The effects of competitive intensity and market dynamism on performance

The Iranian market has the potential to be an important market for firms. Nevertheless, Iran's economy is also going through many challenges which may have a stronger impact on international small and medium-sized enterprises (SMEs) because of the market conditions it faces. International SMEs face a myriad of factors in these markets which include how to navigate the competitive intensity and the dynamism in the market in order to achieve high performance. This study aims to explore this issue through examining cost and differentiation advantage as a mediator for the relation between market dynamism, competitive intensity, and international SMEs' performance from the perspectives of industrial organisation. Using firm-level surveys, the results indicate that both competitive intensity and market dynamism have a significant effect on international SME performance. However, differentiation and cost advantage do not have a mediating impact. These findings validate the effects of competitive intensity and market dynamism on the hypothesised dimensions of industrial organisation, thus contributing to the knowledge in management scholarship within the context of international business.