Moderating Role of Network Competency Between Composition Based Strategy Components and Firm Performance: Evidence from Retail Stores in Pakistan
DOI:
https://doi.org/10.31384/jisrmsse/2022.20.1.5Keywords:
Composition-Based View, Composition-Based Strategy, Compositional Offering, Compositional Competition, Compositional Capabilities, Firm’s Performance, Competency RetentionAbstract
This paper investigates the relationship between the components of the composition based strategy and firm performance. The study further examines the moderating relationship of network competency on different components of the composition-based strategy (CBV) and financial performance. The study collects the data from 134 owners/managers of retail stores in Lahore, Pakistan. The data were analyzed with confirmatory factor analysis and hierarchical linear regression. The findings reveal that compositional competition and compositional capability positively relate to firm performance. The study only finds the significant moderating role of network competency between compositional capability and firm performance. This study advances the extant research in the strategic management literature by amalgamating resource utilization and a relationship-driven approach. This study further supports the notion that the composition-based view is an alternative strategic perspective for small firms. Future research work may advance the findings of this study by considering other measures of firm performance and replicating the study in different contexts.
Downloads
References
Abu-Rumman, A et al. (2021). “Entrepreneurial networks, entrepreneurial orientation, and performance of small and medium enterprises: are dynamic capabilities the missing link?” Journal of Innovation and Entrepreneurship 10(1), pp. 1–16. https://doi.org/10.1186/s13731-021-00170-8. DOI: https://doi.org/10.1186/s13731-021-00170-8
Ahmad, N H, C Wilson, and L Kummerow (2011). “Assessing the dimensionality of business success: The perspectives of Malaysian SME owner-managers”. Journal of Asia-Pacific Business 12(3), pp. 207–224. https://doi.org/10.1080/10599231.2011.586855. DOI: https://doi.org/10.1080/10599231.2011.586855
Ali, H and Y Li (2021). “Financial Literacy, Network Competency, and smes Financial Performance: The Moderating Role of Market Orientation”. The Journal of Asian Finance 8(10), pp. 341–352. https://doi.org/10.13106/jafeb.2021.vol8.no10.0341.
Anderson, J C and D W Gerbing (1988). “Structural equation modeling in practice: A review and recommended two-step approach”. Psychological Bulletin 103(3), pp. 411–423. DOI: https://doi.org/10.1037/0033-2909.103.3.411
Anwar, M (2018). “Business model innovation and smes performance-Does competitive advantage mediate?” International Journal of Innovation Management(07), pp. 22–22. https://doi.org/10.1142/S1363919618500573. DOI: https://doi.org/10.1142/S1363919618500573
Banker, R D, R Mashruwala, and A Tripathy (2014). “Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?” Management Decision 52(5), pp. 872–896. https://doi.org/10.1108/md-05-2013-0282. DOI: https://doi.org/10.1108/MD-05-2013-0282
Becerra, M, J Santaló, and R Silva (2013). “Being better vs. Being different: Differentiation, Competition, and pricing strategies in the Spanish hotel industry”. Tourism Management 34, pp. 71–79. https://doi.org/10.1016/j.tourman.2012.03.014. DOI: https://doi.org/10.1016/j.tourman.2012.03.014
Berry, L L, K Seiders, and D Grewal (2002). “Understanding service convenience”. Journal of Marketing 66(3), pp. 1–17. https://doi.org/10.1509/jmkg.66.3.1.18505. DOI: https://doi.org/10.1509/jmkg.66.3.1.18505
Borchardt, M et al. (2020). “Leveraging frugal innovation in micro-and small enterprises at the base of the pyramid in Brazil: an analysis through the lens of dynamic capabilities”. Journal of Entrepreneurship in Emerging Economies 13(5), pp. 864–886. https://doi.org/10.1108/JEEE-02-2020-0031. DOI: https://doi.org/10.1108/JEEE-02-2020-0031
Bressler, M S (2012). “How small businesses master the art of competition through superior competitive advantage”. Journal of Management and Marketing Research 11(1), pp. 1–12.
Burton, R M (2015). “Extraordinary Survival from Ordinary Resources-How So? Management and Organization Review”. Management and Organization Review 11(3), pp. 413–417. https://doi.org/10.1017/mor.2015.38. DOI: https://doi.org/10.1017/mor.2015.38
Cai, Q et al. (2019). “Innovating with Limited Resources: The Antecedents and Consequences of Frugal Innovation”. Sustainability 11(20). https://doi.org/10.3390/su11205789. DOI: https://doi.org/10.3390/su11205789
Campbell, J M and J Park (2017). “Extending the resource-based view: Effects of strategic orientation toward community on small business performance”. Journal of Retailing and Consumer Services 34(1), pp. 302–308. https://doi.org/10.1016/j.jretconser.2016.01.013. DOI: https://doi.org/10.1016/j.jretconser.2016.01.013
Cannas, R (2021). “Exploring digital transformation and dynamic capabilities in agrifood smes”. Journal of Small Business Management, pp. 1–27. https://doi.org/10.1080/00472778.2020.1844494. DOI: https://doi.org/10.1080/00472778.2020.1844494
Chandler, G N and S H Hanks (1993). “Measuring the performance of emerging businesses: A validation study”. Journal of Business Venturing 8(5), pp. 391–408. https://doi.org/10.1016/0883-9026(93)90021-V. DOI: https://doi.org/10.1016/0883-9026(93)90021-V
Chen, J and Z Guo (2014). “Strategic sourcing in the presence of uncertain supply and retail competition”. Production and Operations Management 23(10), pp. 1748–1760. https://doi.org/10.1016/0883-9026(93)90021-V. DOI: https://doi.org/10.1111/poms.12078
Clampit, J A et al. (2021). “Performance stability among small and medium-sized enterprises during COVID-19: A test of the efficacy of dynamic capabilities”. International Small Business Journal, pp. 1–17. https://doi.org/10.1177/02662426211033270. DOI: https://doi.org/10.1177/02662426211033270
Curran, P J, S G West, and J F Finch (1996). “The robustness of test statistics to nonnormality and specification error in confirmatory factor analysis”. Psychological Methods 1(1), Pp. 16–29. https://doi.org/10.1037/1082-989X.1.1.16. DOI: https://doi.org/10.1037/1082-989X.1.1.16
Dar, M S, S Ahmed, and A Raziq (2017). “Small and medium-size enterprises in Pakistan: Definition and critical issues”. Pakistan Business Review 19(1), pp. 46–70. https://doi.org/10.22555/PBR.V19I1.1245.
Elmaraghy, H et al. (2013). “Product variety management”. CIRP Annals 62(2), pp. 629–652. https://doi.org/10.1016/j.cirp.2013.05.007. DOI: https://doi.org/10.1016/j.cirp.2013.05.007
Falahat, M, C S Chuan, and S B Kai (2018). “Brand loyalty and determinates of perceived quality and willingness to order”. Academy of Strategic Management Journal 17(4), pp. 1–10.
Fornell, C and D F Larcker (1981). “Evaluating structural equation models with unobservable variables and measurement error”. Journal of Marketing Research 18(1), pp. 39–50. https://doi.org/10.1177/002224378101800104. DOI: https://doi.org/10.1177/002224378101800104
Franco, M and H Haase (2010). “Failure factors in small and medium-sized enterprises: qualitative study from an attributional perspective”. International Entrepreneurship and Management Journal 6(4), pp. 503–521. https://doi.org/10.1007/s11365-009-0124-5. DOI: https://doi.org/10.1007/s11365-009-0124-5
Hair J. F. (2010). Multivariate data analysis: a global perspective (7th ed.). Pearson Education.
Hayes, A F and M Scharkow (2013). “The Relative Trustworthiness of Inferential Tests of the Indirect Effect in Statistical Mediation Analysis”. Psychological Science 24(10), Pp. 1918–1927. https://doi.org/10.1177/0956797613480187. DOI: https://doi.org/10.1177/0956797613480187
Hermawati, A and E Gunawan (2021). “The implementation of dynamic capabilities for small and medium-sized enterprises in creating innovation”. VINE Journal of Information and Knowledge Management Systems 51(1), pp. 92–108. https://doi.org/10.1108/VJIKMS-08-2019-0121. DOI: https://doi.org/10.1108/VJIKMS-08-2019-0121
Hernández-Linares, R, F W Kellermanns, and M C López-Fernández (2021). “Dynamic capabilities and SME performance: The moderating effect of market orientation”. Journal of Small Business Management 59(1), pp. 162–195. https://doi.org/10.1111/jsbm.12474. DOI: https://doi.org/10.1111/jsbm.12474
Hill, J and P Mcgowan (1996). “Marketing development through networking: a competency based approach for small firm entrepreneurs”. Journal of Small Business and Enterprise Development 3(3). P. 148, pp. 148–156. https://doi.org/10.1108/eb020974. DOI: https://doi.org/10.1108/eb020974
Hu, L T and P M Bentler (1999). “Cutoff criteria for fit indexes in covariance structure analysis: Conventional criteria versus new alternatives”. Structural Equation Modeling: A Multidisciplinary Journal 6(1), pp. 1–55. https://doi.org/10.1080/10705519909540118. DOI: https://doi.org/10.1080/10705519909540118
Jaccard, J, C K Wan, and R Turrisi (1990). “The Detection and Interpretation of Interaction Effects Between Continuous Variables in Multiple Regression”. Multivariate Behavioral Research 25(4), pp. 467–478. https://doi.org/10.1207/s15327906mbr2504_4. DOI: https://doi.org/10.1207/s15327906mbr2504_4
Jiang, X et al. (2018). “Entrepreneurial orientation, network resource acquisition, and firm performance: A network approach”. Journal of Business Research 87, pp. 46–57. https://doi.org/10.1016/j.jbusres.2018.02.021. DOI: https://doi.org/10.1016/j.jbusres.2018.02.021
Kellermanns, F et al. (2016). “The Resource-Based View in Entrepreneurship: A Content-Analytical Comparison of Researchers’ and Entrepreneurs’ Views”. Journal of Small Business Management 54(1), pp. 26–48. https://doi.org/10.1111/jsbm.12126. DOI: https://doi.org/10.1111/jsbm.12126
Kiyabo, K and N Isaga (2020). “Entrepreneurial orientation, competitive advantage, and smes’ performance: application of firm growth and personal wealth measures”. Journal of Innovation and Entrepreneurship 9(1), pp. 1–15. https://doi.org/10.1186/s13731-020-00123-7. DOI: https://doi.org/10.1186/s13731-020-00123-7
Kump, B et al. (2019). “Toward a dynamic capabilities scale: measuring organizational sensing, seizing, and transforming capacities”. Industrial and Corporate Change 28(5), Pp. 1149–1172. https://doi.org/10.1093/icc/dty054. DOI: https://doi.org/10.1093/icc/dty054
Kurniawan, R and B Christiananta (2016). “Relationship between Synergistic Cooperation and Dynamic Capability to the Business Performance: A Literature Review from Resource Based View Perspective”. GSTF Journal on Business Review (GBR) 4(3), pp. 9–14. https://doi.org/10.5176/2010-4804_4.3.379.
Li, X (2016). “Compositional advantage and strategy: understanding how resource-poor firms survive and thrive.” In: International Association for Chinese Management Research (IACMR) Seventh Biennial Conference, Hangzhou, China.
Li, X. (2018). “How emerging market resource-poor firms compete and outcompete advanced country resource-rich rivals: An asymmetry reversing theory”. Cross Cultural & Strategic Management 25(3), pp. 538–544. https://doi.org/10.1108/CCSM-08-2016-0155. DOI: https://doi.org/10.1108/CCSM-08-2016-0155
Liu, T C and L W Wu (2007). “Customer retention and cross-buying in the banking industry: An integration of service attributes, satisfaction and trust”. Journal of Financial Services Marketing 12(2), pp. 132–145. https://doi.org/10.1057/palgrave.fsm.4760067. DOI: https://doi.org/10.1057/palgrave.fsm.4760067
Liu, Y and Y Yu (2021). “Business Model Adaptation of Small and Medium-Sized Information Technology Firms: The Role of Dynamic Capabilities”. Journal of Global Information Management (JGIM) 29(6), pp. 1–15. DOI: https://doi.org/10.4018/JGIM.20211101.oa1
Luo, Y and J Bu (2018). “Contextualizing international strategy by emerging market firms: A composition-based approach”. Journal of World Business 53(3), pp. 337–355. https://doi.org/10.1016/j.jwb.2017.01.007. DOI: https://doi.org/10.1016/j.jwb.2017.01.007
Luo, Y and J Child (2015). “A composition-based view of firm growth”. Management and Organization Review 11(3), pp. 379–411. https://doi.org/10.1017/mor.2015.29. DOI: https://doi.org/10.1017/mor.2015.29
Ma, H (2000). “Competitive advantage and firm performance”. Competitiveness Review 10(2), pp. 15–32. https://doi.org/10.1108/eb046396. DOI: https://doi.org/10.1108/eb046396
Matthyssens, P and K Vandenbempt (2008). “Moving from basic offerings to value-added solutions: Strategies, barriers and alignment”. Industrial Marketing Management 37(3), pp. 316–328. https://doi.org/10.1016/j.indmarman.2007.07.008. DOI: https://doi.org/10.1016/j.indmarman.2007.07.008
Mendenhall, W, T Sincich, and N S Boudreau (2012). “A second course in statistics: regression analysis”. In: Prentice Hall.
Mintzberg, H (1988). “Generic strategies: toward a comprehensive framework”. Advances in Strategic Management 5(1), pp. 1–67.
Nyaga, G N and J M Whipple (2011). “Relationship quality and performance outcomes: Achieving a sustainable competitive advantage”. Journal of Business Logistics 32(4), pp. 345–360. https://doi.org/10.1111/j.0000-0000.2011.01030.x. DOI: https://doi.org/10.1111/j.0000-0000.2011.01030.x
Oliva, R and R Kallenberg (2003). “Managing the transition from products to services”. International Journal of Service Industry Management 14(2), pp. 160–172. https://doi.org/10.1108/09564230310474138. DOI: https://doi.org/10.1108/09564230310474138
Ong, J. W., Ismail, H., & Yeap, P. F. (2018). Competitive advantage and firm performance: the moderating effect of industry forces. International Journal of Business Performance Management, 19(4), 385–407. https://doi.org/10.1504/IJBPM.2018.095069 DOI: https://doi.org/10.1504/IJBPM.2018.095069
Penttinen, E and J Palmer (2007). “Improving firm positioning through enhanced offerings and buyer-seller relationships”. Industrial Marketing Management 36(5), pp. 552–564. https://doi.org/10.1016/j.indmarman.2006.02.005. DOI: https://doi.org/10.1016/j.indmarman.2006.02.005
Podsakoff, P M, S B Mackenzie, et al. (2003). “Common method biases in behavioral research: a critical review of the literature and recommended remedies”. Journal of Applied Psychology 88(5), pp. 879–903. https://doi.org/10.1037/0021-9010.88.5.879. DOI: https://doi.org/10.1037/0021-9010.88.5.879
Podsakoff, P M and D W Organ (1986). “Self-reports in organizational research: Problems and prospects”. Journal of Management 12(4), pp. 531–544. https://doi.org/10.1177/014920638601200408. DOI: https://doi.org/10.1177/014920638601200408
Porter, M E (1980). “Competitive strategy: Techniques for analyzing industries and competitors”. In: Competitive strategy: Techniques for analyzing industries and competitors. New York, NY: Free Press.
Porter, M. E. (1985). “Competitive advantage: Creating and Sustaining Superior Performance”. In: Competitive advantage: Creating and Sustaining Superior Performance. New York: The Free Press.
Ritter, T, I F Wilkinson, and W J Johnston (2002). “Measuring network competence: some international evidence”. Journal of Business & Industrial Marketing 17(2/3), pp. 119–138. https://doi.org/10.1108/08858620210419763. DOI: https://doi.org/10.1108/08858620210419763
Royston, J P (1983). “Some Techniques for Assessing Multivarate Normality Based on the Shapiro- Wilk W”. Applied Statistics 32(2), pp. 121–121. DOI: https://doi.org/10.2307/2347291
Rui, H, M Zhang, and A Shipman (2017). “Chinese expatriate management in emerging markets: A competitive advantage perspective”. Journal of International Management 23(2), pp. 124–138. https://doi.org/10.1016/j.intman.2017.01.002. DOI: https://doi.org/10.1016/j.intman.2017.01.002
Sarker, S and M Palit (2015). “Strategic orientation and performance of small and medium enterprises in Bangladesh”. International Journal of Entrepreneurship and Small Business 24(4), pp. 572–586. https://doi.org/10.1504/IJESB.2015.068643. DOI: https://doi.org/10.1504/IJESB.2015.068643
Stalk, G, P Evans, and L E Shulman (1992). “Competing on capabilities: The new rules of corporate strategy”. Harvard Business Review 70(2), pp. 57–69.
Tehseen, S, Z H Qureshi, and T Ramayah (2018). “Impact of network competence on firm’s performances among Chinese and Indian entrepreneurs: A multigroup analysis”. International Journal of Entrepreneurship 22(2), pp. 1–14.
Tehseen, S and S Sajilan (2016). “Network competence based on resource-based view and resource dependence theory”. International Journal of Trade and Global Markets 9(1), pp. 60–82. https://doi.org/10.1504/IJTGM.2016.074138. DOI: https://doi.org/10.1504/IJTGM.2016.074138
Tehseen, S, F U Ahmed, et al. (2019). “Entrepreneurial competencies and smes’ growth: The mediating role of network competence”. Asia-Pacific Journal of Business Administration 11(1), pp. 2–29. https://doi.org/10.1108/APJBA-05-2018-0084. DOI: https://doi.org/10.1108/APJBA-05-2018-0084
W Hill, C (1988). “Differentiation versus low cost or differentiation and low cost: a contingency framework”. Academy of Management Review 13(3), pp. 401–412. https://doi.org/10.5465/amr.1988.4306957. DOI: https://doi.org/10.5465/amr.1988.4306957
W Peng, M et al. (2018). “The growth of the firm in (and out of) emerging economies”. Asia Pacific Journal of Management 35(4), pp. 829–857. https://doi.org/10.1007/s10490-018-9599-3. DOI: https://doi.org/10.1007/s10490-018-9599-3
W Volberda, H and E Karali (2015). “Reframing the compositional Capability: A resource-based view on ’a composition-based view of firm growth”. Management and Organization Review 11(3), pp. 419–426. https://doi.org/10.1017/mor.2015.39. DOI: https://doi.org/10.1017/mor.2015.39
Warnaby, G and H Woodruffe (1995). “Cost effective differentiation: an application of strategic concepts to retailing”. International Review of Retail, Distribution and Consumer Research 5(3), pp. 253–269. https://doi.org/10.1080/09593969500000017. DOI: https://doi.org/10.1080/09593969500000017
Yasa, N et al. (2020). “The role of competitive advantage in mediating the effect of promotional strategy on marketing performance”. Management Science Letters 10(12), pp. 2845–2848. https://doi.org/0.5267/j.msl.2020.4.024. DOI: https://doi.org/10.5267/j.msl.2020.4.024
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Ansar Waseem, Yasir Rashid, Abdul Rashid Kausar
This work is licensed under a Creative Commons Attribution 4.0 International License.
Copyright: The Authors
