Question

Examine competitive relationship and product relationship

Answer 1

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Purpose – The purpose of this paper is to examine the underlying strategic intent of quality performance. Specifically, the study aimed to examine the individual impact of differentiation and cost leadership as well as their interaction effect on quality performance. Design/methodology/approach – This study employed a data set drawn from 102 managers of Australian manufacturing firms. Multiple regression analysis with moderating effect was used for analysing the relationship between the competitive strategies and quality performance. Findings – The findings indicated that product quality was predicted by differentiation strategy, but not cost leadership strategy. However, the effect of differentiation on quality was moderated by cost leadership whereby the higher the cost leadership, the stronger the effect. Research limitations/implications – The small sample size which was dominated by small-to-medium sized firms (SMEs) was the major limitation of the study. The sample size and distribution also inhibited the comparison of the results between industry sectors. Practical implications – The results contribute to a better understanding on how quality can be effectively employed as a base for realising competitive strategy. In particular, the positive interaction between differentiation and cost leadership in predicting quality performance suggests the synergy between the two as well as supporting the cumulative view of competitive strategies. Originality/value – By testing the interaction effect of differentiation and cost leadership in predicting quality performance, this study advances the previous works on the area which looked at the relationship between quality performance and each of the two competitive strategies separately.