Analyzing the performance of FMCG firms: role of competitive strategies and capital structure

Purpose The present study attempts to examine how competitive strategies and capital structure impact the performance of Indian Fast-Moving Consumer Goods (FMCG) firms. Furthermore, it also aims at investigating the moderating effect of competitive strategies on the relationship amid capital structure and performance. Design/methodology/approach The sample for the study comprises 61 firms listed on the BSE FMCG index spanning over eight years from 2016 to 2023. The data have been collected from the CAPITALINE database and are analyzed using Panel data regression along with various diagnostic tests. Findings The findings documented an insignificant influence of capital structure on performance. Additionally, the hybrid strategy emerges as the most impactful strategy in augmenting FMCG performance, attributed to its adaptability to diverse consumer preferences, cost-effectiveness and product distinctiveness, providing a competitive advantage. Additionally, it emphasizes the significant role that competitive strategy plays in moderating the link between capital structure and performance. Research limitations/implications The study provides a valuable guide for stakeholders desiring to gain a thorough comprehension of factors shaping FMCG performance. The study’s outcome will significantly impact the financial and strategic decisions of Indian FMCG firms, offering vital insights for managers and policymakers to make well-informed choices in optimizing strategies and capital structure for better performance management. Originality/value The study provides a comprehensive examination of competitive strategies and capital structure’s impact on performance by simultaneously integrating the moderating role of competitive strategy, setting it unique from existing literature. Furthermore, it differentiates itself by exploring the underexplored landscape of the Indian FMCG sector by utilizing secondary data instead of more commonly used primary data.