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Profit-making entities operate in industries with either low or high levels of competition. Rival firms adopt strategic management and financial mechanisms to acquire the largest share in the market. Porter’s five forces model is a useful tool which determines and examines an industry’s investment viability and profitability (Arora & Bodhanwala, 2018). This model identifies competitive intensity as a factor which influences corporate and risks governance.
The framework also determines financial performance among rival companies affected by an industry’s market share value and operational effectiveness among entities (Buallay et al., 2017). This discussion presents a thematic literature review based on recent empirical studies. Most importantly, competitive intensity is vital in determining the influence of risk and corporate governance on a firm’s overall performance.
Competitive intensity depicts varying impacts on the relationship between corporate and a firm’s performance. In essence, companies which offer services in markets with many consumers encounter rivalry from other entities (Arora & Bodhanwala, 2018). The impact of competitive intensity on a firm’s growth is depicted in the financial statements of organizations in the Gulf Cooperation Council (GCC) (Pillai & Al-Malkawi, 2018). Rival companies in the Middle East and North Africa adopt management models which keep their operations distinct in the energy market (Arora & Bodhanwala, 2018). Competitive intensity affects corporate governance and organizational performance among firms as determined by management attributes of the Chief Executive Officer (CEO) and board dynamics as evidenced in Turkey (Ararat et al., 2017).
The management approach consented and approved by board directors determines financial performance to indicate competent corporate governance (Arora & Bodhanwala, 2018). Most importantly, accounting-based performance identifies competitive intensity as a vital tool of improving investment capital depicted in high-profit margins.
Moreover, rival companies implement liberal approaches of management, which enhance stakeholder relationships in distinct ways. Most importantly, operational and supervisory activities which contribute to successful organizations play a vital role in improving corporate governance (Pillai & Al-Malkawi, 2018). New entrants increase the competitive intensity in most emerging markets by redistributing market share value among existing entities, as evidenced in the United Arab Emirates (UAE) (Al-Malkawi & Pillai, 2013). Firms recording high Returns on Assets (ROAs) and Return on Equity (ROEs) display strategic management approaches among employees (Alanazi, 2019).
Firms with a stable market presence capitalize on the production capabilities to overcome new entrants’ market challenges (Ararat et al., 2017). In most cases, price and quantity of production entail tactics adopted to counter competitive intensity, threatening financial performance among ventures (Pillai & Al-Malkawi, 2018). Successful strategies ensure that market value describing competitive industries remain stable and consistent.
Furthermore, competitive intensity also influences risk governance and firm performance of profit-making entities. Organizational activities which put a firm’s entrepreneurial attributes ahead of rival companies contribute to high ROAs and ROEs (Alqahtani & Uslay, 2020). In essence, operational tactics are advanced from the conceptual development of ideas from a productive workforce (Arora & Bodhanwala, 2018). Competitive intensity influences risk governance among firms as stipulated by commercial regulators in respective economies (Price & Sun, 2017). For instance, capital structure determines the successful implementation of financial initiatives which maximize stakeholder value among investors, as depicted in Thailand (Detthamrong et al., 2017).
It is objective that marketing activities optimize competitive intensity among organizations. Through effective marketing intensity, companies generate the expected Returns on Investments (ROIs) through objective stakeholder interaction (Bae et al., 2017). Most critically, risk governance determines venture rivalry levels among entities operating competitively intense markets.
Additionally, competitive intensity in modern organizations has resulted in business sustainability practices. In essence, both profit-making and non-profit firms are encouraged to protect and conserve vital natural resources within the environment (Price & Sun, 2017). Evidence from Saudi Arabia’s business practices acknowledges the significance of corporate governance in measuring performance among institutions based on their contribution to business and environmental sustainability (Buallay et al., 2017).
The performance of competitive firms is critically evaluated on conservation measures describing corporate governance (Bae et al., 2017). The overall impacts of corporate social responsibilities (CSR) on organizations depend on financial revenues as an attribute of competitive intensity (Price & Sun, 2017). Most fundamentally, competitive intensity improves creativity and innovativeness among organizations, which base operational success on sustainability initiatives.
Competition intensity is measured using varying market and economic attributes. Empirical studies described thematically above acknowledge the essence of corporate governance and a firm’s performance. Business entities based in various economies adopt strategic measures to counter competitive intensity from rival organizations. Nonetheless, a review of the above literature highlights competitive intensity as a vital determinant of business and environmental sustainability.
Risk governance is critical in stabilizing a firm’s operation, hence improving competition levels regarding the operation duration. Firms have increased competitive intensity through green projects intended to conserve the ecosystem through environmental sustainability. This aspect of corporate governance ensures the stability of business continuity plans, which entail intensifying marketing activities. Risk management ensures the competitive firm’s overcome business challenges posed by rival ventures. Thus, competitive intensity is useful for encouraging the accountability of top executives among organizations.
References
Alanazi, A. S. (2019). Corporate governance and firm performance: Evidence from an emerging market. Risk Governance and Control: Financial Markets and Institutions, 9(1), 45−52. Web.
Al-Malkawi, H. A. N., & Pillai, R. (2013). Corporate governance and firm performance: Evidence from UAE. Intensity: International Journal of Applied Social Science Research, 2(1), 42−52. Web.
Alqahtani, N., & Uslay, C. (2020). Entrepreneurial marketing and firm performance: Synthesis and conceptual development. Journal of Business Research, 113, 62−71. Web.
Ararat, M., Black, B. S., & Yurtoglu, B. B. (2017). The effect of corporate governance on firm value and profitability: Time-series evidence from Turkey. Emerging Markets Review, 30, 113−132. Web.
Arora, A., & Bodhanwala, S. (2018). Relationship between corporate governance index and firm performance: Indian evidence. Global Business Review, 19(3), 675−689. Web.
Bae, J., Kim, S. J., & Oh, H. (2017). Taming polysemous signals: The role of marketing intensity on the relationship between financial leverage and firm performance. Review of Financial Economics, 33, 29−40. Web.
Buallay, A., Hamdan, A., & Zureigat, Q. (2017). Corporate governance and firm performance: evidence from Saudi Arabia. Australasian Accounting, Business and Finance Journal, 11(1), 78−98. Web.
Detthamrong, U., Chancharat, N., & Vithessonthi, C. (2017). Corporate governance, capital structure and firm performance: Evidence from Thailand. Research in International Business and Finance, 42, 689−709. Web.
Pillai, R., & Al-Malkawi, H. A. N. (2018). On the relationship between corporate governance and firm performance: Evidence from GCC countries. Research in International Business and Finance, 44, 394−410. Web.
Price, J. M., & Sun, W. (2017). Doing good and doing badly: The impact of corporate social responsibility and irresponsibility on firm performance. Journal of Business Research, 80, 82−97. Web.
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