Competitive environmental analysis of firm performance in the consumer goods industries--an empirical investigation
Abstract
The intensity of competitive forces are a major determinant of firm performance. The extant literature fails to include the role of competitive forces in assessing the performance of a firm. This dissertation proposes a multiple equation, disaggregate model relating firm strategy to performance incorporating the role of competitive forces. The model develops a new latent construct called 'competitive intensity' that measures and incorporates the moderating effect of competitive forces on performance. In the process, the model captures interrelationships among variables of interest such as strategy, market share and competitive forces. In particular, the framework captures the direct and the indirect effects of strategy on performance. In addition, the model investigates the relationship between market share and ROI. To test this model and a comprehensive set of hypotheses, a rigorous methodological procedure not previously in evidence in the strategy--performance literature is developed. Estimation using the methodology is undertaken in two stages. In the first stage, cluster analysis is used to form groups of homogeneous competitive environments which are treated as sub-groups for input to a structural equation causal model (LISREL MULTISAMPLE METHODOLOGY). The model is then estimated to test the hypotheses developed using the sub- groups to control for the moderating role of competitive intensity. The market share--ROI relationship is tested with the help of cluster analysis and polynomial regression. The empirical analysis finds significant strategic and performance differences between the competitive groups lending credence to the moderating role of competitive intensity. There is significant evidence concerning the industry specific nature of relationship between market share and ROI. The study provides managerial insights as to what strategies to follow in different competitive environments.
Degree
Ph.D.
Advisors
Moriarty, Purdue University.
Subject Area
Marketing
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