How Do Competition and Capabilities Influence Managerial Performance?

Abstract

The environment in which an organization operates namely, new entrants, substitute products, abundance of competitors with diverse strategies, lack of differentiation, origins and personalities (Porter, 1979), dictates how the company should plan its internal business processes as well as its learning and growth development to satisfy customers and thus achieve enterprise performance. For this study, we collected data until February 2009 by surveying American and Canadian companies using the Dunn and Bradstreet database. We used OLS regression to test hypothesized relation between the variables. We find that there is a positive relationship between Learning & growth (LG) and Technological dynamism (TD); and LG and Environmental competitiveness (EC); but a weak positive relationship between LG and Internal business process (IBP). These results support our argument that firms that confront external environment need to invest in IBP in order to succeed. We found that LG has a strong positive relationship with EC but not significant relationship with TD. While LG has a strong positive influence on Customer satisfaction (CS), IBP shows a very weak positive relationship but Financial Performance (FP) has a strong positive relationship with EC, IBP, and CS, but a relatively weak positive relationship with TD and LG. This means that a competitive environment with fast moving technology influences firms to invest in internal processes and human resources which in turn creates customer satisfaction thus have better operating results. Before the results could be generalized, more research is warranted.