Strategic performance through inter-firm networks. Strategic alignment and moderating role of environmental dynamism
| DOI | https://doi.org/10.1108/WJEMSD-03-2016-0015 |
| Date | 10 October 2016 |
| Pages | 282-298 |
| Published date | 10 October 2016 |
| Author | Zahid Yousaf,Abdul Majid |
| Subject Matter | Strategy,Business ethics,Sustainability |
Strategic performance through
inter-firm networks
Strategic alignment and moderating
role of environmental dynamism
Zahid Yousaf and Abdul Majid
Department of Management Sciences, Hazara University, Mansehra, Pakistan
Abstract
Purpose –The purpose of this paper is to examine and develop a strategic performance model for
small and medium enterprises linking with inter-firm networks, strategic alignment and environmental
dynamism.
Design/methodology/approach –Drawing on the live experiences of 757 respondents, including
managing directors/owners and CEOs of different SMEs, the authors proposed a theoretical model
representing how firms could attain strategic performance through inter-firm networks with a
mediating role of strategic alignment.
Findings –The current study demonstrated that SMEs with strong inter-firm networks have the
ability to align business activities with strategies and get earlier strategic performance. Strategic
performance looks skeptical to ever gain acceptance until strategic alignment is adopted by small and
medium enterprises. The findings of this study indicated that environmental dynamism strengthens
the relationship between strategic alignment and strategic performance.
Originality/value –This research extended the understanding about the inter-firm networks,
strategic alignment and environmental dynamism surrounding strategic performance. This study
identified and empirically tested how the inter-firm networks impact on strategic performance through
the mediating effect of strategic alignment.
Keywords Pakistan, SMEs, Strategic alignment, Environmental dynamism, Inter-firm networks,
Strategic performance
Paper type Research paper
1. Introduction
Inter-firm networks have appeared as an attractiveindicator of strategic performance in
SMEs for the reason that through networks they hold better resources along with
numerous opportunities. As compared to individual firms, networks facilitate firms to
work more enthusiastically underunfavorable circumstances,and they become relatively
more capable of resource identification and successful integration (Rampersad et al.,
2010). Strategic performance frequently requires multiple tasks to be carried out
simultaneously, consecutively, or reciprocally, which could be achievable through
inter-firm networks (Kim et al., 2008). Inter-firm networks are the powerful tool to bring
prosperity in SMEsand make them able to design and bring advanced products into the
market for attainingstrategic performance (Dyer and Hatch, 2006).There is a reasonable
amount of literature available on the domains of networks and enterprise performance
(e.g. Papke-Shields and Malhotra, 2001; Lumpkin and Dess, 2001; Madison et al., 2014);
however, the analysis of these concepts in the context of developing countries is still an
World Journal of
Entrepreneurship, Management
and Sustainable Development
Vol. 12 No. 4, 2016
pp. 282-298
©Emerald Group Publishing Limited
2042-5961
DOI 10.1108/WJEMSD-03-2016-0015
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2042-5961.htm
Conflict of interest: Authors declared no conflict of interest.
The authors thank the Editor Professor Allam Ahmed and reviewers for valuable suggestions
and insights that helped to improve this paper.
282
WJEMSD
12,4
unexploredfield that requires anin-depth investigation(Raza and Majid, 2015). Predictors
of strategic business performance, especially strategic alignment and dynamism of the
environment of the developing countries, is another ignored area in entrepreneurship
literature. This paper especially makes a concerted effort to address these issues.
Entrepreneurship researchers like Gemser et al. (1996) specifically emphasized the
advantages of inter-firm networks to look into the performance strategically. However,
to build a strong relationship between inter-firm networks and strategic performance,
the role of strategic alignment cannot be ignored as suggested by Joshi et al. (2003).
Therefore, this study also considered the mediating role of strategic alignment to
further strengthen the theoretical model of strategic performance of SMEs in the
context of developing countries.
The environment of the developing countries is relatively more dynamic and
complex and discussed by number of researchers in their studies (Lumpkin and Dess,
2001). Without considering the dynamism of the environment, the reliability of the
newly developed model wil l remain questionable. Therefore, th is study also
investigated the moderating role of environmental dynamism in the relationship of
strategic alignment and strategic performance.
The objective of this research is to address the above mentioned issues and add
valuable contributions to the existing body of knowledge in three ways. First, we
extended our understanding about inter-firm networks, strategic alignment
environmental dynamism and strategic business performance. Second, we
conceptually identified and em pirically tested how inter-firm networks aff ect
strategic performance through the mediating effect of strategic alignment. Third, we
investigated whether the relationship between strategic alignment and strategic
performance fluctuates across the different levels of environmental dynamism. The
study proceeds as follows: we described a theoretical foundation and hypothesis
development in the next section. After literature review, we presented the research
model along with the measurement and analysis of variables. Finally, we discussed our
conclusion, implications, limitations and future directions.
2. Literature review and hypotheses
2.1 Strategic performance and inter-firm netw orks
Strategic performance refers to the successful achievement of an organization’s
strategic objectives (Zou and Cavusgil, 2002). It covers both organizational
performance as well as organizational effectiveness (Chakravarthy, 1986). Strategic
performance represents the competitiveness of an enterprise and covers the most
influential position among competitors in attaining a foothold in the industry, raising
the awareness of the firm and responses to those competitive challenges which were
created by competitors (Chung, 2011). Chung et al. (2015) reported t hat strategic
performance enhances the learning process and helps an enterprise create unique and
competitive capability in operational areas. Strategic performance guides the competitive
positions of business, and covers details regarding the overall performance of the
enterprise: performance relative to competitors and performance relative to other
businesses of the same kind in the industry (Madison et al., 2014). We used strategic
performance here as a major outcome of strategic alignment through inter-firm networks.
Inter-firm network refers to a firm’s association with other organizations like
customers, competitors, suppliers, government agencies, research organizations or
other institutions, for improving the different skills and knowledge required for
strategic performance (Ren et al., 2013). Inter-firm networks refer to the relationships
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Performance
through inter-
firm networks
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