Competitive strategies, innovation, and firm performance: an empirical study in a developing economy environment

ABSTRACT

This paper studies the relationships between competitive strategies, innovation, and firm performance within the context of Turkish manufacturing companies. The data were collected from top management of the firms via Computer Assistant Telephone Interviewing method. One hundred and forty manufacturing firms operating in various sectors including textile, automotive supply, computer and electronics provide the basis for this empirical research. In order to test our model, we employ structural equation modelling using partial least squares. The results show that competitive strategies such as cost-leadership and differentiation can lead to innovation, which, in turn, increase firm performance. Managers implement cost-leadership and differentiation strategies to take part in competitive market conditions; however, they should put additional importance on innovation that plays a significant role as a bridge between competitive strategies and firm performance.

KEYWORDS:

• Strategic management
• cost-leadership
• differentiation
• innovation
• firm performance
• Turkish manufacturing industry

Notes on contributors

Cahit Ali Bayraktar is a lecturer of Industrial Engineering at Istanbul Technical University. He graduated with a BS, an MS, and a PhD from Istanbul Technical University in Industrial Engineering. His main research interests are strategic management, competition management, and human resources systems.

Gulsah Hancerliogullari is an assistant professor of Industrial Engineering at Istanbul Bilgi University. She graduated with BS and MS from Bilkent University in Industrial Engineering, and a PhD from Old Dominion University in Engineering Management and Systems Engineering. Her current research interests are empirical research in operations management, application of optimisation methods to transportation and health-care problems.

Basak Cetinguc is a PhD student at Istanbul Technical University in Industrial Engineering Department. She graduated with a BS from Kocaeli University in Industrial Engineering, an MS from the George Washington University in Engineering Management. Her research interests are innovation, technology management and data analysis.

Fethi Calisir is a professor of Industrial Engineering at Istanbul Technical University. He graduated with a BS from Istanbul Technical University, an MS from the University of Miami, and a PhD from Purdue University in Industrial Engineering. His current research interests include IT Project Management, Software Usability, and Human–Computer Interaction.