Firm Level Strategy and Value Creation in Small Businesses: The Nigerian Experience

Adedeji Saidi Adelekan; Ayodele Samuel Majekodunmi; powel maxwell Worimegbe

doi:10.22146/gamaijb.62427

Firm Level Strategy and Value Creation in Small Businesses: The Nigerian Experience

Adedeji Saidi Adelekan, Ayodele Samuel Majekodunmi, powel maxwell Worimegbe

(Submitted 21 December 2020)

(Published 7 June 2021)

Abstract

The issue of firm specific strategies and how they affect organizational performance has engendered a lot of discussions in the extant literature. This creates a need to investigate the extent to which firm level strategy influences value creation in small businesses. Premised on the elements of corporate, business and functional level strategies, this study examines the influence of firm strategy on value creation in a developing economy ie. Nigeria. Employing a survey research design, 689 small business owners and managers were surveyed utilizing questionnaire research instruments. Using PLS-SEM, the study reveals that firm strategy is a driver of value creation in small businesses. The study also shows that corporate level strategy and business level strategy are the most significant drivers of value creation. The results of this study highlight critical concerns and guide small businesses through the value creation process to achieve competitiveness. Small firms should be active in the formulation and implementation of strategies that are based on value creation. More attention should be given to business level strategy, as this is the most significant driver of value creation.

Keywords

value creation, small businesses, corporate strategy, business strategy, functional strategy

Full Text: PDF

DOI: 10.22146/gamaijb.62427

References

Aftab, M., Ehsan, R., Naseer, S. & Awan, T., (2012). The effect of corporate strategy and capital structure on performance of banking sector of Pakistan. Global Journal of Management and Business Research, 12 (17), 21-35.

Alfaro, L., Chari, A., Greenland, A., & Schott, P. (2020). Aggregate and firm-level stock returns during pandemics, in real-time. NBER working paper 26950.

Anugwo, I. C. & Shakantu, and W.M. (2015). Elements of strategic management as drivers impacting on emerging contractors' business survival in the South African Construction Industry Conference: Proceedings 4th Nmmu Construction Management Conference.

Aremu, M. & Oyinloyes, O. O. (2014). Relationship between strategic management and firms' performance in Nigerian banking industry. Kuwait Chapter of Arabian Journal of Business and Management Review 4(3):28-41

Carter, C. (2020). The age of strategy: strategy, organisations and society. business history 55(7) DOI: 10.1080/00076791.2013.838030

Chamberlain, G. P. (2010).Understanding Strategy. CreateSpace, Charleston.

Farjoun, M. (2002). Towards an organic perspective on strategy. Strategic Management Journal, 23(7), 33-42

Frery, F. (2016). The fundamental dimensions of strategy. https://www.researchgate.net/publication/292822532_The_fundamental_dimensions_of_strategy/references

Goedhart & Koller, P. (2020). Valuation: Measuring and managing the value of companies, 7th edition, Mckinsey and Company

Gosselin, M. (2005). An empirical study of performance measurement in manufacturing firms. International Journal of Productivity and Performance Management, 54(5/6) 410-38.

Georgescu-Roegen, N. (1971). The Entropy Law and the Economic Process. Harvard University Press.

Jorgenson, E. (2015). Why value creation is the foundation of business: How to define it, measure it, and manage it. Retrieved from https://medium.com/evergreen-business-weekly/why-value-creation-is-the-foundation-of-business-how-to-define-it-measure-it-and-manage-it-147c92b87aca

Kirtons, M., (1976). Kirton's Adaptation-Innovation Theory (KAI). https://www.businessballs.com/change-management/kirtons-adaptation-innovation-theory/

Lechner, C. & Gudmundsson, V. (2014). Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal, 32(1):36-60

Merchant, K. A. & Sandino, T. (2009). Four options for measuring value creation. Journal of Accountancy. 208 (2), 1-4

Nandakumar, M. K., Ghobadian, A., & O'Regan, N. (2010). Business‐level strategy and performance: The moderating effects of environment and structure. Management Decision, 48 (6), 907-939

Hofer, C. W & Schendel, D. E. (1979). Strategic management a new view of business policy and planning, Little, Brown, Boston,

Maltz, A.C., Shenhar, A.J. & Reily, R.R. (2003). Beyond the balanced scorecard: refining the search for organisational success measures. Long Range Planning, 36(2), 187-204

Machado, H.P. (2016). Growth of small businesses: a literature review and perspectives of studies. Gest. Prod., São Carlos, 23(2). 419-432,

Mintzberg, H. (1981). Organisational structure: Organisation design: Fashion or fit? Harvard Busines Review. https://hbr.org/1981/01/organization-design-fashion-or-fit

Monday, J., Akinola, G. O., Ologbenla, P., & Aladeraji, O. K. (2015). Strategic management and firm performance: A study of selected manufacturing companies in Nigeria. European Journal of Business and Management, 7(2), 161-171

Morris, M. H., Kocak, A. & Ozer, A. (2007). Coopetition as a Small Business Strategy: Implications for Performance. Journal of Small Business Strategy, 35-52

Naidoo, P. (2020). Nigeria tops South Africa as the continent's biggest economy https://www.bloomberg.com/markets/fixed-income

Naver, C. J. & Slater, F. S. (2000). The positive effect of a market orientation on business profitability: A balanced replication. Journal of Business Research 48(1):69-73

Nikols, F. (2016). Strategy, strategic management, strategic planning and strategic thinking. https://www.nickols.us/strategy_etc.pdf

Njagi, L. M., Naumusonge, G. S. & Mugambi, F. (2016). Effects of Strategic Management Determinants on Firm Performance in the Shipping Industry in Kenya. Global Journal of Commerce and Management Perspective, 5(5), 14-26.

Olaolu, D. & Obaji, N., (2020). An assessment on the influence of entrepreneurial training, risk-taking and innovativeness on SMEs development in Nigeria. Journal of Economics and Business, 3(1), 58-76

Olson, E.M. and Slater, S.F. (2002). The balanced scorecard, competitive strategy, and performance. Business Horizon, 45(3), 11-16

Rashidirad, M. and Salimian, H. (2020), SMEs dynamic capabilities and value creation: the mediating role of competitive strategy. European Business Review, 32(4), 591-613. https://doi.org/10.1108/EBR-06-2019-0113

Shah, M. A., (2005). The Foundations of Successful Strategy Implementation: Overcoming the Obstacles. Global Business Review, 6(2)

Straková, J. (2017). Strategic analysis methods and their influence on the stability and development of small and medium-sized enterprises in the Czech Republic. Stud. Comer. Bratisl. 2017, 10, 196–214.

Sharma, P. & Carney, M., (2012). Value Creation and Performance in Private Family Firms: Measurement and Methodological Issues. Family Business Review, 25(3), 72-89

Thiel, P. (2018). Zero to one: Notes on startups, or how to build the future. Amazon, United Kingdom.

Thompson, A. A. & Strickland, A.J., (2007). Strategic management: concepts and cases 11th Edition, McGraw-Hill

Sowers, V. & Goldminz, I., (2018). Why Value Creation is the Foundation of Business: How to define it, measure it, and manage it. https://medium.com/evergreen-business-weekly/why-value-creation-is-the-foundation-of-business-how-to-define-it-measure-it-and-manage-it-147c92b87aca

Straková, J., Rajiani, I., Pártlová, P., Váchal, J., & Dobroviˇc, J., (2020). Use of the Value Chain in the Process of Generating a Sustainable Business Strategy on the Example of Manufacturing and Industrial Enterprises in the Czech Republic. MDPI Sustainability,

Teeratansirikool, L., Sununta, S., Badir, Y & Charoenngam, C. (2013). Competitive strategies and firm performance: The mediating role of performance measurement. International Journal of Productivity and Performance Management 63(1&2):168-184

Weir, K. A., Kochhar, A., LeBeau, S. A. & Edgeley, D. G., (2000). An empirical study of the alignment between manufacturing and marketing strategies. Long Range Planning 33(6):831-848

Worimegbe, P. M., (2020). Coopetition and customers' experience in the Nigerian banking sector: The moderating effect of technology. Global Journal of Business, Economics and Management: Current Issues, 10(2), 111-123. https://doi.org/10.18844/gjbem.v10i2.4847

Zook, C. & Rogers, P., (2001). In pursuit of growth. European Business Journal. Vol. 13, Issue 2)

Refbacks

There are currently no refbacks.

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.