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Formal strategic planning, operating environment, size, sector and performance: evidence from the UK’s manufacturing SMEs

Ghobadian, Abby; O'Regan, Nicholas; Thomas, Howard; Liu, Jonathan

Authors

Abby Ghobadian

Howard Thomas

Jonathan Liu



Abstract

The relationship between strategic planning and firm performance has long interested strategic management researchers. In the past decade, this research effort has slowed down, while strategic planning has gained greater popularity among managers. However, some academics dispute the usefulness of strategic planning, particularly in turbulent environments. This paper examines the following key research questions that are relevant to both practice and theory. First, the relationship between the formality of strategic planning (conceptualised by considering whether firms have written strategic plans and the level of correspondence between the written strategic plan and the normative planning process) and a wide range of performance measures. Second, the relationship between three contingency factors - size, sector and environment, in addition to the incidence of formal planning and the level of formality. Of great interest are the effects of munificence and turbulence. The results suggest that the link between strategic planning formality and performance is tenuous. Nevertheless, managers tend to deploy strategic planning widely in difficult market environments. The conclusion is that strategic planning is perceived to enhance a firm's survival chances, but not necessarily its short-term performance.

Citation

Ghobadian, A., O'Regan, N., Thomas, H., & Liu, J. (2008). Formal strategic planning, operating environment, size, sector and performance: evidence from the UK’s manufacturing SMEs. Journal of General Management, 34(2), 1-20

Journal Article Type Article
Publication Date Jan 1, 2008
Journal Journal of General Management
Print ISSN 0306-3070
Publisher SAGE Publications
Peer Reviewed Peer Reviewed
Volume 34
Issue 2
Pages 1-20
Keywords strategic planning, firm performance, performance measures
Public URL https://uwe-repository.worktribe.com/output/1018728
Publisher URL http://www.braybrooke.co.uk/jgm/