Competitive Strategy, Environmental Characteristics and Performance in African Emerging Economies: Lessons from Firms in Ghana

Abstract

This paper examines the impact of the implementation of competitive strategy on organizational performance in response to economic liberalization policies using survey data from organizations in Ghana. We also examine how the perceived intensity of industry competition and industry sector moderate the relationship between competitive strategy and organizational performance. The results show that the implementation of the competitive strategies of low-cost, differentiation, and integrated low-cost and differentiation were all positively related to performance (return on assets and return on sales). We also find that both industry competition and industry sector moderate the relationship between differentiation strategy and return on assets. Moreover, industry competition moderates the relationships between both low-cost and differentiation strategies and return on sales. The results indicate that implementing a clearly defined competitive strategy is beneficial to organizations experiencing significant changes in the environment due to economic liberalization. The findings also suggest that while low-cost strategy is more beneficial to organizations in a highly competitive industry, differentiation strategy is more beneficial to firms in lowly competitive industry. At the same time, organizations in the manufacturing sector benefit more than those in the service sector when they implement the differentiation strategy. Managerial implications are presented.

Management control systems, business strategy and performance: A comparative analysis of family and non-family businesses in a transition economy in sub-Saharan Africa

“…The differentiation strategy is typically bolstered by substantial investments in research and development, marketing, and product and service innovation. Empirically, most previous studies of the competitive strategyperformance relationship using Porter's (1980) typology have supported the existence of a relationship between competitive strategy (cost leadership and differentiation) and performance in both transition and advanced economies (e.g., Acquaah, Adjei, & Mensa-Bonsu, 2008;Aulakh, Kotabe, & Teegen, 2000;Beal & Yasai-Ardekani, 2000;Campbell-Hunt, 2000;Dess & Davis, 1984;Kim, Nam, & Stimpert, 2004;Miller & Dess, 1993;Spanos, Zaralis, & Lioukas, 2004).…”

Factors That Distinguish Proactive Versus Reactive Exporters: Decisions by Export Firms in a Developing Country

“…An exploratory research design was used involving a survey of 105 exporters to identify whether there are significant differences between reactive firms with low levels of adaptation of export marketing strategy and those proactive exporters with high levels of adaptations. The factors that explain whether firms with high levels of Themes Country Acquaah et al (2008) African emerging economies; competitive strategy Ghana Farley et al (2008) Business-to-business markets; firm performance; innovativeness; market orientation South Africa Ibeh et al (2007) Export stimulation; developing economies Nigeria Madichie (2007) Multilateral trading system; WTO membership Sub-Saharan Africa Mpoyi et al (2006) Competitive advantage; strategies Sub-Saharan Africa Muranda (2005) Export processing zones; economic crisis Zimbabwe Okoraofo (2004) Marketing orientation; marketing practices, developing countries Sub-Saharan Africa Shrestha et al (2008) Economic development; efficient and effective system of management All Africa Tesform et al (2006) Export problems; developing countries; footwear; textiles; manufacturing firms Eritrea usually refers to product offerings, and one assumption is that the growing convergence of consumer needs, wants, tastes, and preferences stimulates the marketing mix elements (e.g., the product design, packaging, pricing, advertising, and promotion) to be standardized across all international markets (Levitt, 1983;Okazaki, Taylor, & Doh, 2007). In contrast, the adaptation approach argue that despite increasing globalization, great variations exist between countries in dimensions such as consumer needs and wants, product usage, purchasing power, social and culture, law and regulations, which require appropriate adjustments to the firm's marketing strategy based on the distinctive circumstances of each foreign market (Katsikea & Skarmeas, 2003;Solberg, 2002;Terpstra & Sarathy, 2000).…”

Correcting Inflation with Financial Dynamic Fundamentals: Which Adjustments Matter in Africa?

“…Based on the relevance of the theoretical underpinnings highlighted in the first view of the second strand above, it is evident that inflation would seriously deter these proactive stimuli. Acquaah et al (2008) have examined the impact of the implementation of competitive strategy on organizational performance in response to economic liberalization and found that low-cost and integrated low-cost are positively related to performance (return on assets and return on sales). In light of the second perspective of the second strand above, soaring prices drive cost-push inflation which is inherently detrimental to a low-cost business strategy.…”

“…Firstly, with the dramatic rise in the price of stable food commodities over the past decade 2 , while the literature on the causes and impacts of the crisis in global food prices in the developing world has mushroomed in recent years (Piesse & Thirtle, 2009;Wodon & Zaman, 2010;Masters & Shively, 2008), we are unaware of studies that have closely examined how financial policies affected consumer prices. Hence, correcting inflation is particularly important in fighting poverty (Funjii, 2011) on the one hand and; on the other hand directly (Ibeh et al, 2007;Acquaah et al, 2008;Musila & Al-Zyoud, 2012) or indirectly (Asongu 2012(Asongu , 2013aBartels et al, 2009;Rolfe & Woodward, 2004;Tuomi, 2011) eases the doing of business in Africa.…”