Relationship between Competitive Strategy and Firm Performance: Moderated by Environmental Dynamism (ED) and Competitive Intensity (CI)

This study is intended to examine the effects of strategy on performance moderated by environmental dynamism (ED) and competitive intensity (CI). Survey data was obtained from Batik MSMEs in Central Java - Indonesia. Sampling was carried out in the Yogyakarta, Surakarta, Pekalongan, and Rembang areas with a total sample of 150 Micro, Small, and Medium Enterprises (MSMEs). The results show that the effect of differentiation strategy (DS) on performance is stronger in more dynamic environments. However, this environmental dynamism (ED) weakens the effect of cost leadership strategy (CLS) on firm performance. Furthermore, competitive intensity can increase the effect of CLS and decrease the effect of DS on firm performance.