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INTERNATIONAL JOURNAL OF RESEARCH IN BUSINESS AND SOCIAL SCIENCE 12(7)(2023) 85-93
* Corresponding author. ORCID ID: 0000-0002-7929-785X © 2023 by the authors. Hosting by SSBFNET. Peer review under responsibility of Center for Strategic Studies in Business and Finance.
https://doi.org/10.20525/ijrbs.v12i7.2925
Role of government as moderator: Porter’s diamond firm strategy,
structure, and rivalry attribute and industry’s performance
Muhammad Ahmed Butt (a)* Paul Katuse (b) (a) Dr. DBA. University of Central Punjab, Lahore, Pakistan. (b) Prof. Dr. Skyline University College, Sharjah. UAE
A R T I C L E I N F O
Article history:
Received 27 August 2023
Received in rev. form 06 Oct. 2023
Accepted 20 October 2023
Keywords:
Firm’s Performance, Firm Strategy,
Structure and Rivalry, Government
Policy, Moderator
JEL Classification:
M10, M19
A B S T R A C T
The prime purpose of the research was to examine, through empirical study, and help determine the government’s role as moderator in the relationship between Porter’s diamond firm strategy, structure,
and rivalry construct and firm’s performance in Pakistan’s automotive sector. In the study, research philosophy was positivism and deductive approach applied for the main reason to establish
generalization in the results. With a view to determine the magnitude, direction and significance; researchers emphasized on descriptive and inferential statistical techniques. Data was solicited from
166 sample respondents through structured questionnaire. To establish the reliability perspective and validity context in the questionnaire constructs, pilot study constituted part of the research study.
Parametric and nonparametric statistical techniques also became the integral part of analysis for drawing objectively based conclusions. For moderation purpose, the tool was macro, PROCESS v3.0
(model 1). The study findings aptly indicate that in theoretical context, the relationship is not significant whereas the practical perspective reflects that the government policy does influence industry firms’
performance, however, mediating role of government between Porter’s construct viz. firm strategy, structure, and rivalry and industry firms’ performance documented no impact. In the constituencies of
academia, automotive sector players, and policymakers the moderation results shed light on the theoretical and practical contextualization.
© 2023 by the authors. Licensee SSBFNET, Istanbul, Turkey. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license
(http://creativecommons.org/licenses/by/4.0/).
Introduction
According to Malyshev (2002), policy related to government regulations entails competition in the market coupled with market
openness contained in the implementation plan, to bring cultural shift toward infusing flexibility facet in the design of policy;
additionally, combining legal facets, public management and economic tenets is important to shape the regulatory framework. Loader
(2007) highlighted that fully-constructed infrastructure is the mainspring for key economic pursuits, namely, accessibility to natural
resources, compatibility of business systems, transport &communication systems, and other initiatives in the domain of education,
environment protection, and information technology.
Porter (1990) argued that in the diamond framework government’s role and participation is important in the system. Additionally,
government participation in diamond provides challenges and influences firms in the industry in encouraging way to enhance their
aspirations and competitiveness in terms of performance. Researchers studied policy contours involving sub-constructs namely:
capital market regulations, and/or capital market deregulation and subsidies component, local product standards, laws related to tax,
and finally, regulations governing antitrust. Also, it is incumbent on governments to provide protection and to raise the level of their
citizens’ well-being. Consistent with Porter (1990) arguments; when competition among domestic industries is high with fierce
rivalry, in these circumstances, firms that survive by way of competing, invariably develop the potential to thrive in the global arena.
Further, in relation to national competitive advantage, Porter expressed that countries are better poised to succeed in the industrial
sector where excellent management practices are internalized by firms coupled with best organizational design and modes are
Research in Business & Social Science
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Butt et al., International Journal of Research in Business & Social Science 12(7) (2023), 85-93
86
congruent with industry sources of competitive advantage. There is every likelihood that fierce competition results into red queen
effect; forcing the industries to formulate pragmatic strategies for business and redefine its unique competencies to maintain the
competitive vitality for productivity enhancement (Derfus, Maggitti, Grimm, & Smith, 2008).
Flannery (2014) stated specifically that when the country’s firms receive protection from competitive forces, they are increasingly
not inclined to realize the improvement in productivity; resultantly they meet with failure in the face of competition in the global
market and hence, these firms do not create value for the national economy. Regarding firm’s performance measurement (PM)
system, historically the thrust remained squarely on financial parameters; this approach faced criticism as being deficient in evaluating
and monitoring multi-dimensional performance (Brignall & Ballantine, 1996). Kaplan and Norton (1992) note that firm’s
performance denotes combining financial context and non-financial based criteria, serving as cornerstone in showcasing the data and
information in achieving the objectives and results, and determining the firm’s performance using broad-based context namely:
financial, customer, process, and learning & growth. The tool is balance scorecard (BSC) which researchers applied during the study.
To the determine the role of government as moderator between Porter’s diamond firm strategy, structure and rivalry attribute and
industry’s performance. Hypothesis was H01: Government policy does not significantly moderate the influence of Porter’s firm
strategy, structure & rivalry construct and firm’s performance.
Literature Review
Theoretical Context
Porter (1998) argued that countries’ governments have deep interest, particularly, from the perspective of influence of geographic
location for competition and to be able to take decisions as to the extent of providing assistance and support to the people located
there. A taxonomy was presented by (Edler & Georghiou, 2007) which primarily divides or categorizes the policy measures into two
as being applied in domains, namely, those rendering support to supply side, and the other providing direction to the demand side. In
the research study independent variable was Porter Diamond (1990) construct: firm strategy, structure & rivalry. The moderating
variable has elements viz. capital market regulations, local product standards, laws related to tax, law governing antitrust facets
whereas the dependent variable was, firm’s performance. Kaplan and Norton (1992) balance scorecard (BSC) having parameters i.e.,
financial context, customer context, process context and learning context was used. BSC tool has the strength to give speedy and
concurrently comprehensive picture of organization required by managers with the object to enhance the managerial performance.
Empirical Context
Government formulates policies focusing on the key areas which have central role for public well-being inclusive of: finance,
industry, trade & business, development programs, health, environment and safety policies and programs. (Brown et al., 2010; Deniz
et al., 2013; Dögl et al., 2012). According to (Loader,2007) fully developed government infrastructure is considered as quintessential
for economic development. Hogan, Meredith, and Pan (2015) did a study in the US and examined the regulation on risk-based capital
(RBC). In the banking sector in the US and Europe, RBC regulations are linked with the developing of risk. On the contrary,
proponents of RBC regulations argued that with a view to restrict the banking risk, RBC regulations are imperative. A study by Ming
(2017) on Chinese energy sector investigated prevalent energy transformation in China and supported reforms for energy subsidy.
Research method put emphasis on assembly of comprehensive energy subsidy inventory and distributional link influence was studied.
It was found out that subsidies were regressive marginally; and to narrow the wealth disparity, energy reforms were recommended
by the researcher. From critique perspective, by and large, the results are country-specific and as regards its benefits to academia and
corporate practitioners, the same remain undetermined. A study was conducted to examine the lean product tenets application in
South Africa (SA) automotive sector and its extent of implementation. The sample was drawn from Toyota’s vendors engaged in and
responsible for engineering and design of product locally (Mund, Pieterse, & Cameron,2015); follow-up interviews were conducted
as well. Empirically, the authors established that vehicle manufacturer put greater emphasis on production and less focus on design
and product development. Another study conducted by (Nnyanzi, Babyenda, & Bbale, 2016) of Makerere University of Uganda
surmised that economic growth can be achieved by regional states. The study, by taking into account the developing countries’ high
level of reliance on fiscal mechanism including revenues generated by imposing taxes, surmised that the revenue administrations
have to formulate policies that assign them the role to achieve the revenue objectives. Nevertheless, it is not found out in the empirical
study results that regional integration has any important bearing on improving or deterring tax collection methods. George and Reddy
(2015) carried out a study in India; the purpose was to explore and ascertain reasons for gaps existing in corporate tax regime in the
State. The study findings pointed out that tax policies in India are meshed in complicated and complex system with huge reliance on
indirect taxes that consequently results into limited predictability; the situation is aggravated due to excessive litigation. The authors’
conclusions have provided valuable contribution in comprehending the corporate tax systems’ mechanism along with its intrigues,
in India. However, the paper is at the government policy level, and its implications are country-specific. Also, the aspect of
contribution for academia, remained unsubstantiated in the study. Wilson, Sonsini, Goodrich, and Rosati [WSGR], (2016) a US
consulting firm presented in their report that from key economic perspective the year 2016 was most productive and full of activities
in a wide range of areas including dealing with a continuum of cartels in the world and merger & acquisition (M&A) to domestic
criminal and civil confrontations. The year bestowed on antitrust practitioners and industries an array of challenges, at international
and national level, plus constant paradigm shifts in policy and enforcement regime. Oyelakin and Kandi (2017) of Ahadu Bello
Butt et al., International Journal of Research in Business & Social Science 12(7) (2023), 85-93
87
University Nigeria undertook a study to examine how their country could generate new employment both in industrial and
commercial sectors and realize the full potential of the nation’s human dividend and natural resources stressing government policy’s
role in explaining and emphasizing innovation, technology and entrepreneurship plus industrial relations development in Nigeria. In
another empirical study, carried out in Indonesia, Moeljadi, Sumiati, Anselah, and Yuniarsa (2015) of University of Brawijaya,
investigated the research question regarding the role of government as moderator while determining the relationship between
entrepreneurship, market & innovation and performance in business. Sample for study was selected from small and medium
enterprise (SMEs). Through the research it was found out that entrepreneurial centric, market-oriented and innovation-based
approaches would bring about enhancement in business performance especially SMEs. Nonetheless, it was determined through the
study that government role could not moderate the association between entrepreneurship, market and innovation areas.
Research Methodology
In the research design researchers used research philosophy, namely, positivism. The researchers remained professionally
independent and neutral during the course of study. The study included descriptive survey and analytical surveys. Target population
in the study were senior managers of the automotive industry. In the selection of sample, simple random sampling method where
selection of elements based on probability was applied; this being consistent and fair and also to avoid subjectivity.
To calculate the sample size Yamane (1967) equation was applied and results of calculation is provided as below.
n=N/{1+N(e2)}
n signify size of sample
N signify population (targeted) (377)
𝑒 signify margin of error which is (0.05).
Sample size for the study was calculated applying values in the Yamane (1967) formula given as below.
n= [377/ {1+377(0.052)}] =194
Cronbach’s alpha for Firm Strategy, Structure and Rivalry
Tavakol and Dennick (2011) explained that Alpha (>0.90) higher reflects small redundant items in the instruments. On the other
hand, Alpha (<0.5) indicates that questions’ number in the instrument are low or interrelatedness among items is poor. Firm Strategy,
Structure and Rivalry items being analyzed and Cronbach’s alpha coefficient determined for the construct. Results is, α =.82, which
reflects that items interrelatedness and consistency in firm strategy, structure, and rivalry internal is maintained. Table 1 provides the
details.
Table 1: Cronbach’s alpha for Firm Strategy, Structure and Rivalry
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
.820 .812
15
Source: Authors
Cronbach's alpha for Firm’s Performance
The result is, α = .86, reflects that firm’s performance items in the questionnaire is maintaining internal consistency. Table 2 exhibit
the details.
Table: 2 Cronbach’s alpha for Firm’s Performance
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
.862 .869 15
Source: Authors
Moderation analysis was performed in the study by applying (Hayes, 2013) macro, PROCESS v3.0 (model 1). This model entails
bootstrapping and M-test. Researcher carried out the study through this macro, PROCESS v 3.0 (model 1) in determining whether
government policy moderates the influence of Porter’s construct Firm Strategy, Structure, and Rivalry and firm’s performance in
Pakistan automotive sector or not. In all the phases of this study; ethical tenets received paramount importance and were implemented.
Findings and Discussion
Researchers collected data from 166 respondents from the target industry out of 194 sample size. The study documented 85.6% as
response rate (RR). Bagire and Namada (2013) in the strategic management study recorded 66% RR in East Africa study. Government
policy as component has seventeen statements in the structured questionnaire soliciting response from the senior managers working
in the automotive industry of Pakistan. To the question that governments have a big stake in the influence of location in competition
Butt et al., International Journal of Research in Business & Social Science 12(7) (2023), 85-93
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as they are responsible for the well-being of citizens in particular geographic areas, out of 166 respondents, 56.0% and 26.5%
participants agreed and strongly agreed respectively which elicits conclusion about government’s central role in the influence of
location in competition in the given context.
On the question of subsidies to firms bringing about adverse impact on overall performance of the industry, 38.6% of respondents
agreed, 31.3% remained neutral, and 13.3% showed disagreement with the statement. Thus, according to the perspective of a large
segment of incumbents, government subsidies to firms have negative implications in overall context on the performance of
automotive firms. Regarding the critical question on tax environment 42.2% and 30.7% of 166 respondents agreed and strongly
agreed that tax environment in Pakistan is based on complex systems which negatively impacts firm’s performance including the key
industry of automotives. Whereas the importance of global antitrust laws cannot be overemphasized, contextually in response to the
statement that global antitrust laws (e.g., protecting small players from the dominant players in the industry) have negative impact
on the performance of firms, 29.5% of the incumbents agreed, however, the percentage of respondents was high who opted to remain
neutral on this aspect, 44%. 11.4% of participants representing automotive industry documented their disagreement to this viewpoint
regarding global antitrust laws. Table 3 presents the detailed outcomes related to frequency distribution for government policy.
Table 3: Frequency Distribution for Government Policy
Items Government Policy
SD D N A SA Total
Governments have a big stake in the influence of location.
F 0 6 23 93 44 166
% .0 3.6 13.9 56.0 26.5 100.0
Governments feel intense pressure of competition from other nations to attract investment of international companies.
F 0 9 31 94 32 166
% .0 5.4 18.7 56.6 19.3 100.0
Regulations make the financial system more stable and reduce the risk of future financial crises.
F 0 2 27 97 40 166
% .0 1.2 16.3 58.4 24.1 100.0
Government subsidies include: Tax holidays, reduced tariff on imports, price support, financial contribution, direct.
F 1 5 43 87 30 166
% .6 3.0 25.9 52.4 18.1 100.0
Subsidies have a large impact on government budgets. F 0 15 33 79 39 166
% .0 9.0 19.9 47.6 23.5 100.0
Subsidies to firms bring about adverse impact on overall performance of the industry.
F 4 22 52 64 24 166
% 2.4 13.3 31.3 38.6 14.5 100.0
Product standards related to the characteristics of goods/ services range from quality, safety to fitness for purpose.
F 0 1 45 84 36 166
% .0 .6 27.1 50.6 21.7 100.0
Global product designs require modifications to suit local manufacturing decisions keeping in view local conditions.
F 0 7 34 98 27 166
% .0 4.2 20.5 59.0 16.3 100.0
Internalizing the product standards leads to competitive advantage for the firm.
F 0 18 35 92 21 166
% .0 10.8 21.1 55.4 12.7 100.0
Tax policy can act as an important structural driver to have growth of industry.
F 1 3 31 73 58 166
% .6 1.8 18.7 44.0 34.9 100.0
Tax environment in Pakistan is based on complex system which negatively impacts firm’s performance.
F 1 6 38 70 51 166
% .6 3.6 22.9 42.2 30.7 100.0
Tax policies can be an effective mechanism to promote domestic investments.
F 2 1 28 86 49 166
% 1.2 .6 16.9 51.8 29.5 100.0
International investment can be promoted through effective tax policies mechanism.
F 2 1 31 88 44 166
% 1.2 .6 18.7 53.0 26.5 100.0
Tax policies can be instrumental to create national competitive advantage.
F 1 7 34 83 41 166
% .6 4.2 20.5 50.0 24.7 100.0
Governments in developing economies generally move to protect consumer interest from unfair pricing by monopolies.
F 2 17 52 72 23 166
% 1.2 10.2 31.3 43.4 13.9 100.0
Countries are increasingly entering into various treaties related to the content and enforcement of competition laws.
F 0 8 55 85 18 166
% .0 4.8 33.1 51.2 10.8 100.0
Global antitrust laws have negative impact on the performance of firms.
F 2 19 73 49 23 166
% 1.2 11.4 44.0 29.5 13.9 100.0
SD (Strongly Disagree), D (Disagree), N (Neutral), A (Agree), SA (Strongly Agree). F(Frequency)
Source: Authors
Butt et al., International Journal of Research in Business & Social Science 12(7) (2023), 85-93
89
Factor Analysis Results on Government Policy
In factor analysis, determinable and observable are shortened to fewer variables (latent) which are unobservable, and common
variance is called as dimensionality reduction in the study. To summarize data was the key purpose of factor analysis with a view to
both understand the pattern and interpret the relationships in easy manner; in addition, to determine the not-directly-observable
components on the basis of variables which are observable. More importantly, generated factor analysis scores have been used in
correlation analysis and linear regression models. In this study 166 respondents represented various firms of auto sector. In the factor
analysis of the government policy; Kaiser-Meyer-Olkin (KMO) is applied to help determine the adequacy of sampling and to compute
value which is recorded as .794 that is considered acceptable position as the KMO is above .5. Secondly, in the research study,
Bartlett’s test of sphericity was performed to confirm that all the seventeen elements in government policy and its components have
patterned relationships.
Bartlett’s test results recorded x2(136, N=166) = 754.851, p =.000. This test result shows that the government policy has patterned
relationship among the elements (p<.001). These provided results are indication to continue with the factor analysis. Table 4 presents
the results of KMO and Bartlett's test on government policy.
Table 4: KMO and Bartlett's Test on Government Policy
Factor Analysis
KMO and Bartlett’s Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .794
Bartlett's Test of Sphericity Approx. Chi-Square 754.851
Df 136
Sig. .000
Source: Authors
Factor analysis interpretation is established on rotated factor loadings, coupled with rotated eigenvalues, and scree test. To elaborate,
the ‘eigenvalue’ is considered as total variance defined by each component. Thus, any component which scored eigenvalue less than
1.0 could not have adequate total variance expressed as representing a unique component, and is not considered henceforth in the
model. Cut-off of 1.0 applied on eigenvalue and resultantly there are five components that explained a cumulative variance score of
59.3%, namely,(1) governments have a big stake in the influence of location in competition as they are responsible for the well-being
of citizens in particular geographic areas 28.6% (2) governments feel intense pressure of competition from other nations to attract
investment of international companies 9.7 % (3) regulations make the financial system more stable and reduce the risk of future
financial crises 8.2% (4) government subsidies include: Tax holidays, reduced tariff on imported components, income or price
support, financial contribution, direct funding, among others 6.9%,and (5) subsidies have a large impact on government budgets
5.9%. These five components in the government policy are significant for the model. Table 5 presents the outcomes related to total
variance explained for government policy.
Table 5: Total Variance Explained for Government Policy
Component Initial Eigenvalues Extraction Sums of Squared Loadings
Total % of
Variance
Cumulative % Total % of Variance Cumulative %
1 4.862 28.597 28.597 4.862 28.597 28.597
2 1.641 9.653 38.250 1.641 9.653 38.250
3 1.394 8.201 46.452 1.394 8.201 46.452
4 1.180 6.941 53.392 1.180 6.941 53.392
5 1.003 5.900 59.292 1.003 5.900 59.292
6 .913 5.372 64.664
7 .854 5.026 69.691
8 .740 4.353 74.044
9 .688 4.044 78.088
10 .670 3.940 82.028
11 .565 3.324 85.352
12 .552 3.249 88.601
13 .499 2.934 91.535
14 .456 2.679 94.214
15 .387 2.274 96.488
16 .306 1.801 98.289
17 .291 1.711 100.000
Source: Authors
Butt et al., International Journal of Research in Business & Social Science 12(7) (2023), 85-93
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Scree plot is graph of the eigenvalues used to determine how many components to be retained in government policy. From the factor
analysis test, it is concluded that components one to five have eigenvalues greater than one; hence, the results corroborate with total
variance documented for government policy. Figure 1 depicts the results.
Figure 1: Scree Plot for Government Policy; Source: Authors
On normal variables Pearson’s coefficient was applied (government policy and firm’s performance as dependent variable) to
determine the linear relationship; p<.01 is significant level. In the analysis tested results are positive and linearly related r =0.271,
p<.01. Thus, it is evident that governmental policy influences the performance of the firm in Pakistan’s auto sector. Two asterisks
reflect the identifications. Correlation test results between policy of government index and performance of the firm is provided in
Table 6.
Table 6: Correlation between Government Policy Index and Firm’s Performance
Firm’s Performance
Government Policy Pearson Correlation .271**
Sig. (2-tailed) .000
N 166
**. Correlation is significant at the 0.01 level (2-tailed).
Source: Authors
Influence of Firm Strategy, Structure, and Rivalry on Firm’s Performance and Government Policy as Moderator
The moderation analysis was performed in the study by applying macro, PROCESS v3.0 (model 1). During the computation every b
is compared with zero subsequently applied t-test calculation from the beta divided by its standard error (SE) in the study. In this
analysis, statistics reflect that interaction is not significant, b= -.0523, 95% CI [-.5252,0.4206], t = -.2184, p>.01, and expressed that
policy of government does not moderate the relationship between firm strategy, structure, and rivalry and firm’s performance.
However, in the broader context model of moderation predicted 8.7% of the performance of the firm variance, F (3,162) =4.8583,
p< .01. Table 7 explain influence of firm strategy, structure, and rivalry on firm’s performance and government policy as moderator.
Butt et al., International Journal of Research in Business & Social Science 12(7) (2023), 85-93
91
Table 7: Influence of Firm Strategy, Structure, and Rivalry on Firm’s Performance and Government Policy as Moderator
FP (Firm’s performance), FSSR (Firm Strategy, Structure and Rivalry), GP (Government Policy), int_1 (Interaction)
Source: Authors
Discussion
Through the empirical research, the researchers attempted to assess policy of government at its role having a moderating effect on
Porter’s diamond construct; firm strategy, structure, and rivalry on the performance of firm in the Pakistan automotive sector.
Government policy sub-constructs included, namely: capital market regulation, government offered subsidies, local products
manufacturing standards, and governance of antitrust laws. It was drawn from results that tests related to correlation express that as
for as relationship is concerned between policy of government and performance of firm, that does exist. In the analysis tested results
are positive and linearly related r =0.271, p<.01. Thus, it is evident that governmental policy influences the performance of the firm
in Pakistan’s auto sector. Governments normally do have a stake, that too at a high level, in influencing the competition location
because state being hugely responsible to keep into consideration the geographical location dynamics and the vital aspect of protecting
the citizens of the area and augmenting their well-being. This result is in congruence with Porter (1998) argument that governments
have deep interest, particularly from the perspective of influence on competition location, with regards to providing assistance and
support to the people located there geographically.
The study results evidently showed agreement with the arguments of (Brown et al., 2010; Dögl et al., 2012; Deniz et al., 2013) that
policies formulated by governments have focal thrust on areas where well-being of people receives the paramount importance, with
particular reference to: financial perspectives, industrial context, fostering trade& businesses activities, programs having emphasis
on development, health segment, programs designed on safety issues and environmental policies. Regulations do provide impetus in
creating stability in overall system of finance and tackle the gaps; and resultantly may contain the possibility of any future financial-
oriented crises. Hogan, Meredith, and Pan (2015) views also corroborate with this study results; these authors studied and examined
in the US the country’s regulatory laws on risk-based capital (RBC). In the broader context it was witnessed in the research that
subsidies and performance of firm do not directly encourage and support competition in automotive sector. This contextual inference
is supported by Ming (2017) who identified that subsidies are regressive marginally; and are used to narrow the wealth disparity.
It was inferred from the study that while analyzing locally manufactured product standards and performance of firm; no direct
relationship was found. These findings are endorsing the conclusion presented by (Mund et al., 2015) in their study in South Africa
that manufacturers of auto vehicles are placing greater emphasis on production whereas designing plus development of product
received relatively less attention. In addition, no direct relationship was found between sub-construct like laws related to tax and
performance of firm in the research study. George and Reddy (2015) findings corroborate that tax policies in India are meshed in
complicated and complex system designed to improve the revenue position with a view to mitigate the fiscal deficit. Additionally,
regulations related to antitrust and performance of automotive sector has direct relationship as the empirical study found out. These
identified perspectives are congruent with the findings of consulting company based in the US, Wilson, Sonsini, Goodrich, and Rosati
[WSGR], (2016) who highlighted in their generated report that from key economic perspective, the year 2016 was most productive
and active. The interesting aspects included, among others; tackling a range of challenges, right from dealing with a continuum of
cartels in the worldwide and phenomenon of merger& acquisition(M&A) to crimes happing domestically and civil based
confrontations. Practitioners in antitrust fields and industrial sectors experienced an array of challenges during the said year, both
internationally and nationally plus constant paradigms shift in policy and enforcement regime. Oyelakin and Kandi (2017); study
concluded with starkly different results and findings which indicated positive link between support rendered by government and
creating innovation, developing technology and enhancing entrepreneurship. In Indonesia the research results by (Moeljadi et al.,
2015) of University of Brawijaya were, to a great degree, similar; where it was concluded that role of government as determining the
Butt et al., International Journal of Research in Business & Social Science 12(7) (2023), 85-93
92
relation among entrepreneurship, market and innovation and performance in business brought out significant impact in SMEs
business performance however; the moderation was not performed by the government as the results revealed. In the final analysis,
reflecting on the objectively based results, the null hypothesis H01: Government policy does not significantly moderate the influence
of Porter’s firm strategy, structure, & rivalry and firm’s performance is not rejected. Thus, it is safe to arrive at conclusion that policy
of government coupled with its sub-construct components namely: capital market regulation, government offered subsidies, local
products manufacturing standards, and governance of antitrust laws affects the Pakistan automotive industry. Nonetheless, results
hold true that in this analysis, statistics reflect that interaction is not significant, b= -.0523, 95% CI [-.5252,0.4206], t = -.2184, p>.01,
and that policy of government does not moderate the relationship between firm strategy, structure, and rivalry and firm’s performance.
However, in the broader context model of moderation predicted 8.7% of the performance of the firm variance, F (3,162) =4.8583,
p< .01.
Conclusions
Government policy as key determinant and its subsequent series of effects on Pakistani automotive sector cannot be undermined.
The study findings hold true that role of government policy being moderator in Porter’s model framework firm construct of strategy,
structure and rivalry and performance of the firm is not significant. As explained the interaction is not significant statistically, b= -
.0523, 95% CI [-.5252,0.4206], t = -.2184, p>.01, stating that firm strategy, structure, and rivalry attribute and performance of firm
relationship is not moderated by policy of the government; although model of moderation predicted 8.7% of the performance of the
firm variance, F (3,162) =4.8583, p< .01. Therefore, it is logical to say, consistent with the study results, that governmental policy
coupled with its sub-construct components viz. capital market regulations, government offered subsidies, local products
manufacturing standards, and governance of antitrust laws does have a significant impact on the Pakistan automotive industry.
Nonetheless, from the foregoing statistically emerged results from the empirical study, government role as key determining force in
the state cannot be overemphasized. Porter’s diamond model’s sub-construct: firm strategy, structure and rivalry serve as catalyst in
achieving pragmatic results in terms of performance in the key automotive industry. It is safe to recommend that Pakistan government
may seriously infuse Porter’s diamond sub-construct while crafting automotive policy along with support measures to help improve
the performance of the industry.
Acknowledgements
Author Contributions: Conceptualization, Methodology, Data Collection, Formal Analysis, Writing—Original Draft Preparation, Writing—Review
And Editing by authors with equal participation. All authors have read and agreed to the published the final version of the manuscript.
Institutional Review Board Statement: Ethical review and approval were waived for this study, due to that the research does not deal with
vulnerable groups or sensitive issues.
Data Availability Statement: The data presented in this study are available on request from the corresponding author. The data are not publicly
available due to privacy.
Conflicts of Interest: The authors declare no conflict of interest.
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