Author(s): Akeke Adenike Rita, Akeke Niyi Israel, Abiodun Oladimeji
Sustainable superior performance is achieved when managers understand the process of positioning their firms in the face of competition through decreasing internal efficiency into lower input cost for customers. However, this has received less direct emphasis in the SMEs sector. This study analysed cost leadership and performance nexus in SMEs as a way out for resolving this deficiency. Data was obtained using a 7-point Likert scale measuring instrument. A total sample of 978 useful responses was obtained out of 2075 participants that were approached through a multistage sampling technique. Data collected was tested through multivariate analysis of structural equation modeling. The results show that the entire constructs of cost leadership strategy exert significant and positive influence on performance of firms. It specifically revealed that the ability to reduce costs of administration, having access to low-cost materials than rivals, and vigorously pursuing cost reduction have significant effect on performance of SMEs in the study area. This indicates that if firm can deliver value at low cost while not mortgaging the delivery of unique services, it may position itself in the market place relative to competitors.