Business-level strategies and sustainable competitive advantage of small and medium-sized enterprises in Nigeria

Abstract

Small and medium-sized enterprises in Nigeria operate within a competitive environment characterised by shifting customer expectations, rising operational costs and the continuing difficulty of establishing a defensible market position. This study examined the effect of business-level strategies on the sustainable competitive advantage of such enterprises, with competitive advantage operationalised through customer satisfaction and loyalty. A survey research design was adopted. The population comprised 5,432 registered enterprises in the Federal Capital Territory, Abuja, from which a sample of 357 was determined using the Krejcie and Morgan table. Primary data were collected through a structured questionnaire administered to owners and managers and measured on five point scales. The instrument recorded Cronbach alpha coefficients between 0.798 and 0.871 with an overall value of 0.842. Data were analysed using descriptive statistics, Pearson correlation and multiple regression in SPSS version 20. All three strategies exerted positive and statistically significant effects. Differentiation recorded the strongest effect ( b = 0.369, t = 5.897, p < 0.001), followed by cost leadership ( b = 0.301, t = 4.689, p < 0.001) and focus ( b = 0.259, t = 3.825, p < 0.001). The model was significant, F(3, 353) = 184.563, p < 0.001, and explained 61.0 percent of the variance in customer satisfaction and loyalty. That all three strategies contribute simultaneously is noteworthy, since classical strategy theory holds that firms pursuing more than one generic position risk becoming stuck in the middle. The pattern observed here suggests that for small enterprises in this market the three operate less as mutually exclusive postures than as complementary capabilities. The study concludes that business-level strategy is a material determinant of competitive advantage among Nigerian enterprises, and recommends investment in differentiation through product and service quality, supported by cost discipline and deliberate segment selection.