Business strategy and industrial competition: The case of manufacturing companies

This research aims to test if appropriate business strategy can improve firm performance using industrial competition as its moderating variable. This study applies Miles and Snow's (1978) business strategy typology: prospectors and defenders. This study takes manufacturing companies listed on Indonesia Stock Exchange (IDX) during 2011-2016 as the research object, as they have complete business processes to better describe complete business strategy implementation. Research in emerging markets, such as Indonesia, will provide a complete picture of the impact of business strategy on business performance. The results show that prospectors have better financial performance than defenders and will last for two years after the strategy was executed. This study also finds that prospectors who are committed to innovation have a better performance than defenders, especially in high levels of industrial competition. This result is essential for managers to adopt a suitable business strategy under the competitive environment.