Competitive advantage and firm performance: the moderating effect of industry forces

Jeen Wei Ong, Hishamuddin Ismail and Peik Foong Yeap

International Journal of Business Performance Management, 2018, vol. 19, issue 4, 385-407

Abstract: This study aims to examine the moderating effect of industry competitive forces on the relationship between competitive advantage and firm performance. Previous researches have concluded that competitive advantage leads to superior performance but the impact is limited. A possible reason is that the economic value created by firms is appropriated by other stakeholders. This study hypothesises that the five industry competitive forces moderate the relationship. 517 usable responses were collected from small and medium enterprises (SMEs) in Malaysia to test the research framework developed. The results show that buyer bargaining power, supplier bargaining power and threat of new entrants moderate the effect of competitive advantage on firm performance. Surprisingly, SMEs with differentiation advantage and cost advantage are able to appropriate more economic value when the buyers and suppliers have strong bargaining power respectively. On the other hand, the threat of new entrants reduces the economic value that SMEs can capture.

Keywords: competitive advantage; firm performance; small and medium enterprises; SMEs; industry competitive forces; moderating effect. (search for similar items in EconPapers)
Date: 2018
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