In today’s competitive business environment, organizations must swiftly implement strategies to maintain their market position, differentiate themselves, expand their products, and enhance customer value. Differentiation strategies in organizations, such as universities, are crucial due to global competition, changing student expectations, technological advancements, and evolving market demands.
Objective
The study examines the impact of a differentiation strategy on organizational performance in developing countries, analyzing the macro-environment as a mediator.
Methods
The researchers employed a quantitative research design, utilizing a purposive sampling technique to select 200 managers from a targeted population of 400 managers employed at public universities in Kenya. The data were collected through a cross-sectional survey that utilized questionnaires. Partial least squares structural equation modeling (PLS-SEM) was used for data analysis.
Results
The study revealed that differentiation strategy significantly influences organizational performance across all managerial levels. Differentiation strategy significantly correlates with the macro-environment. The macro-environment significantly impacts organizational performance for the middle management and complete sample, but not for top management. The R2 values indicate moderate explanatory power for MENV (R2 = 0.316) and weak explanatory power for PER (R2 = 0.244), suggesting that additional organizational and institutional factors may influence organizational performance. The study also found that the macro-environment significantly mediates the influence of differentiation strategy on organizational performance for the middle management and complete sample, but not for the top management, which had an insignificant indirect effect.
Conclusion
The research suggests that managers should adopt a differentiation strategy to enhance their unique value propositions and internal VRIN capabilities and resources, including technological innovation, customer service, staff training, continuous service quality enhancement, and brand and reputation building. Additionally, managers need to establish macro-environmental scanning mechanisms to enable them to respond proactively to regulatory, technological, and economic shifts. Managers should also foster public-private partnerships to co-develop programs and align with evolving policy environments. For policymakers and governments, the findings underscore the importance of investing in technological infrastructure, creating enabling regulatory environments, and fostering collaborative systems through public-private partnerships and international linkages. Such efforts are critical to expanding access to resources, facilitating policy alignment to support institutional innovation, resilience, and national competitiveness across different sectors and industries.
LeeCWuCJongD. Understanding the impact of competitive advantage and core competency on regional tourism revitalization: empirical evidence in Taiwan. Front Psychol2022; 13: 922211.
5.
PucciarelliFKaplanA. Competition and strategy in higher education: managing complexity and uncertainty. Bus Horiz2016; 59(3): 311–320.
6.
Commission for University Education. Universities authorised to operate in Kenya. Commission for University Education, 2022.
7.
ShisiaTMWanjereDM. Effect of competitive strategies on performance of public universities in Kenya (Nairobi County). Int J Econ2019; 3: 203–226. Available:. https://www.ijebmr.com
8.
K. Commission for University Education. University statistics (2017/2018). Commission for University Education, 2019.
9.
McCowanT. Quality of higher education in Kenya: addressing the conundrum. Int J Educ Dev2018; 60: 128–137.
10.
World Bank. Improving higher education performance in Kenya: a policy report. 2019, [Online]. Available:. https://www.worldbank.org
11.
PorterME. Competitive advantage: creating and sustaining superior performance with a new introduction. In: Introduction. The Free Press, 1998.
12.
WheelenTLDavid HungerJHoffmanAN, et al.Strategic management and business policy: globalization, innovation and sustainability. 15th ed.Pearson Education Limited, 2018.
IslamiXTopuzovska LatkovikjMDrakulevskiL, et al.Does differentiation strategy model matter? designation of organizational performance using differentiation strategy instruments – an empirical analysis. Bus Theor Pract2020; 21(1): 158–177.
JohnsonGWhittingtonRScholesK, et al.Exploring strategy: text and cases. 11th ed.Pearson Education, 2017. [Online]. Available. https://www.pearson-books.com
18.
WangXMolNPJongbloedB. Performance measurement in universities. University of Twente, 2010.
PeterafM. Resource-based theories. The Palgrave encyclopedia of strategic management. Palgrave Macmillan UK, 2016, pp. 1–4.
21.
MullinsLJChristyG. Management and organisational behaviour. 11th ed.Pearson Education Limited, 2016.
22.
BankerRDMashruwalaRTripathyA. Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?Manag Decis2014; 52(5): 872–896.
23.
Kankam-KwartengCOsmanBAcheampongS. Performance of restaurants: recognizing competitive intensity and differentiation strategies. J Tour Her Serv Mark2020; 6(3): 25–34.
24.
NavaiaEMoreiraARibauC. Differentiation strategy and export performance in emerging countries: mediating effects of positional advantage among Mozambican firms. Economies2023; 11(2): 44.
25.
BaariuLVGathunguJNdemoB. Moderation effect of macro environment on the relationship between competitive strategy drivers and performance of manufacturing small and medium enterprises in Nairobi County, Kenya. DBA Africa Manag Rev2020; 10(5): 107–133. [Online]. Available. https://journals.uonbi.ac.ke/damr
26.
SabihainiPrasetioJE. Competitive strategy and business environment on SMEs performance in Yogyakarta, Indonesia. Int J Manag2020; 11(8): 1370–1378.
27.
YadiFTJMuhammadNPramestiD. The impact of external environment on competitive advantage through SME differentiation strategy in Central Java. Univ J Manag2021; 9(2): 38–43.
28.
ManyekiKOngetiWOdiyoW. Influence of Porters generic strategies on performance of private chartered universities in Kenya: a case of Nairobi County. J Strat Manag2017; 2: 47–67.
29.
DavidFRDavidFR. Strategic management a competitive advantage approach: concepts and cases. 16th ed.Pearson Education Limited, 2017.
30.
BastedoMN. Open systems theory. In: The Sage encyclopedia of educational leadership and administration. Sage Publications, 2004, vol 2, p. 711.
31.
TetiEPerriniFTirapelleL. Competitive strategies and value creation: a twofold perspective analysis. J Manag Dev2014; 33(10): 949–976.
ThompsonAPeterafMAGambleJE, et al.Crafting and executing strategy: concepts and readings. 20th ed.McGraw-Hill Education, 2016. [Online]. Available. https://bit.ly/LS4Apple
34.
Rosenberg HansenJFerlieE. Applying strategic management theories in public sector organizations: developing a typology. Public Manag Rev2016; 18(1): 1–19.
35.
PorterM. What is strategy?Harvard Business School Publishing, 1996, vol 74, pp. 61–78.
36.
PorterME. Competitive strategy techniques for analyzing industries and competitors. In: New Introduction. The Free Press, 1998.
37.
BrysonJM. Strategic Planning for public and nonprofit organizations. A guide to strengthening and sustaining organizational achievement. 4th ed.Wiley, 2018.
38.
KaliappenNHilmanH. Competitive strategies, market orientation types and innovation strategies: finding the strategic fit. World J Entrep Manag Sust Dev2017; 13(3): 257–261.
39.
HossainMSKabirSBMahbubN. Competitive strategies and organizational performance: determining the influential factor conquer over the rivals in the Food Industry of Bangladesh. Int Rev Manag Market2019; 9(3): 100–105.
40.
AcquaahMAdjeiMCMensa-BonsuIF. Competitive strategy, environmental characteristics and performance in African emerging economies: lessons from firms in Ghana. J Afr Bus2008; 9(1): 93–120.
41.
Claver-CortésEPertusa-OrtegaEMMolina-AzorínJF. Characteristics of organizational structure relating to hybrid competitive strategy: implications for performance. J Bus Res2012; 65(7): 993–1002.
42.
Pertusa-OrtegaEMMolina-AzorínJFClaver-CortésE. Competitive strategies and firm performance: a comparative analysis of pure, hybrid and “stuck-in-the-middle” strategies in Spanish firms. Br J Manag2009; 20(4): 508–523.
43.
SpanosYELioukasS. An examination into the causal logic of rent generation: contrasting Porter’s competitive strategy framework and the resource-based perspective. Strateg Manag J2001; 22(10): 907–934.
44.
TeeceDJ. Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance. Strateg Manag J2007; 28(13): 1319–1350.
45.
BarneyJBHesterlyWS. Strategic management and competitive advantage: concepts and cases. In: Global. Pearson Education Limited, 2015. [Online]. Available. https://www.pearsonmylabandmastering.com
46.
SrivastavaRKFaheyLChristensenHK. The resource-based view and marketing: the role of market-based assets in gaining competitive advantage. J Manag2001; 27(6): 777–802.
47.
BarneyJBClarkDN. Resource-based theory: creating and sustaining competitive advantage. Oxford University Press, 2007.
PriemRLButlerJE. Is the resource-based “view” a useful perspective for strategic management research?Acad Manag Rev2001; 26(1): 22.
51.
KraaijenbrinkJSpenderJCGroenAJ. The Resource-based view: a review and assessment of its critiques’. Sage Publications Inc, 2010.
52.
HarneyB. Systems theory. In: A guide to key theories for human resource management research. Edward Elgar Publishing Ltd, 2024, pp. 312–318.
53.
RothS. The open theory and its enemy: implicit moralisation as epistemological obstacle for general systems theory. Syst Res Behav Sci2019; 36(3): 281–288.
54.
IslamiXMustafaNTopuzovska LatkovikjM. Linking Porter’s generic strategies to firm performance. Futur Bus J2020; 6(1): 3.
55.
ColeE. Strategies for competitive advantage. Western Ext Mark Comm2008; 5: 1–8.
56.
AgyapongAZamoreSMensahHK. Strategy and performance: does environmental dynamism matter?J Afr Bus2020; 21(3): 315–337.
57.
GošnikDKavčičKMeškoM, et al.Relationship between changes in the business environment, innovation strategy selection and firm’s performance: empirical evidence from Slovenia. Adm Sci2023; 13(4): 99.
58.
KharubMPatleBKSharmaG. The relationship between differentiation strategy and firm performance: a mediating role of quality management. IOSR J Mech Civ Eng2017; 4(2): 66–71. [Online]. Available. https://www.iosrjournals.org
59.
AliqahKMA. Differentiation and organizational performance: empirical evidence from Jordanian companies. J Econ2012; 3(1): 7–11.
60.
HilmanHKaliappenN. Do cost leadership strategy and process innovation influence the performance of Malaysia hotel industry?Asian Soc Sci2014; 10(10): 134–141.
61.
MwanikiAWHeFHemdanW. Cost leadership strategy and the moderating role of general environment on organizational performance. In: Tallón-BallesterosAJ (ed). Modern management based on big data V: proceedings of the 5th international conference (MMBD 2024). IOS Press, 2024, pp. 17–23.
62.
OkwembaME. Influence of cost leadership strategy on performance of public universities in Western Kenya Region. Int J Acad Res Psychol2023; 6(7): 1–4, [Online]. Available:. https://www.ijarp.org
63.
NavaiaEMoreiraARibauC. The mediating roles of cost leadership and cost focus strategies on innovation capabilities and export performance. Results from an emerging country. Cogent Bus Manag2024; 11(1): 1–18.
64.
LiCBLiJJ. Achieving superior financial performance in China: differentiation, cost leadership or both?J Int Market2008; 16(3): 1–22.
65.
HodgkinsonIR. Are generic strategies “fit for purpose” in a public service context?Publ Pol Adm2013; 28(1): 90–111.
66.
ZhangBWangDMoL, et al.Brand recognition, interdepartmental conflict, and performance: an investigation of Porter’s differentiated competitive strategy implementation in a large Chinese automobile company. Sustainability2022; 14(20): 13546.
67.
HoltK. Differentiation strategy: winning customers by being different. 1st ed.Routledge, 2020.
68.
ChiT. Business contingency, strategy formation, and firm performance: an empirical study of Chinese apparel SMEs. Adm Sci2015; 5(2): 27–45.
AkdoğanAACingšzA. An empirical study on determining the attitudes of small and medium sized businesses (SMEs) related to coopetition. Proced Soc Behav Sci2012; 58: 252–258.
71.
Sammut‐BonniciTGaleaD. SWOT analysis. In: Wiley encyclopedia of management. Wiley, 2015, pp. 1–9.
72.
AdeolaA. Impact of external business environment on organisational performance of small and medium scale enterprises in Osun state, Nigeria. Scholedge Int J Bus Policy & Gov2016; 3(10): 155–166.
73.
SinghRSarangalRKSinghG. The impact of micro and macro environment on entrepreneurial success: case of J&K MSMEs. FIIB Business Review2022; 11(1): 94–106.
74.
NjorogeJKOngetiWJKinuuD, et al.Does external environment influence organizational performance? the case of Kenyan state corporations. Manag Org Studies2016; 3(3): 41–51.
75.
MachukiVNAosaE. The influence of the external environment on the performance of publicly quoted companies in Kenya. Business Admin Manag2011; 1(7): 205–218, [Online]. Available. https://www.primejournal.org/BAM
76.
YasaNNKSukaatmadjaIPGGiantariIGAK, et al.The influence of external environment and resource capability on the hybrid business strategy and business performance. In: Proceedings of the 7th international conference on entrepreneurship and business management (ICEBM uNTAR). Scitepress, 2019, pp. 343–349.
77.
YanS.Competitive strategy and business environment: the case of small enterprises in China, Asian Soc Sci2010; 6: 64–71. [Online]. Available:. https://www.ccsenet.org/ass
78.
Sammut‐BonniciTGaleaD. PEST analysis. In: Wiley encyclopedia of management. Wiley, 2015, pp. 1.
79.
HairJJFHultTMRingleCM, et al.Classroom companion: business partial least squares structural equation modeling (PLS-SEM) using R. A workbook. Springer Nature Switzerland AG, 2021.
80.
GD Israel, Determining sample size, 2012, University of Florida,IFAS Extension. https://edis.ifas.ufl.edu
81.
KockNHadayaP. Minimum sample size estimation in PLS-SEM: the inverse square root and gamma-exponential methods. Inf Syst J2016; 28(1): 227–261.
82.
EtikanI. Comparison of convenience sampling and purposive sampling. Am J Theor Appl Stat2016; 5(1): 1.
CooperDRSchindlerPS. Business research methods. 12th ed.McGraw-Hill, 2014.
85.
PalinkasLAHorwitzSMGreenCA, et al.Purposeful sampling for qualitative data collection and analysis in mixed method implementation research. Adm Policy Ment Health2015; 42(5): 533–544.
86.
FieldAP. Discovering statistics using SPSS (and sex and drugs and rock ‘n’ roll). 3rd ed.Sage, 2012.
87.
PallantJ. SPSS survival manual. A step-by-step guide to data analysis using SPSS. 3rd ed.Open University Press, 2007.
88.
PodsakoffPMMacKenzieSBLeeJY, et al.Common method biases in behavioral research: a critical review of the literature and recommended remedies. J Appl Psychol2003; 88(5): 879–903.
PodsakoffPMMacKenzieSBPodsakoffNP. Sources of method bias in social science research and recommendations on how to control it. Annu Rev Psychol2012; 63: 539–569.
91.
ChangSJVan WitteloostuijnAEdenL. From the Editors: common method variance in international business research. J Int Bus Stud2010; 41(2): 178–184.
92.
KockN. Common method bias in PLS-SEM: a full collinearity assessment approach. Int J E-Collab2015; 11(4): 1–10.
93.
KockNGaskinsL. The mediating role of voice and accountability in the relationship between internet diffusion and government corruption in Latin America and Sub-Saharan Africa. Inf Technol Dev2014; 20(1): 23–43.
94.
KockNLynnGS. Lateral collinearity and misleading results in variance-based SEM: an illustration and recommendations. J Assoc Inf Syst Online2012; 13: 546–580. Available. https://ssrn.com/abstract=2152644
95.
LindellMKWhitneyDJ. Accounting for common method variance in cross-sectional research designs. J Appl Psychol2001; 86(1): 114–121.
96.
ChinWW. The partial least squares approach to structural equation modeling. Modern methods for business research1998; 295(2): 295–336, [Online]. Available. https://www.researchgate.net/publication/311766005
97.
HairJFRisherJJSarstedtM, et al.When to use and how to report the results of PLS-SEM. Eur Bus Rev2019; 31(1): 2–24.
98.
HenselerJRingleCMSarstedtM. A new criterion for assessing discriminant validity in variance-based structural equation modeling. J Acad Market Sci2015; 43(1): 115–135.
99.
SarstedtMRingleCMHairJF. Partial least squares structural equation modeling. In: HomburgCKlarmannMVombergA (eds). Handbook of market research. Springer International Publishing, 2021, pp. 1–47.
100.
FornellCLarckerDF. Evaluating structural equation models with unobservable variables and measurement error. Source: J Mark Res1981; 18(1): 39–50.
101.
HairJJFHultGTMRingleCM, et al.A primer on partial least squares structural equation modelling (PLS-SEM). Sage Publications, Inc, 2014.
102.
CohenJ. Statistical power analysis for the behavioral sciences. 2nd ed.Lawrence Erlbaum Associates, 1988.
103.
DanksNPRayS. Predictions from partial least squares models. In: Applying partial least squares in tourism and hospitality research. Emerald Group Publishing Ltd, 2018, pp. 35–52. DOI: 10.1108/978-1-78756-699-620181003.
104.
ShmueliGSarstedtMHairJF, et al.Predictive model assessment in PLS-SEM: guidelines for using PLSpredict. Eur J Market2019; 53(11): 2322–2347.
105.
OtienoEAOgutuMNdemoB, et al.The effect of enterprise risk management and macro environment on the performance of Kenya state-owned corporations. DBA Africa Manag Review2020; 10(3): 30–57, [Online]. Available. https://journals.uonbi.ac.ke/damr
106.
NdambukiABowenMKarauJ. The effects of business strategies on growth of market share in the telecommunications industry in Kenya: a case study of Telkom Kenya. European J Bus Stra Manag2017; 2(4): 16–32, [Online]. Available. https://www.iprjb.org
107.
SukboonyasatitKThanapaisamCManmarL. Key performance indicators of public universities based on quality assessment criteria in Thailand. Contemp Iss Educ Res2011; 4(9): 9–18.
108.
GuthrieJNeumannR. Economic and non-financial performance indicators in universities. The establishment of a performance-driven system for Australian higher education. Public Manag Rev2007; 9(2): 231–252.
