunity seeking abilities, advantage seeking abilities and growth orientation.…”

“…Source: Asikhia and Jansen van Rensburg (2015) Product/service features compared to industry leader, Market share to large firms Cost parity; percentage of asset ownership of total, rate of re-occurrence of transaction; degree of environmental risk and level of transferability of assets Barney & Hesterley, 2006;Bello & Ivanov, 2014;Jaquier, 2003;Majumdar, 2008;Maney, et. al., 2014Minarik, 2007Porter, 1996Ireland, Hitt & Sirmon, 2003Ireland & Webb, 2007;Kalantaridis, 2009;Kraus et.al., 2011;Kyrgidou, 2008;Luke, Kearins & Verreynne, 2011) Bamford et al 1997) Basco, 2014Garfamy, 2012).…”

A Case Study on Performance Implications of Hybrid Strategy in Automotive Supplier Industry

“…Beal and Yasai-Ardekani (2000), consistently with Claver-Cortes et al (2012), proposed that hybrid strategies may yield multiple sources of advantage over rival firms, and so allow achievement of higher performance and this makes it difficult to imitate hybrid strategies. In conclusion, the firms' ability to use hybrid strategy may be more important than maintaining competitive advantage (Carter, Stearns & Reynolds, 1994;Kim & Choi, 1994;Parnell & Hershey, 2005 Leitner & Güldenberg, 2010;Hodgkinson, 2013;Parnell, 2013;Manev, Manolova, Harkins & Gyoshev, 2014;Salavou, 2015).…”

“…While some studies revealed that pure strategies improved performance (Ebben & Johnson, 2005;Lechner, Gudmundsson & Vidar, 2014;Hansen, Nybakk & Panwar, 2015), others suggested that different generic strategies were linked to different aspects of performance (Chandler & Hanks, 1994;Baum, Locke & Smith, 2001). There is another group of studies, which indicated that hybrid strategies, combining elements of both generic competitive strategies, simultaneously lead to better performance (Carter, Stearns & Reynolds, 1994;Kim & Choi, 1994;Acquaah & Yasai-Ardekani, 2008; Pertusa-Ortega, Molina-Azorí n & Claver-Corté s, 2009; Leitner & Güldenberg, 2010;Hodgkinson, 2013;Parnell, 2013;Manev, Manolova, Harkins & Gyoshev, 2014;Salavou, 2015). Hybrid strategies involving high level of emphasis on both cost-leadership and differentiation strategies simultaneously should be distinguished from stuck in the middle strategy where a firm fails to successfully pursue both cost-leadership and differentiation strategies (Acquaah & Yasai-Ardekani, 2008).…”