THE EFFECT OF POSITIONING STRATEGY ON FIRMS PERFORMANCE MODERATED BY PRODUCT MARKET COMPETITION
Name: GUILHERME LECCO TESSAROLO
Publication date: 17/12/2020
Advisor:
Name |
Role |
|---|---|
| LUIZ CLAUDIO LOUZADA | Advisor * |
Examining board:
| Name |
Role |
|---|---|
| LUIZ CLAUDIO LOUZADA | Advisor * |
| VAGNER ANTONIO MARQUES | Internal Examiner * |
Summary: This research aims to investigate the effect of positioning strategies, adopted in a pure or hybrid
way, on firms performance. In addition, it verifies the moderating effect of product market
competition in this relationship, in order to analyse under which levels of competition the
adoption of a hybrid strategy is superior to the adoption of generic strategies of cost leadership
and product differentiation, separately. A sample with 11,322 firm-year observations was
analysed. This sample included publicly available archival data from firms in the industries of
consumer goods and services cyclical and non-cyclical, and technology, with shares traded on
the main stock exchanges of the G20 countries, for the period 2008-2019. To measure the
strategic positioning of firms, this research adopts the principal component analysis technique
according to the methodology proposed by Tripathy (2006) and Banker et al. (2014). The level
of competition in the product market is measured using the Herfindahl-Hirshman index
(Besanko et al., 2013). The results indicate that firms adopting a hybrid strategy are more likely
to achieve good performances than the others. They also showed that the relationship between
strategic positioning and operational performance is moderated by product market level of
competitiveness. In a low competition market, the adoption of a strategy is unnecessary. For
low to medium levels of competition, pure strategy appears superior. However, in highly
competitive environments, the hybrid strategy is more advantageous. This research joins the
theoretical fields of accounting, economics, and business administration, to investigate the
relationship between exogenous and endogenous factors in the formation of performance and
contributes examining the combined effect between the firms strategy and the market
competition in obtaining competitive advantage. In addition, the data sample analysed did not
restrict to data referring to a single country or a single industry, as observed in the previous
literature.
