The Effect of Competition in the Product Market on the Relationship Between Competitive Strategies and the Competitive Power Growth of Firms Listed on the Tehran Stock Exchange

Objectives: In today’s growing and competitive market environment, companies are compelled to adopt strategies to maintain and enhance their competitive power. This study aims to examine the effect of competitive strategies—specifically product differentiation and cost management—on the growth of companies’ competitive power, with a particular focus on competitive and monopolistic industries. Methodology/Design/Approach: The study employs an applied research design and analyzes data from 136 companies listed on the Tehran Stock Exchange over the period 2004–2019. Research hypotheses were tested separately for competitive and monopolistic industries, as well as for the overall period, to assess the differential impact of the strategies. Findings: The results indicate that cost management strategies contributed to an increase, while product differentiation strategies led to a decrease in the growth of competitive power during the study period, particularly in monopolistic industries. The intensity of the effect of cost management on competitive power growth differed from that of product differentiation. In competitive industries, neither product differentiation nor cost management strategies had a significant impact on the growth of competitive power. Overall, the effect of these competitive strategies varies between monopolistic and competitive industry contexts. Innovation: This study provides insights into how the effectiveness of competitive strategies depends on industry structure. By distinguishing the impacts of cost management and product differentiation in monopolistic versus competitive settings, the research offers practical guidance for managers seeking to enhance firm competitiveness through strategic decision-making.