Competitive strategies and value creation: a twofold perspective analysis

Purpose - This paper investigates whether the implementation of a defined competitive strategy brings about different value creation levels, where ‘value’ is defined in a twofold perspective as ‘shareholder value’ versus ‘stakeholder value’ and ‘social capital’. Design/Methodology - A sample of 169 European companies is investigated. Simple linear regressions and t-tests for the equality of means are conducted. Findings - While no significant differences are found in the creation of value for the shareholders, firms following differentiation strategies generate considerably higher value for all the stakeholder groups than companies pursing cost leadership strategies. Results also show that size and reputational considerations play a significant role in explaining the different stakeholder value performance. Limitations - Some missing data such as off-balance sheet items could have influenced the calculation of the discriminant values for strategy classification. Implications - Although the two groups manage to achieve comparable levels of profitability, the differentiators, presumably because of their structural outward-facing orientation, seem to be better positioned to meet the challenges of the next wave of growth, which resides in the substantial interconnection between economic and societal value. The path to value creation still needs a better understanding of how the enlarged stakeholder approach can influence corporate long-term success. Originality/value - In light of the importance of competitive strategy as value creation tools, the works sheds some light on the relationship between competitive strategies and value creation as it has been approached more recently.