Management

Business Strategy and Competitive Advantage in Family Businesses in Ghana: The Role of Social Networking Relationships

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The business strategy perspective argues that achieving competitive advantage hinges on pursing a coherent competitive strategy. Family businesses are also said to manifest a strong desire to develop enduring and committed social relationships with external stakeholders. Nevertheless, there has been relatively little attention devoted to the business strategic activities of family businesses and how they use social networking relationships developed with external entities to bolster their business strategy and build competitive advantage. Using data from sub-Saharan African economy, Ghana, over two time periods, this study examined effects of business strategy on performance of family businesses and how the social networking relationships the managers of family businesses develop with external entities moderates the business strategy – performance link. The findings from 104 family firms over two time periods indicate that the business strategies of cost leadership and differentiation were both positively related to return on performance. Though, not hypothesized, social networking relationships with community leaders and government bureaucratic officials enhanced the performance of family businesses, but social networking relationships with political leaders was detrimental to performance. The findings also indicated that the effect of cost leadership on performance is strengthened by social networking relationship with community leaders. However, cost leaderships influence on performance is impeded by networking relationships with political leaders. On the other hand, the effect of differentiation on performance was augmented by networking relationships with community leaders. The findings indicated that (1) the pursuit of the business strategies of cost leadership and differentiation create competitive advantage for family businesses, (2) social networking relationships with government bureaucratic officials and community leaders are beneficial to family businesses, but social networking relationships with political leaders is detrimental to family businesses, and (3) the benefit of business strategy to family businesses is moderated positively by networking with community leaders, but negatively by networking with political leaders.

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Publisher

: ., 2000

Collation

1-35

Language

English

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NONE

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Subject(s)

Business Strategy and Competitive Advantage in Fam

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