Business Strategies and Competitive Advantage: The Role of Performance and Innovation

This study aims to examine the effect of business strategies to improve the competitive advantages of small and medium enterprises (SMEs). Further, our study considers the importance of performance and innovation as mediating variables in the relationship between business strategies and competitive advantage. The sample of the study consists of 150 SMEs in the construction and real estate industry. Our findings show that business strategies have a positive impact on competitive advantage. Better business strategies improve the competitive advantage of SMEs. Further, business performance and innovation also mediate the relationship between business strategies and competitive advantages. These results provide evidence of the importance of performance and innovation to improve the competitive advantage. It is suggested that SMEs improve their performance and innovation capability to strengthen their competitive advantages.