2.6 Relationships between Competitive Advantage and Organizational
Similarly, a number of different organizational performance indicators have been shown to be influenced by competitive advantage. These include: (i) sales performance (Fahy, 2000; Ismail et al., 2010; Neely, 2005; Newbert, 2008; Wang &
Lo, 2003); (ii) organizational efficiency (Ismail et al., 2010); (iii) market performance (Fahy, 2000; Li et al., 2006; Newbert, 2008; Phongpetra & Johri, 2011); (iv) financial performance (Fahy, 2000; Li et al., 2006; Majeed, 2011; Newbert, 2008; Nham Phong
& Yoshi, 2010; Phongpetra & Johri, 2011); and (v) export performance (Morgan et al., 2004). Nham Phong & Yoshi (2010) found that competitive advantage influences organizational performance in the areas of quality, cost reduction, and innovation.
Majeed (2011) found that competitive advantage influences organizational performance in the areas of return on asset and sales growth ratio.
The results of various studies on the relationship between competitive advantage and organizational performance are summarized in Table 2.8. It should be noted that although some of these studied competitive advantage and independent variable, most examined it as a mediator or moderator of performance.
From the results of the studies, the relationship between competitive advantage and organizational performance can be summarized in the following assumption:
Hypothesis 3: Competitive advantage has a positive direct effect on organizational performance. (CA Æ OP)
61 Table 2.8 Summary of the Studies regarding the Relationship between Competitive Advantage and Organizational Performance
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Mahmood
& Hanafi (2013b)
Entrepreneurial orientation
Competitive advantage:
- Differentiate product
- Market sensing - Market
responsiveness
Firm
performance: - Profitability - Market share
165 SMEs in Malaysia
Regression - Competitive advantage mediates the relationship between the entrepreneurial orientation and firm performance.
- Entrepreneurial orientation has direct influence on firm
performance.
Munizu (2013)
Total quality management
Competitive advantage:
- Price/cost - Delivery dependability - Product innovation - Time to market
Organizational performance:
- Market share - Sale
55 fishing company in Indonesia
SEM - Competitive advantage mediates the relationship between the total quality management and
organizational performance.
- Total quality management has positively directed influence on firm performance.
62 Table 2.8 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Agha et al. (2012)
Core
competency
Competitive advantage:
- Flexibility - Responsiveness
Organizational performance
64 paint manufacturi ng in United Arab
Emirates
Regression - Competitive advantage mediates the relationship between the core competency and organizational performance.
- Core competency has positively directed influence on organizational performance.
Majeed (2011)
Competitive advantage:
- Competencies
- Financial performance:
- Return on assets
- Sales Growth Ratios
- Conceptual paper
- Competitive advantage and firm performance are two special terms with an actually complex
association.
- Overall studies have shown a significant association between competitive edge and performance.
And competitive advantages lead the company towards attaining high profits.
63 Table 2.8 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Al-alak &
Tarabieh (2011)
Customer orientation
Competitive advantage:
- Differentiate product
- Market sensing - Market
responsiveness
Firm
performance:
- Profitability - Market share
Bank in Jordan
SEM Innovation differentiation and market differentiation mediate the relationship between the customer orientation and firm performance.
Ismail et al. (2010)
Cost-based advantage:
- Lower manufacturing costs
- Lower-priced products
- Age of firms - Size of firms
Sales-based performance:
- Level of sales revenue
- Profitability - Return on assets
127 Malaysian
manufacturers
Two-way ANOVA
- The age of firms is a significant moderator in the relationship between competitive advantage and performance, and that this relationship is stronger for older firms.
64 Table 2.8 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Ismail et al. (2010)
(Continued)
Product-based advantage:
- Product differentiation - Packaging - Design
- Product quality - Style - Accessibility Service-based advantage:
- Product line breadth
- Reliability - Flexibility
- Return on investments- Manufacturing productivity - Product added value content - Added value per employee - Sales growth - Market share for product
- The size of firms does not significantly moderate the relationship between competitive advantage and performance.
- Provides empirical support for the Resource-Based View of Malaysian manufacturers
regarding the issue of competitive advantage.
65 Table 2.8 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Ismail et al. (2010)
(Continued)
- Product innovation - Delivery speed - Technical support - Value for customer
Organizational -based
performance:
- Emphasis on efficient organizational internal processes - Customer satisfaction - Employee development - Job
satisfaction
66 Table 2.8 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Nham Phong &
Yoshi (2010)
Organizational capabilities:
- Resource- based view
Competitive advantage:
- Cost-leadership - Quality
- Innovation
Financial performance:
- Sales Growth 102 supporting industries
Regression - Organizational capabilities are related to the competitive advantage.
- Competitive advantage is related to financial performance.
- Competitive advantage mediates the relationship between
organizational capabilities and financial performance.
Zhou et al.
(2009)
Customer value
Competitive advantage:
-Innovation differentiation -Market differentiation
Organizational performance:
- Market performance - Financial performance
328 hotels around the world
SEM - Innovation differentiation and market differentiation are positively influence on market performance.
- Market performance positively mediates the relationship -
67 Table 2.8 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Zhou et al.
(2009)
(Continued)
Market orientation:
between innovation differentiation, market differentiation and financial performance.
- Innovation differentiation and market differentiation have no direct influence on financial performance.
Rose et al.
(2009)
Resource- based view:
-
Organizational resource - Capabilities - System
Competitive advantage
Organizational performance
- Conceptual paper
- Competitive advantage is the basis for superior performance.
- The resource-based view of the firm’s competitive advantage is one of the main strategic
management theories applicable to explain organizational
performance.
68 Table 2.8 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Newbert (2008)
Resource- capability combination:
- Value - Rareness
Competitive advantage:
- Costs highly competitive - Opportunities capitalized on - Threats responded to
Performance:
- Marketing - Growth in sales
- Profitability - Market share
Micro- and nanotechnol ogy firms
Regression - The value positively related to competitive advantage.
- The rareness positively related to competitive advantage.
- Competitive advantage
positively related to performance.
- Competitive advantage mediates the relationship between the rareness and performance.
- Competitive advantage not mediates the relationship between the value and performance.
69 Table 2.8 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Li et al.
(2006)
SCM practices:
- Strategic supplier - Partnership - Customer relationship - Level and quality of information sharing
- Postponement
Competitive advantage:
- Price/cost - Quality - Delivery dependability - Product innovation - Time to market
Organizational performance:
- Market performance - Financial performance
196
organizations
SEM - High levels of SCM practice have high levels of organizational performance.
- SCM practice has a direct impact on competitive advantage.
- Organizations with high levels of competitive advantage have a high level of organizational performance.
70 Table 2.8 (Continued)
Authors Independent variable
Mediator/
Moderator
Dependent
variable Sample Method Findings
Fahy (2000)
Key resources:
- Tangible assets - Intangible assets
- Capabilities
Competitive advantage:
- Value of customers Management’s strategic choices:
- Resource identification - Resource development/
protection - Resource deployment
Performance:
- Market performance - Sales performance - Financial performance
- Conceptual paper
- To understand the nature of competitive advantage.
- This section traces the development of the resource- based view and evident of the resource-based view of the firm is theory of competitive advantage.
2.7 Relationships between Learning Organizations, Competitive