The Impact of Competitive Strategy and Supply Chain Strategy on Business Performance: The Role of Environmental Uncertainty*

Abstract

This article investigates the relationships among competitive strategy, supply chain strategy, and business performance while examining the moderating effect of environmental uncertainty. A total of 604 questionnaires were collected from three cities in China, and the statistical results show significant moderating effects of external environment on the relationships among competitive strategy, supply chain strategy, and business performance. Firms that primarily focus on a differentiation strategy emphasize an agile supply chain strategy. Cost leaders are inclined to implement both lean and agile supply chain strategies, but their emphasis on agile strategy is significantly greater in a volatile environment than in a stable environment. The choice of supply chain strategy does not appear to be an “either-or” decision and firms could adopt either a lean or an agile strategy, or both, depending on the environment. This article provides significant managerial implications for supply chain practitioners to co-align supply chain strategy and competitive strategy with the environment to improve performance.