Generic business strategies and competitiveness of SMEs in Nigeria

Abstract

Purpose This paper aims to investigate the mediating effect of employee engagement on the relationship between generic business strategies and the competitiveness of Small and Medium-Scale Enterprises (SMEs) in the Federal Capital Territory, Abuja (FCT). Design/methodology/approach The research design used a cross-sectional survey approach, focusing on SMEs registered with the SMEDAN in FCT-Abuja. A total of 349 SMEs were used. Data collection relied on a questionnaire-based survey instrument. The data were analysed using Partial Least Square Structural Equation Model (SmartPLSv3.1). Findings The results revealed several significant findings. Firstly, the study confirmed a direct and positive relationship between the cost leadership strategy and SME competitiveness, indicating that cost leadership significantly enhances competitiveness. Secondly, a significant and positive relationship was identified between the focus strategy and SME competitiveness, suggesting its significant contribution. However, the relationship between the differentiation strategy and SME competitiveness was found to be non-significant. Moreover, the research established that employee engagement has a significant positive effect on SME competitiveness. The study also confirmed the mediating effect of employee engagement on the relationship between cost leadership strategy and competitiveness, as well as between focus strategy and competitiveness. Lastly, employee engagement significantly mediated the relationship between differentiation strategy and SME competitiveness. Originality/value The paper advances a new perspective by linking internal resource’s role in strategic management effort towards ensuring increased firm competitiveness especially in SMEs. The paper offers scholars a new area of research, as it draws scholarly attention to internal behaviour mechanisms that drives top managements activities through lower-level employee participation towards ensuring improved competitiveness.