Porter’s Strategies and Firm Competitiveness: The Mediating Role of Market and Technological Innovation

Abstract

This article is based on a study that investigated the impact of Porter’s generic strategies on firm competitiveness (FC) and the mediating role of organisational innovation (OI) amongst small, micro, and medium tourism enterprises (SMMTEs). A quantitative approach was adopted, with questionnaires distributed to 320 SMMTEs in Harare, Zimbabwe. Data adequacy tests were performed followed by structural equation modelling. The findings showed that innovation – particularly market innovation (MI) – acts as a crucial mediator between business strategies and FC and that neither of the two forms of innovation is significantly impacted by differentiation strategy (DS). In addition, the overall low-cost leadership strategy (OLCLS) has a major effect on MI but not technological innovation (TI). It was thus concluded that the OLCLS via MI is central to SMMTEs achieving competitiveness. The study enhances understanding of how innovation mediates the relationship between Porter’s generic strategies and firm competitiveness in a developing country. The findings will assist managers to develop effective business strategies to enhance firm competitiveness.

Keywords

• business strategy
• firm competitiveness
• organisational innovation
• differentiation strategy
• focus strategy
• low-cost leadership strategy