Investigating the Effect of Cost Management and Differentiation Strategies on Company Risk, with Emphasis on the Role of Intellectual Capital and Risk Management

Document Type : Research Paper

Authors

1 Department of Management,Economics and Accounting,Payame Noor University,Tehran,Iran

2 Assistant Professor,Department of Management,Economics and Accounting,

Abstract

It is no secret to any knowledgeable manager that in today's dynamic and competitive environment, it’s absolutely essential to use the right strategy against the competitors. Following the right competitive strategy in such a market will lead to the consolidation of the organization's position in the industry and will improve the organization's performance. The purpose of this study is to investigate the effect of cost management and differentiation strategies on the risk of companies listed on the Tehran Stock Exchange. In this research, the criteria of differentiation and cost management strategy are independent variables, the criteria of company risk is dependent variable, and the effectiveness of risk management as well as the intellectual capital are considered as moderator variables. The statistical population of the study included all companies listed on the Tehran Stock Exchange in a period of 10 years in the 1390s. Systematic elimination was applied to select a statistical sample of 1270 observations. Fitting of the model and testing of the hypotheses was carried out using modeling structural equations in Smart PLS software. The results of the hypothesis testing indicated that there is no significant relationship between cost management strategy and risk management, and intellectual capital does not have a significant effect on this relationship. But there is a negative and significant relationship between differentiation strategy and company risk.

Keywords

References

 
 
Agustia, D., Pratama, N., Muhammad, A., Permatasari, Y. (2020). Earnings Management, Business Strategy, and Bankruptcy Risk: Evidence from Indonesia, Heliyon 6 (2020) e03317.
Azimi Yancheshmeh, M., Rajabi, M., & Mahmoud Dehnavi, Z. (2016). The Study of Productivity and Cost Leadership and Differentiation Strategy Effect on Bankruptcy Risk. Management Accounting, 8(27), 71-86. (In Persian).
Balsam, S., Fernando, G.D. and Tripathy, A. (2011). The Impact of Firm Strategy on Performance Measures Used in Executive Compensation. Journal of Business Research, 64(2) , 187-193
Banker, R. D., Flasher, R., & Zhang, D. (2013). Strategic Positioning and Asymmetric Cost Behavior.
Bontis N, Chua Chong Keow W, Richardson S (2000). Intellectual Capital and Business Performance in Malaysian Industries. J Intellect Cap. 1 (1), 85-100.
Bryan, D, Fernando, G and D, Tripathy. (2013). Bankruptcy Risk, Productivity and Firm Strategy. Journal of Review Accounting and Finance, 12(4), 309- 326.
Dadashi, I., Amiri Lolaki, Z. (2019). Corporate Diversity and Bankruptcy Risk; With Emphasis on Differentiation Strategies and Cost Leadership. Financial Accounting Knowledge, 6(2), 185-213. doi: 10.30479/jfak.2019.10107.2413. (In Persian).
Damankashan, B., Amiri-Syahoui, H.(1400). Investigating the Impact of Marketing Strategies on Organizational Performance from the Point of View of Managers and Vice-Presidents of Golestan Qeshm Telecommunication Center. Management Science Research, 9, 24-34. (In Persian).
David, F.R. (2011). Strategic Management, Concepts and Cases, 13th Edition. New Jersey, Prentice Hall.
Dian, Y., & Xuanyu, O. (2020). The Rise and Impact of Financial Capitalism: a Sociological Analysis of New Forms of Capitalism. Social Sciences in China, 41(4), 24-43.
Didehkhani, H., Mehrani, H., Badie, F., & Yusefi Komijani, A. (2019). Evaluation of Multi-Channel Marketing Strategies Based on Fuzzy ANP and TOPSIS. Iranian Journal of Trade Studies, 23(92), 55-80. (In Persian).
Fakhrhosseini, S.f. (2022). Investigating the Effect of Intellectual Capital Efficiency on Productivity: Evidence from Banks Listed on Tehran Stock Exchange. Entrepreneurship Knowledge, 2(3), 27-34. (In Persian).
Filsaraei, M., shoorvarzi, M., Zanganeh, M. (2021). Earnings Management, Business Strategy and Bankruptcy Risk. Journal of Capital Market Analysis, 1(2), 1-29. (In Persian).
Habib, Ahsan and Hasan, Mostafa Monzur and Jiang, Haiyan, Stock Price Crash Risk: Review of the Empirical Literature. (2017). Accounting and Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2811256 or http://dx.doi.org/10.2139/ssrn.2811256
Heidarzadeh Hanzaee, A., & Hosseinzadeh Zorofchi, G. (2019). Investigation the Impact of Business Strategy, Overvalued Equity on Stock Price Crash Risk. Financial Knowledge of Securities Analysis, 12(44), 11-22. (In Persian).
Hemati, H., & Mehrabi, A. (2011). Investigating the Relationship Between Intellectual Capital and Financial Returns of Companies Listed in Tehran Stock Exchange. Accounting and Auditing Research, 3(10), 72-83. doi: 10.22034/iaar.2011.104753. (In Persian).
Jermias, J. (2008). The Relative Influence of Competitive Intensity and Business Strategy on the Relationship Between Financial Leverage and Performance. The British Accounting Review, 40(1), 71-86.
Josephson, B. W. (2014). Strategic Marketing Ambidexterity: Antecedents and Financial Consequences. A Dissertation Submitted in Partial Fulfillment of the Requirement for the Degree of Doctor of Philosophy, Washington State University, and Carson College of Business.
kargar, H., Zanganeh, S. (2018). The Impact of Business Strategy on the Relationship Between Risk Taking and Company Value. Journal of Accounting and Management Vision, 1(3), 14-27. (In Persian).
Maditinos, D., C. Chatzoudes, C. Tsairidis,And G. Theriou. (2010). “The impact of Intellectual Capital on Firms’ Market Valueand Financial Performance”. MIBES,433-447.
Miraeez, S., Vaghfi, S. (2022). Investigating the Relationship Between CEO Characteristics and their Interactive Composition with Financial Risk Volatility. Journal of Managementand Sustainable DevelopmentStudies,2(1),45-63.doi:10.30495/msds.2022.1952574.1039.(In Persian).
Moradi, M., Sepahvandi, S. (2015). The Impact of Competitive Strategies on Stability of Financial Performance and Risk. Journal of Financial Accounting Research, 7(3), 90-75. (In Persian).
Nandakumar, M.K., and Ghobadian, A., and O’Regan, N. (2011). Generic Strategies and Performance - Evidence from Manufacturing Firms. International Journal of Productivity and Performance Management, 60 (3), 222-251.
Pourzamani, Z .,Karimi,a. (2010). The Effect of Risk Management and Intellectual Capital on Companies Performance. Financial Knowledge of Securities Analysis, 3(6) ,1-18. (In Persian).
Raei,r., saeedi,a.(2010) Basics of Financial Engineering and Risk Management. 4th edition, Tehran, Semit Publications. (In Persian).
Rezaei, F .,Firouzalizadeh, A., Noormohammadi, E. (2019). Relationship of Management Ability with Integrated Risk Management Components. Financial Accounting and Auditing Researches, 12(48), 23-42. (In Persian).
Rostami, A., Niknia, N. (2013). The Effect of Portfolio Diversification on Value at Risk in Tehran Stock Exchange (TSE). Journal of Investment Knowledge, 2(6) ,104-83. (In Persian).
Sadat Taheri, A. (2013). Investigating the Relationship Between Differentiation Strategies and Cost Leadership in Tehran Industrial Companies. Thesis, Islamic Azad University, Science and Research Unit, Hormozgan, Master of Executive Management, Supervisor Dr. Mohammad Reza Mirabi. (In Persian).
Shayeghanno, N., & Agajani, V. (2022). The Effect of Intellectual Capital on the Comparability of Financial Statements. Journal of Accounting and Management Vision, 5(60), 95-111. (In Persian).
Talebnia, G., Rajabdorri, H. (2018). Effect of the Audit Committee on the Stock Prices Crash Risk: Looking at the Ethical Voluntary Disclosure. Journal of Financial Accounting Research, 10(1), 95-110. doi: 10.22108/far.2018.110700.1258. (In Persian).
Zare, M. S.,Vafaei, N. A .,Mohammad Alizadeh, A. (2017). Investigating the Effect of the Capital Ratio in the Bank on Increasing the Risk of Financial Crisis in the Country’s Banking Industry. Research in Accounting and Economic Sciences Journal,8,47-58. (In Persian).
 
 

Files

History

  • Receive Date: 22 May 2022
  • Revise Date: 20 July 2022
  • Accept Date: 30 July 2022

Share

How to cite

Statistics