Competitive Strategy, Environmental Characteristics and Performance in African Emerging Economies: Lessons from Firms in Ghana

This paper examines the impact of the implementation of competitive strategy on organizational performance in response to economic liberalization policies using survey data from organizations in Ghana. We also examine how the perceived intensity of industry competition and industry sector moderate the relationship between competitive strategy and organizational performance. The results show that the implementation of the competitive strategies of low-cost, differentiation, and integrated low-cost and differentiation were all positively related to performance (return on assets and return on sales). We also find that both industry competition and industry sector moderate the relationship between differentiation strategy and return on assets. Moreover, industry competition moderates the relationships between both low-cost and differentiation strategies and return on sales. The results indicate that implementing a clearly defined competitive strategy is beneficial to organizations experiencing significant changes in the environment due to economic liberalization. The findings also suggest that while low-cost strategy is more beneficial to organizations in a highly competitive industry, differentiation strategy is more beneficial to firms in lowly competitive industry. At the same time, organizations in the manufacturing sector benefit more than those in the service sector when they implement the differentiation strategy. Managerial implications are presented.