Competitive strategies and small subsistence business performance: The mediating role of intangible resources

Abstract

From the basis of the competitive advantage theory, this study analyzes how competitive strategies and firm’s resources affect small subsistence business performance. The study establishes that a differentiation strategy has a greater influence on business performance, compared to a cost leadership strategy, as well as a mediating effect of the intangible resources on the relationship competitive strategies-business performance. Using the software R, a Partial Least Square (PLS) technique is used to test the hypothesis based on 104 small subsistence businesses from Southern Mexico. Findings suggest that a cost leadership strategy affects small subsistence business performance in a greater way, followed by a differentiation strategy and managerial financial capabilities. Moreover, intangible resources as a second-order construct of capabilities partially mediates those effects. This gives evidence on how the perspective of Resource Based View and Strategic Positioning operate within small subsistence businesses and an emerging economy context.