Size matters: The market–non-market strategy nexus and firm performance in South Africa

• Published in: South African journal of business management Vol. 55; no. 1; pp. 1 - 12
• Main Authors: Parnell, John A., Troilo, Michael L., Dobbelstein, Thomas
• Format: Journal Article
• Language: English
• Published: Pretoria AOSIS 2024; African Online Scientific Information Systems (Pty) Ltd t/a AOSIS; South African Bureau for Scientific Publications; AOSIS Publishing
• Subjects: Africa; Business; Business strategy; Executives; Financial performance; Firm performance; Firm size; Leadership; Management; Managers; Market strategy; Non-market strategy; Size of enterprise; smartPLS; Social exchange theory; South Africa; Structural equation modeling; Variance analysis; South Africa; Ghana; Sub-Saharan Africa; SmartPLS; business strategy; Africa; South Africa; market strategy; firm size; firm performance; Non-market strategy
• ISSN: 2078-5585; 0378-9098; 2078-5976; 2078-5976
• DOI: 10.4102/sajbm.v55i1.4273

\r\nPurpose\r\nThis study seeks to discover how a firm’s size and its use of both market and non-market strategies (MS and NMS) impact firm performance in South Africa.\r\n\r\n\r\nDesign/methodology/approach\r\nWe used the Prolific platform to gather survey data from 247 executives and managers across the country representing a variety of firm sizes and industries. Cronbach’s alpha, analysis of variance (ANOVA) and structural equation modelling via partial least squares (PLS-SEM) were then employed to test constructs and hypotheses. Configuration theory and social exchange theory (SET) are the conceptual foundations for this study.\r\n\r\n\r\nFindings/results\r\nFirm size is a driver of the market strategy of differentiation, but not cost leadership. Larger firms are also more likely to pursue both political and social NMS. Differentiation and social NMS positively impact firm performance, but cost leadership and political NMS do not.\r\n\r\n\r\nPractical implications\r\nManagers should emphasise differentiating their products and services rather than being a low-cost provider. When considering various non-market strategies, they should emphasise social NMS. Although large firms are more likely than small firms to pursue political NMS, they do not appear to accrue any benefit.\r\n\r\n\r\nOriginality/value\r\nThis study fills gaps in the strategy-performance literature by directly linking firm size to strategic choices and by analysing the effects of different types of MS and NMS on firm performance. As such, it is valuable to both academics and practitioners. This study also advances our understanding of MS and NMS in South Africa.\r\n