How Does Firm Size Influence Nonmarket Strategy? Evidence From the United Kingdom

Abstract

Many scholars suggest that firms integrate their market and nonmarket strategies, but identifying market‐nonmarket combinations that create synergy and enhance firm performance is challenging. We build on previous work by examining the performance impact of relative firm size, the generic strategies of cost leadership and differentiation, and the political and social dimensions of nonmarket strategy (NMS) in the United Kingdom. We surveyed 261 managers in the United Kingdom about their firm strategies and performance and utilized PLS‐SEM to analyze the results. While larger firms demonstrated a greater inclination toward engaging in NMS, firm size and performance were not directly correlated. Social NMS and differentiation emerged as influential drivers that positively impacted firm performance, but political NMS and cost leadership did not. The findings underscore the performance implications of aligning market and nonmarket strategies in ways that promote synergy. They also suggest that large firms are more likely to emphasize both social and political NMS.