Abstract:
The paper studies the impact of competitive strategies and innovation on firm performance. Data was collected using a structured questionnaire designed on a five point liker scale. One hundred and fifty employees, mainly those in charge of operations up to Chief Executive Officers who were knowledgeable about competitive strategies participated. Fifty firms operating in textile and clothing manufacturing provided the basis for the research. The structural equation modeling was employed using the least squares. The results
show that focus and differentiation strategies have a positive direct relationship with firm performance and innovation. However cost leadership has indirect relationship with firm performance and a positive relationship with innovation which in turn improves firm
performance. Implementation of the three generic strategies enables managers to gain competitive advantage for their firms although attention needs to be paid to innovation which acts as an enabler between the competitive strategies and firm performance.
