Competitive strategies and firm performance: the mediating role of performance measurement

Abstract

PurposeThe purpose of this paper is to examine the mediating role performance measurement plays in the relationship between competitive strategies and firm performance.Design/methodology/approachThis study conducted a mail‐survey of Thai listed companies in 2009. A total of 101 Thai listed companies’ executives, each representing their company, participated in this study. The SPSS version 11.5, path‐analytical model is adopted to analyze the survey data obtained.FindingsThis study finds that generally, all competitive strategies positively and significantly enhance firm performance through performance measurement. Specifically, firms’ differentiation strategy not only has a direct and significant impact on firm performance but also it has indirect and significant impact on firm performance through financial measures. Cost leadership strategy that firms pursue does not directly affect firm performance. However, it does so indirectly and significantly through financial performance measures.Research limitations/implicationsFuture research could consider the use of longitudinal data to ascertain more clearly these causal relationships.Practical implicationsThe paper offers managerial implications that whether a firm chooses to pursue cost leadership or differentiation strategies, a strong emphasis on performance measurement will ensure the positive impact on firm performance in a fierce competitive environment.Originality/valueThis paper adds to the existing theoretical discussion and analyses the research and findings on the mediating role of performance measurement on the relationship between competitive strategy and firm performance.