The impact of competitive strategy dimensions (cost leadership and innovative differentiation) on banks' profitability
Yıl 2025,
Cilt: 6 Sayı: 2, 1 - 22, 31.12.2025
Nashwan Ghazi Hameed Aldoury
,
Essia Ries Ahmed Abu Rıes
Öz
The primary objective of this study is to investigate the impact of competitive strategy dimensions cost leadership and innovative differentiation on the profitability of banks in the Iraqi. The sample includes 113 top managers (CFOs and CEOs) from financial instantiations (banks) listed with the Central Bank of Iraq. A quantitative research approach was adopted, and data collection occurred in two phases. In the first phase, 135 usable survey was retrieved from the 152 distributed. Partial Least Squares (PLS) analysis was used to test the research constructs. The findings revealed that innovative differentiation has a significant and positive impact significant on banks’ profitability. However, the cost leadership strategy showed no significant effect on profitability.
Kaynakça
-
Andersen, J. (2021). A relational natural-resource-based view on product innovation: The influence of green product innovation and green suppliers on differentiation advantage in small manufacturing firms. Technovation, 104, 102254.
-
Anwar, M. (2018). Business model innovation and SMEs performance—does competitive advantage mediate?. International Journal of Innovation Management, 22(07), 1850057. https://doi.org/10.1142/S1363919618500573
-
Anwar, M., & Li, S. (2021). Spurring competitiveness, financial and environmental performance of SMEs through government financial and non-financial support. Environment, Development and Sustainability, 23(5), 7860-7882.
-
Anwar, M., & Shah, S. Z. (2021). Entrepreneurial orientation and generic competitive strategies for emerging SMEs: Financial and nonfinancial performance perspective. Journal of Public Affairs, 21 (1), e2125.
-
Bagozzi, R. P., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the academy of marketing science, 16, 74-94.
-
Banker, R. D., Mashruwala, R., & Tripathy, A. (2014). Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?. Management Decision.
-
Banker, R. D., R. Mashruwala, and A. Tripathy. (2014). “Does a Differentiation Strategy Lead to More Sustainable Financial Performance Than a Cost Leadership Strategy?” Management Decision 52 (5): 872–896.
https://doi.org/10.1108/MD-05-2013-0282.
-
Bao, W., Xiao, J., Deng, T., Bi, S., & Wang, J. (2024). The challenges and opportunities of financial technology innovation to bank financing business and risk management. Financial Engineering and Risk Management, 7(2), 82-88.
-
Birjandi, H., Jahromi, N. M., Darabi, S. A., & Birjandi, M. (2014). The effect of cost leadership strategy on ROA and future performance of accepted companies in Tehran Stock Exchange.
-
Chapman, R. and Hyland, P. (2000), “Strategy and continuous improvement in small-to-medium Australian manufacturers”, Integrated Manufacturing Systems, Vol. 11 No. 3, pp. 171-179.
-
Ciptadi, G., Budiarto, A., Ihsan, M. N., Wisaptiningsih, U., & Wahyuningsih, S. (2014). Reproductive performance and success of artificial insemination in Indonesian crossbreed goats in study versus small holder farm. American-
Eurasian Journal of Sustainable Agriculture, 8(7), 35-38.
-
Croteau, A. M., & Bergeron, F. (2001). An Information Technology Trilogy: Business Strategy, Technological Deployment and Organizational Performance. The Journal of Strategic Information Systems, 10 (2), 77-99.
-
Cui, L. (2020). The Impact of Innovation Input on Innovation Performance from the Perspective of Differentiation Strategy. International Journal of Social Science and Education Study, 2(12), 121-133.
-
Dadzie, C.A., Winston, E.M. and Dadzie, K.Q. (2012), “Organizational culture, competitive strategy, and performance in Ghana”, Journal of African Business, Vol. 13 No. 3, pp. 172-182.
-
Danso, A., Adomako, S., Amankwah‐Amoah, J., Owusu‐Agyei, S., & Konadu, R. (2019). Environmental sustainability orientation, competitive strategy and financial performance. Business Strategy and the Environment, 28(5), 885-
895.
-
Dutse, A. H. G., & Aliyu, M. S. (2018). Cost leadership, market orientation and business performance: An empirical investigation. Journal of Quantitative Methods, 2(2), 28-42.
-
Fedora, A. C., Rudiawarni, F. A., Sulistiawan, D., & Gümrah, A. (2025). Exploring the interplay of earnings management, business strategy and market competition: the case of Indonesia and South Korea. Asian Journal of Accounting Research, 10(1), 45-62.
-
Gölgeci, I., Gligor, D. M., Tatoglu, E., & Arda, O. A. (2019). A relational view of environmental performance: What role do environmental collaboration and cross-functional alignment play? Journal of Business Research, 96, 35–46.
-
Ha, N. M., Nguyen, P. A., Luan, N. V., & Tam, N. M. (2024). Impact of green innovation on environmental performance and financial performance. Environment, Development and Sustainability, 26(7), 17083-17104.
-
Habib, A. M. (2023). Do business strategies and environmental, social, and governance (ESG) performance mitigate the likelihood of financial distress? A multiple mediation model. Heliyon, 9(7).
-
Hair, J., Hollingsworth, C. L., Randolph, A. B., & Chong, A. Y. L. (2017). An updated and expanded assessment of PLS-SEM in information systems study. Industrial management & data systems, 117(3), 442-458.
-
Hulland, J. (1999). Use of partial least squares (PLS) in strategic management study: A review of four recent studies. Strategic management journal, 20(2), 195-204.
-
Hutahayan, B. (2020). The mediating role of human capital and management accounting information system in the relationship between innovation strategy and internal process performance and the impact on corporate financial performance.
-
Ilyas, m., khan, i., & khan, m. N. (2018). Cost leadership strategy and financial performance: empirical evidence from textile sector listed companies of pakistan. Journal of business & tourism, 4(1), 191-197.
-
Isichei, E. E., Isichei, M. O., & Moruku, R. K. (2025). Generic business strategies and competitiveness of SMEs in Nigeria. Competitiveness Review: An International Business Journal, 35(1), 158-174.
-
Ju, Y., Cheng, Y., Chen, L., & Xing, X. (2024). Enhancing firms’ innovation persistence in the circular economy through government-supported green supply chain demonstrations: cost leadership or differentiation?. International Journal of Logistics Research and Applications, 1-21.
-
Kharub, M., Mor, R. S., & Sharma, R. (2018). The relationship between cost leadership competitive strategy and firm performance: A mediating role of quality management. Journal of Manufacturing Technology Management, 30(6), 920-936.
-
Kharub, M., Mor, R. S., & Sharma, R. (2018). The relationship between cost leadership competitive strategy and firm performance: A mediating role of quality management. Journal of Manufacturing Technology Management, 30(6), 920-936.
-
Kharub, M., R. S. Mor, and R. Sharma. 2019. “The Relationship between Cost Leadership Competitive Strategy and Firm Performance: A Mediating Role of Quality Management.” Journal of Manufacturing Technology Management 30 (6): 920–936. https://doi.org/10.1108/JMTM-06-2017-0116.
-
Komakech, R. A., Namugenyi, M. W., Namara, R. B., & Ombati, T. O. (2024). Influence of Competitive Strategies on the Performance of Small Manufacturing Enterprises in Kampala Metropolitan, Uganda. Ugandan Journal of Management and Public Policy Studies, 25(1), 24-41.
-
Lechner, C., & Gudmundsson, S. V. (2014). Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal, 32(1), 36-60.
-
Li, C. B., & Li, J. J. (2008). Achieving superior financial performance in China: Differentiation, cost leadership, or both?. Journal of international Marketing, 16(3), 1-22.
-
Lofving, M., Safsten, K. and Winroth, M. (2014), “Manufacturing strategy frameworks suitable for SMEs”, Journal of Manufacturing Technology Management, Vol. 25 No. 1, pp. 7-26.
-
Mahmood, N. S., & Ahmed, E. M. (2022). Mediating effect of risk management practices in Iraqi private banks financial performance. Journal of Financial Services Marketing, 1-20.
-
Mohammed, A. J., Hussein, A. A., & AL-Maliki, M. N. (2023). The role of modern technologıes ın enhancıng banks profıtabılıty. American Journal of Business Management, Economics and Banking, 16, 231-243.
-
Ngo, Q. H. (2022). The Positive Effect of Innovative Culture on Differentiation Strategy: Empirical Results from Vietnamese Smes. Calitatea, 23(189), 176-183.
-
Rehman, S. U., Elrehail, H., Nair, K., Bhatti, A., & Taamneh, A. M. (2023). MCS package and entrepreneurial competency influence on business performance: the moderating role of business strategy. European Journal of
Management and Business Economics, 32(1), 1-23.
-
Reimann, M., Schilke, O., & Thomas, J. S. (2010). Customer relationship management and firm performance: the mediating role of business strategy. Journal of the academy of marketing science, 38, 326-346.
-
Rights, J. D., & Sterba, S. K. (2018). A framework of R-squared measures for single-level and multilevel regression mixture models. Psychological methods, 23(3), 434.
-
Rokhim, A. (2024). Business Management Strategies to Enhance MSME Competitiveness. Indonesian Economic Review, 4(2), 40-58.
-
Schulz, S. A., & Flanigan, R. L. (2016). Developing competitive advantage using the triple bottom line: A conceptual framework. Journal of Business & Industrial Marketing, 31(4), 449-458.
-
Sekaran, U., & Bougie, R. (2010). Study Methods for Business: A Skill Building Approach. John Willey & Sons.
-
Sekaran, U., & Bougie, R. (2010). Study Methods for Business: A Skill Building Approach. John Willey & Sons.
-
Sun, W., & Li, C. (2022). Cost leadership strategy, diagnostic control style and firm performance. In Economic and
Business Management (pp. 165-171). CRC Press.
-
Valipour, H., Birjandi, H., & Honarbakhsh, S. (2012). The effects of cost leadership strategy and product differentiation strategy on the performance of firms. Journal of Asian Business Strategy, 2(1), 14-23.
-
Vinzi, V.E., Chin, W.W., Henseler, J. and Wang, H. (2010), Handbook of Partial Least Squares, Springer, Berlin, Vol. 201 No. 0.
-
Yusuf, A. U., Rasyid, S., & Rura, Y. (2020). The effect of intellectual capital and supply chain management on the financial performance by using cost leadership strategy as moderating variable. International Journal of Innovative Science and Study Technology, 5(2), 290-300.
-
Zairbani, A., & Jaya Prakash, S. K. (2025). Competitive strategy and organizational performance: a systematic literature review. Benchmarking: An International Journal, 32(1), 52-111.
The impact of competitive strategy dimensions (cost leadership and innovative differentiation) on banks' profitability
Yıl 2025,
Cilt: 6 Sayı: 2, 1 - 22, 31.12.2025
Nashwan Ghazi Hameed Aldoury
,
Essia Ries Ahmed Abu Rıes
Öz
The primary objective of this study is to investigate the impact of competitive strategy dimensions cost leadership and innovative differentiation on the profitability of banks in the Iraqi. The sample includes 113 top managers (CFOs and CEOs) from financial instantiations (banks) listed with the Central Bank of Iraq. A quantitative research approach was adopted, and data collection occurred in two phases. In the first phase, 135 usable survey was retrieved from the 152 distributed. Partial Least Squares (PLS) analysis was used to test the research constructs. The findings revealed that innovative differentiation has a significant and positive impact significant on banks’ profitability. However, the cost leadership strategy showed no significant effect on profitability.
Kaynakça
-
Andersen, J. (2021). A relational natural-resource-based view on product innovation: The influence of green product innovation and green suppliers on differentiation advantage in small manufacturing firms. Technovation, 104, 102254.
-
Anwar, M. (2018). Business model innovation and SMEs performance—does competitive advantage mediate?. International Journal of Innovation Management, 22(07), 1850057. https://doi.org/10.1142/S1363919618500573
-
Anwar, M., & Li, S. (2021). Spurring competitiveness, financial and environmental performance of SMEs through government financial and non-financial support. Environment, Development and Sustainability, 23(5), 7860-7882.
-
Anwar, M., & Shah, S. Z. (2021). Entrepreneurial orientation and generic competitive strategies for emerging SMEs: Financial and nonfinancial performance perspective. Journal of Public Affairs, 21 (1), e2125.
-
Bagozzi, R. P., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the academy of marketing science, 16, 74-94.
-
Banker, R. D., Mashruwala, R., & Tripathy, A. (2014). Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?. Management Decision.
-
Banker, R. D., R. Mashruwala, and A. Tripathy. (2014). “Does a Differentiation Strategy Lead to More Sustainable Financial Performance Than a Cost Leadership Strategy?” Management Decision 52 (5): 872–896.
https://doi.org/10.1108/MD-05-2013-0282.
-
Bao, W., Xiao, J., Deng, T., Bi, S., & Wang, J. (2024). The challenges and opportunities of financial technology innovation to bank financing business and risk management. Financial Engineering and Risk Management, 7(2), 82-88.
-
Birjandi, H., Jahromi, N. M., Darabi, S. A., & Birjandi, M. (2014). The effect of cost leadership strategy on ROA and future performance of accepted companies in Tehran Stock Exchange.
-
Chapman, R. and Hyland, P. (2000), “Strategy and continuous improvement in small-to-medium Australian manufacturers”, Integrated Manufacturing Systems, Vol. 11 No. 3, pp. 171-179.
-
Ciptadi, G., Budiarto, A., Ihsan, M. N., Wisaptiningsih, U., & Wahyuningsih, S. (2014). Reproductive performance and success of artificial insemination in Indonesian crossbreed goats in study versus small holder farm. American-
Eurasian Journal of Sustainable Agriculture, 8(7), 35-38.
-
Croteau, A. M., & Bergeron, F. (2001). An Information Technology Trilogy: Business Strategy, Technological Deployment and Organizational Performance. The Journal of Strategic Information Systems, 10 (2), 77-99.
-
Cui, L. (2020). The Impact of Innovation Input on Innovation Performance from the Perspective of Differentiation Strategy. International Journal of Social Science and Education Study, 2(12), 121-133.
-
Dadzie, C.A., Winston, E.M. and Dadzie, K.Q. (2012), “Organizational culture, competitive strategy, and performance in Ghana”, Journal of African Business, Vol. 13 No. 3, pp. 172-182.
-
Danso, A., Adomako, S., Amankwah‐Amoah, J., Owusu‐Agyei, S., & Konadu, R. (2019). Environmental sustainability orientation, competitive strategy and financial performance. Business Strategy and the Environment, 28(5), 885-
895.
-
Dutse, A. H. G., & Aliyu, M. S. (2018). Cost leadership, market orientation and business performance: An empirical investigation. Journal of Quantitative Methods, 2(2), 28-42.
-
Fedora, A. C., Rudiawarni, F. A., Sulistiawan, D., & Gümrah, A. (2025). Exploring the interplay of earnings management, business strategy and market competition: the case of Indonesia and South Korea. Asian Journal of Accounting Research, 10(1), 45-62.
-
Gölgeci, I., Gligor, D. M., Tatoglu, E., & Arda, O. A. (2019). A relational view of environmental performance: What role do environmental collaboration and cross-functional alignment play? Journal of Business Research, 96, 35–46.
-
Ha, N. M., Nguyen, P. A., Luan, N. V., & Tam, N. M. (2024). Impact of green innovation on environmental performance and financial performance. Environment, Development and Sustainability, 26(7), 17083-17104.
-
Habib, A. M. (2023). Do business strategies and environmental, social, and governance (ESG) performance mitigate the likelihood of financial distress? A multiple mediation model. Heliyon, 9(7).
-
Hair, J., Hollingsworth, C. L., Randolph, A. B., & Chong, A. Y. L. (2017). An updated and expanded assessment of PLS-SEM in information systems study. Industrial management & data systems, 117(3), 442-458.
-
Hulland, J. (1999). Use of partial least squares (PLS) in strategic management study: A review of four recent studies. Strategic management journal, 20(2), 195-204.
-
Hutahayan, B. (2020). The mediating role of human capital and management accounting information system in the relationship between innovation strategy and internal process performance and the impact on corporate financial performance.
-
Ilyas, m., khan, i., & khan, m. N. (2018). Cost leadership strategy and financial performance: empirical evidence from textile sector listed companies of pakistan. Journal of business & tourism, 4(1), 191-197.
-
Isichei, E. E., Isichei, M. O., & Moruku, R. K. (2025). Generic business strategies and competitiveness of SMEs in Nigeria. Competitiveness Review: An International Business Journal, 35(1), 158-174.
-
Ju, Y., Cheng, Y., Chen, L., & Xing, X. (2024). Enhancing firms’ innovation persistence in the circular economy through government-supported green supply chain demonstrations: cost leadership or differentiation?. International Journal of Logistics Research and Applications, 1-21.
-
Kharub, M., Mor, R. S., & Sharma, R. (2018). The relationship between cost leadership competitive strategy and firm performance: A mediating role of quality management. Journal of Manufacturing Technology Management, 30(6), 920-936.
-
Kharub, M., Mor, R. S., & Sharma, R. (2018). The relationship between cost leadership competitive strategy and firm performance: A mediating role of quality management. Journal of Manufacturing Technology Management, 30(6), 920-936.
-
Kharub, M., R. S. Mor, and R. Sharma. 2019. “The Relationship between Cost Leadership Competitive Strategy and Firm Performance: A Mediating Role of Quality Management.” Journal of Manufacturing Technology Management 30 (6): 920–936. https://doi.org/10.1108/JMTM-06-2017-0116.
-
Komakech, R. A., Namugenyi, M. W., Namara, R. B., & Ombati, T. O. (2024). Influence of Competitive Strategies on the Performance of Small Manufacturing Enterprises in Kampala Metropolitan, Uganda. Ugandan Journal of Management and Public Policy Studies, 25(1), 24-41.
-
Lechner, C., & Gudmundsson, S. V. (2014). Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal, 32(1), 36-60.
-
Li, C. B., & Li, J. J. (2008). Achieving superior financial performance in China: Differentiation, cost leadership, or both?. Journal of international Marketing, 16(3), 1-22.
-
Lofving, M., Safsten, K. and Winroth, M. (2014), “Manufacturing strategy frameworks suitable for SMEs”, Journal of Manufacturing Technology Management, Vol. 25 No. 1, pp. 7-26.
-
Mahmood, N. S., & Ahmed, E. M. (2022). Mediating effect of risk management practices in Iraqi private banks financial performance. Journal of Financial Services Marketing, 1-20.
-
Mohammed, A. J., Hussein, A. A., & AL-Maliki, M. N. (2023). The role of modern technologıes ın enhancıng banks profıtabılıty. American Journal of Business Management, Economics and Banking, 16, 231-243.
-
Ngo, Q. H. (2022). The Positive Effect of Innovative Culture on Differentiation Strategy: Empirical Results from Vietnamese Smes. Calitatea, 23(189), 176-183.
-
Rehman, S. U., Elrehail, H., Nair, K., Bhatti, A., & Taamneh, A. M. (2023). MCS package and entrepreneurial competency influence on business performance: the moderating role of business strategy. European Journal of
Management and Business Economics, 32(1), 1-23.
-
Reimann, M., Schilke, O., & Thomas, J. S. (2010). Customer relationship management and firm performance: the mediating role of business strategy. Journal of the academy of marketing science, 38, 326-346.
-
Rights, J. D., & Sterba, S. K. (2018). A framework of R-squared measures for single-level and multilevel regression mixture models. Psychological methods, 23(3), 434.
-
Rokhim, A. (2024). Business Management Strategies to Enhance MSME Competitiveness. Indonesian Economic Review, 4(2), 40-58.
-
Schulz, S. A., & Flanigan, R. L. (2016). Developing competitive advantage using the triple bottom line: A conceptual framework. Journal of Business & Industrial Marketing, 31(4), 449-458.
-
Sekaran, U., & Bougie, R. (2010). Study Methods for Business: A Skill Building Approach. John Willey & Sons.
-
Sekaran, U., & Bougie, R. (2010). Study Methods for Business: A Skill Building Approach. John Willey & Sons.
-
Sun, W., & Li, C. (2022). Cost leadership strategy, diagnostic control style and firm performance. In Economic and
Business Management (pp. 165-171). CRC Press.
-
Valipour, H., Birjandi, H., & Honarbakhsh, S. (2012). The effects of cost leadership strategy and product differentiation strategy on the performance of firms. Journal of Asian Business Strategy, 2(1), 14-23.
-
Vinzi, V.E., Chin, W.W., Henseler, J. and Wang, H. (2010), Handbook of Partial Least Squares, Springer, Berlin, Vol. 201 No. 0.
-
Yusuf, A. U., Rasyid, S., & Rura, Y. (2020). The effect of intellectual capital and supply chain management on the financial performance by using cost leadership strategy as moderating variable. International Journal of Innovative Science and Study Technology, 5(2), 290-300.
-
Zairbani, A., & Jaya Prakash, S. K. (2025). Competitive strategy and organizational performance: a systematic literature review. Benchmarking: An International Journal, 32(1), 52-111.