Title: Composition-based strategy and firm's performance: the mediating role of competitive advantage

Authors: Ansar Waseem; Yasir Rashid; Abdul Rashid Kausar

Addresses: Hassan Murad School of Management, University of Management and Technology, Pakistan ' Deceased; formerly of: University of Management and Technology, Pakistan ' Hassan Murad School of Management, University of Management and Technology, Lahore, Pakistan

Abstract: The resource-based view (RBV) has been the dominant strategic perspective to study the growth of firms. However, few believe that RBV is more suited for large organisations as its central tenants are not aligned with the characteristics of small firms. Thus, a composition-based view (CBV) is an alternative perspective to studying the survival and growth of small and medium enterprises in emerging economies. Very little empirical work has been done using this strategic perspective. This paper attempts to test the central propositions of CBV by developing a causal mechanism that links composition-based strategy with a firm's performance through competitive advantage. For this purpose, data were collected from 150 owners/managers of different retail stores located in Lahore, Pakistan. Findings indicate that composition-based strategy is positively and significantly related to both firm's performance and competitive advantage. Moreover, competitive advantage mediates the underlying relationship between composition-based strategy and the performance of firms. These results provide interesting insight to both academics and managers. Academics may further explore composition-based strategy as a determinant of competitive advantage and firm's performance. Similarly, managers of small firms may pursue a composition-based strategy to attain multiple sources of competitive advantage and exploit them to achieve superior performance.

Keywords: composition-based view; CBV; composition-based strategy; firm's performance; competitive advantage; small retail businesses.

DOI: 10.1504/IJGSB.2023.130346

International Journal of Globalisation and Small Business, 2023 Vol.13 No.3, pp.291 - 314

Received: 31 Dec 2021
Accepted: 06 May 2022
Published online: 17 Apr 2023 *