Published Online:June 2024
Product Name:The IUP Journal of Business Strategy
Product Type:Article
Product Code:
Author Name:Omary Swallehe
Availability:YES
Subject/Domain:Strategic
Download Format:PDF
Pages:18
The study investigates the appropriateness of two competing strategies—low-cost leadership and differentiation—in creating a competitive advantage and improving the performance of small and medium enterprises (SMEs) in developing countries. The study employed a cross-sectional quantitative design to collect and analyze data from 171 randomly selected SMEs. The study was conducted in Dar es Salaam, Tanzania, between July and August 2022. The study used a stepwise multivariate analysis technique to obtain the most appropriate variables for the study. The study used ten variables, five each for low-cost leadership and differentiation. Five variables (four from low-cost leadership and one from differentiation strategy) were removed from the study model because they were insignificant in influencing performance. The remaining variables were branding, new product development, uniqueness, employee training, and standard products. These variables contributed 29% of the variance in explaining SMEs’ performance in developing countries. The findings justify the claim that SMEs should use other sources to achieve competitive advantage over low-cost leadership and differentiation strategies. However, differentiation seems to be a more appropriate strategy than low-cost leadership.
Businesses are becoming increasingly competitive, and business organizations compete using different strategies. Small and medium enterprises (SMEs) significantly contribute to the economic development of countries which has attracted studies from different angles (Narver and Slater, 1990). The changes in how countries run or participate in economic activities have created challenges and opportunities for these establishments (Dominguez and Mayrhofer, 2017).