Performance implications of aligning generic strategies with the business environment
by P. Reklitis, P. Trivellas
International Journal of Management and Decision Making (IJMDM), Vol. 3, No. 3/4, 2002

Abstract: This article investigates the relationship between the external environment and competitive strategies compared with organisational performance. Firstly, we assess the independence of the environment, strategy and performance dimensions through a Principal Components Analysis (PCA). Secondly, we investigate the impact of the external environment (dynamism, complexity) and competitive strategies (differentiation, cost-leadership, focus) on the organisational performance of two selected samples of Greek manufacturing enterprises, by using a Hierarchical Regression Analysis. Based on a sample of 109 financially successful manufacturing firms, the first study suggests that a hybrid strategy encompassing elements of differentiation and low-cost based strategies is strongly associated with firms' growth. Further, this study indicates that differentiation strategy contributes to higher financial performance (profitability). Findings from a sample of 248 firms in Greece, competing in a wide variety of industries, confirm partially these relationships between business environment and generic strategies with organisational performance. This research concludes that a hybrid strategy encompassing elements of differentiation and low-cost based strategies is strongly associated with profitability. Finally, the results of the second study indicate also that a hybrid strategy that combines differentiation and focus based strategies is strongly related to firm’s growth in environments high in dynamism.

Online publication date: Fri, 18-Jul-2003

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