Competing both ways : How combining Porter’s low-cost and focus strategies hurts firm performance

This study empirically examines the impact of firms’ pursuing multiple generic strategies,namely, Porter’s low-cost and focus strategies. We conceptualize pursuing cost efficiencyadvantage as low-cost strategy and restraining rivalry through horizontal differentiation as focusstrategy. Although we corroborate earlier Strategy research that each of these strategies alonemay have a positive impact on firm profitability, we highlight that mechanisms driving theinteraction of these two strategies are, in fact, non-additive in nature, consistent with recentanalytical work. Using the context of the scheduled U.S. passenger airline industry over twodecades, we empirically show that combining a low-cost strategy with a focus strategy is, indeed,detrimental to firm profitability, which has important implications for scholarship and practice