Business environment, employee competencies and operations strategy: anempirical study of retail firms in China

This paper investigates the links between business environment, employee competencies, operations strategy and performance for a sample of retail companies in China. The path analysis suggests that, because the retail environment becomes more dynamic, firms endeavoured to strengthen their employee competencies to achieve retail success. Employee competencies such as good team working and a high degree of self‐motivation play significant roles in pursuing low cost, quality and flexibility strategies. Operations strategy (low cost and flexibility) in turn influences business performance. In particular, our results show that employee competencies fully mediate the effects of the business environment on operations strategy and that the employee competencies–performance connection is mediated by operations strategy.