A structural equation modeling (SEM) evaluation of the statistical adequacy of the strategic management model

This paper attempts to confirm the adequacy of the strategic management model using the structural equation modeling (SEM) method. The model adopted the resource-based view (RBV) approach to identify competitive strength. The RBV method states that organizations with the right resources coupled with the appropriate management skills and capabilities will develop competitive strength and organizational performance. Results generated by AMOS graphics v. 18, an SEM statistical software, confirm the adequacy of the model for companies engaged in the industrial products sector. Financial strength was found to be a better predictor of competitive advantage than management strength. The results also confirm that competitive advantage has a positive impact on the profitability and performance of organizations.