Strategy and Performance: Does Environmental Dynamism Matter?

Ahmed Agyapong, Stephen Zamore and Henry Kofi Mensah

Journal of African Business, 2020, vol. 21, issue 3, 315-337

Abstract: This paper examines the moderating role of environmental dynamism on the link between strategy and performance. Based on a random sample of micro and small businesses (MSBs) in an emerging economy – Ghana, this study tests the applicability of the strategic-fit paradigm, which assumes that positive organizational outcomes require a match between environment and strategy. Using confirmatory factor analysis and ordinary least squares regression techniques, the results show that MSBs pursuing low-cost strategy in a dynamic environment may have higher performance while those pursuing differentiation strategy in a dynamic environment may have lower performance. The results suggest that MSBs should enhance the implementation of cost-leadership strategy when environmental dynamism is high and implement differentiation strategy only when environmental conditions are stable.

Date: 2020
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DOI: 10.1080/15228916.2019.1641304

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