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Strategic planning– organizational performance relationship: Perspectives of previous studies and literature review

Correspondence to:

Albadri A. Ali, Salman bin Abdulaziz University, Riyadh, Central Saudi Arabia [email protected]

Albadri A. Ali

Salman bin Abdulaziz University, Riyadh, Central Saudi Arabia

Abstract

Purpose: The purpose of this paper is to explore the strategic planning–organizational performance relationship (SP–OP). It is based on reviewing and analyzing previous studies and literature. A total of 15 related studies have been chosen from well- renowned electronic academic resources and data- bases (e.g. Emerald, Elsevier, ProQuest, Sage, Wiley Online, and University Utara Malaysia, etc.). The assumed SP–OP relationship considered some of the important contingent variables identified by these studies as: formal strategic plan (FSP), sort, size, and environment (turbulent) of business. Design/methodology/approach: The main methods being used for this article were compre- hensive review and analysis of related studies and lit- erature review for development of hypotheses. Well prominent electronic resources and databases have been selected. Navigating and selecting relating articles was based on using same keywords of this article title (impact of, relationship, strategic, plan- ning, organizational performance), and excluding those are not. The article hypothesis is constructed based on these studies, literature review and my own observations. The criterion of assessing is made by formulating and drawing comparative table. The contents of the table (refer to Appendix A) are author/s and article titles, purpose, and the findings. In addition, two important columns are comparing this article hypothesis with selected articles’ and whether they are in congruence or not have been identified. Findings: Despite the large number of studies examining SP–OP relationship, the results have been inconclusive. Findings are ranging from posi- tive, negative, and/ or to no relationships. Eight studies support the FSP–OP relationship; neverthe- less, these supporting studies have come up with

findings of many previous studies which evidenced inconclusive and unquantifiable. SP–OP relationship in banking and tourism sectors is positively explored. Intensity of SP in banking sector causes better performance. Four studies are from bank sector. Three of them fully agreed on the positive SP–OP relationship (especially FSP–OP). Although SP–OP relationship has been largely neglected in tourism, hospitality industry, and healthcare, it had showed a significant relationship. In regard to impact of business size on SP–OP relationship: five studies are devoted to small business size, three of them found no significant relationship. The impact of firm size on SP–OP relationship has not yet reached a final conclusion. The majority of studies and literature suggest the non-existence of this relationship. The impact of FSP on OP is varied and contradictory in instable environment. Some findings of studies support this hypothesis, while others found difficult to formulate and implement a plan in such environment. There are five studies tried to explore this relationship. Three of them support this hypothesis and two found no relation- ship. Research limitations/implications: The big confines to empirically conduct this study is the unwillingness of companies to freely participate. Also, such a study or alike requires longitudinal method using both financial and non-financial metrics. This limitation is in alignment with Glaister et al. who recommended incorporation of other performance measures, such as quality and employee satisfaction, in addition to financial measures which would enrich our understanding of the planning–performance relationship. Originality/value: Chosen studies have been selected from different countries. These differences

8 © Informa UK Limited, trading as Taylor & Francis Group 2016 DOI: 10.1179/2047971915Y.0000000017 International Journal of Healthcare Management 2018 VOL. 11 NO. 1

will enrich the study with diverse perspectives and findings.

Keywords: Strategic planning, Formal strategic planning, Organization performance

Introduction

The performance of any organization (for-profit, non-for-profit, micro, macro, etc.) is becoming an annoyed headache for stakeholders. Different disci- plines, management approaches, and studies explored varied reasons and justifications for success or/and failure of organizations not being able to achieve their ultimate strategic objectives, or have not fulfilled, at least, their required perform- ance. This paper refers the success or failure of OP to its relationship with SP dimensions. As some agree on the existence and impact of SP–OP relationship, others disagree, and the rest refer and condition this relationship to contingent variables. Based on a review of other studies such like Rudd et al.1

who argued, that although there is support for a positive relationship of strategic planning to per- formance, there are also studies that have shown no such relationship exists. Also, Efendioglu et al. (2010) confirmed that the relationship between firm strategic planning efforts and firm performance received considerable attention. Despite the large number of studies examining this relationship, the results have been inconclusive: with findings ranging from positive, negative, and/or to no relationships. Mixed evidence about the relationship between strategic planning and organizational per- formance makes the debate about its effectiveness as a tool of strategic management an ongoing one.1

Furthermore, Mueller et al.2 quoted that, although a substantial body of literature suggests a positive relationship between decision process rationality and organizational performance, there is also com- pelling evidence that this relationship is negative. Boyd3 notes that after decades of research, the effect

of strategic planning on a firm’s performance is still unclear. While some studies have found significant benefits from planning, others have found no relation- ship, or even small negative effects. The results from the prior research appear mixed, largely due to differ- ent conceptualizations and measurement of both plan- ning system dimensions and organization performance4 (Veliyath and Shortell, 1993). As this refers the disagreement of these results to the different conceptualization and measurement, the author suggests that, these different perspectives about the SP–OP relationship thoroughly refer to other factors

such like formality/nature of SP, sort or type of business, the firm size, and business environment. Also, the above disagreed argument leads the author to refer these differences to the diverse definitions and concepts for SP. In Aldehayyat et al.,5 Quinn (1980) and Brews and Purohit (2007) argued, that, although there are several definitions of strategic plan- ning, there is no commonly accepted and universal definition of it. Strategy encompasses the following elements; a focus on long-term direction of the organ- ization, matching the activities of the business to the environment in order to minimize the threats and maximize opportunities as well as matching the organization’s activities to the resources available.6

The SP defined as ‘the process of determining the mission, major objectives, strategies, and policies that govern the acquisition and allocation of resources to achieve organizational aims’7 (p. 658). Falshaw et al.8

quoted that strategic planning can be considered from a content or a process viewpoint. The content relates to the distinct elements of the strategic plan which differ from firm to firm. Process relates to the mechanisms for the development of the strategic plan and its subsequent deployment. While a firm is focusing on long-term objectives, it must match its business activities to environment.

The author argues that the above-cited definitions and most others agreed on some concepts and dis- agreed on others. The major agreement is in, e.g., matching process and resource utilization for achieving long-term objectives, etc. Also, the con- tents (name of SP elements) are known and can be unanimously agreed upon, but, the disagreement and the difference embed in the SP and execution (OP) process which is showing the effectiveness and efficiency for each organization. As the environ- ment is unstable, adjustment is persistently required to – at least – minimize the risks and harnessing the opportunities. And once again, this could be referred to the impact of many different circum- stances and factors, such as the formal strategic plan (FSP), size, and environment of the business. If an organization could create a strong and eternal relationship between these factors and its process in effective and efficiency it will achieve and fulfill competing and high performance.

Falshaw et al.8 mentioned that many studies and disciplines exposed the importance of SP, examples: studies done by Thune and House9 and Ansoff et al. (1970) discovered that ‘planners’ outperformed ‘non-planners’ in terms of conventional financial per- formance, such as profit margin and rate of return. Also, there is increasing acceptance of the idea that organizations should adopt formal long-range plan- ning procedures. Each year the volume of literature

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on long-range planning techniques and potential benefits expands to satisfy the growing interest. Articles on long-range planning have proliferated. But reported research directed at quantifying relationship between SP and efforts and subsequent corporate financial performance has been rare.10

Boyd3 notes that strategic planning is one tool to manage environmental turbulence. Further, formal strategic planning is an explicit and ongoing organiz- ational process, with several components, including establishment of goals and generation and evaluation of strategies. An effective strategic planning system will link long-range strategic goals with both mid- range and operational plans. Planners collect data, forecast, model, and construct alternative future scen- arios. Ostensibly, these activities should allow organ- izations to outperform other firms, which did not engage in planning. Capon et al.11 argue that the greater the degree of sophistication of the planning process, the better the performance. In their view, strategic planners should perform better than finan- cial planners because of their focus on adaptation to the environment, and the formal thinking through strategic issues and resource allocation priorities. This practice should lead to the better identification of opportunities and threats, and appropriate firm action. Similarly, corporate planners should outper- form division planners since an integrated corporate perspective should offer advantage over individual subunit perspectives. They also expect division stra- tegic planners to outperform corporate financial plan- ners because the adaptive environmental focus, albeit at a divisional level, should outweigh the benefits of corporate-wide financial integration. Overall they hypothesize that planners should outperform non- planners. With Boyd3 argument, showing that SP is an

instrument with which to manage environment tur- bulence. Also, Boyd stressed on FSP activities with several components (strategic goals, etc.) should allow organization to outperform others firm. This also, enhanced by Capon et al.11 who emphasized that better performance referred to greater FSP. Such perspectives are contradicted with what raised by O’Gorman and Doran,12 and others, who drew the conclusion that ‘management time spent developing strategic process and activities, such like a mission statement could be better spent on the management of the business’.

Study questions

The fundamental question in this study is What factors impact the relationship between SP and OP? The assumption set in this study is that the

extent to which SP positively impact OP depends on certain factors the formality of SP, sort, size, and environment of the business.

Literature review and hypotheses development

Nature and formality of strategic planning For many strategists, researchers, and practitioners, strategy is an intentional, well organized and for- mally document procedure. They based their strat- egy on scientific and thriving studies (scanning, analysis, assess, formulation, execution, implemen- tation, etc.). Hopkins and Hopkins13 cited defi- nitions of some strategists showing the formality of strategic planning. They described strategic plan- ning as the process of using systematic criteria and rigorous investigation to formulate, implement, and control strategy, and formally document organ- izational expectations (cf. Higgins and Vincze, 1993; Mintzberg, 1994; Pearce and Robinson, 1994). Also, Armstrong14 has defined formal strategic planning as a process for determining the firm’s long-range objectives and generating and evaluating alternative strategies, as well as a system for monitoring the outcomes of the plan when executed. Formality has been assessed by items such as the degree of planning manual usage, the amount of emphasis on developing written plans. Dincer et al.15 stated that strategic planning can be thought of in terms of certain dimensions, one of these dimensions is the planning formality. Thus, the authors suggest that formal written plans can serve to gain legitimi- zation from external shareholders, which can be a critical factor for the survival and growth of the firm. In addition, they suggest that written docu- mentation can also help firms communicate their goals, strategies, and operational tasks to internal and external stakeholders. Robinson and Pearce16 stated that formal planning

processes to strategy include documented strategic plans which cover time periods of 3 years or more, identify goals and objectives and the resources needed to achieve them, assess an organization’s environmental factors, and provide ongoing control and measurement systems to monitor progress and make needed corrections. Mintzberg and Lampel17

point out that when the term formal strategic plan- ning is used the intent is to convey that a firm’s stra- tegic planning process involves explicit systematic procedures used to gain the involvement and com- mitment of those principal stakeholders affected by the plan. Falshaw et al.8 stated the characteristics of ‘formal’ strategic planning process is ‘that the process is not just cerebral but formal, decomposable

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into distinct steps, delineated by checklists, and sup- ported by techniques’17 (p. 22). The author thinks the explicitly and systematic procedures (formality) and seriousness of those who involved are a must for SP. Also, the need to acquire the commitment of stakeholders through their participation, at least in designing process (mission, vision, and objectives stages), let them buy what they do, believe and love what they really assigned to. By fulfilling these con- ditions, the FSP comprehensive setup will be fulfilled. Glaister et al.18 argued that the performance impli-

cations of strategic planning have been a central area of investigation for researchers over the past three decades. There is a plethora of research findings on the relationship between FSP and OP, but many of these findings have proved inconclusive. Early studies suggested that FSP enhanced perform- ance.9,19 Later studies concluded that there was no clear systematic relationship between FSP and firm performance.20 In Glaister et al.,18 Bresser and Bishop (1983) have argued that FSP may be dysfunc- tional if it introduces rigidity and encourages exces- sive bureaucracy. In Falshaw et al.8 the question regarding the nature

of strategy formulation in organizations has centered on the so-called ‘design versus process’ debate, which emphasizes the difference between deliberate and emergent strategies (Mintzberg andMcHugh, 1985; Mintzberg and Waters, 1985). Deliberate strat- egies are defined as ‘intentions rebased’ from strat- egies that are formulated in advance, whereas an emergent approach produces evolving strategic pat- terns despite or in the absence of intentions’ (Mintzberg and McHugh, 1985, p. 161). Deliberate or and intention strategy is pre-designed with defined, mission, objectives set processes, and pro- cedures to achieve these objectives. In Moutinho et al.,21 a study by Jenster and Overstreet (1990) focused on formal planning of US credit Unions. They observed from their study of 283 institutions that the propensity to plan is related to key organiz- ational processes, structural configurations, adminis- trative procedures, managerial perceptions of environmental predictability, and multiple perform- ance measures. Even though, the study has not tackled the sort and size of industry. Dincer et al.15 stated that an effective strategic plan-

ning system for a firm will link long-range strategic goals with both mid-range and operational plans. Strategic planning can be thought of in terms of certain dimensions that exist and determine the effec- tiveness of the process. These various dimensions (planning formality, functional coverage, internal and external orientation, the centralization of the process and the time horizon of planning) were

explored by researchers to discuss and analyze the process of strategic planning. Thus, the authors suggest that formal written plans can serve to gain legitimization from external shareholders, which can be a critical factor for the survival and growth of the firm. In addition they suggest that written documentation can also help firms communicate their goals, strategies, and operational tasks to internal and external stakeholders.22 This argument confirms the extent to which FSP increases OP.

Phillips and Appiah-Adu23 found that from all the dimensions that he examined in the UK hotel sector, planning formality was the most effective. He also suggests that ‘this is not surprising since formaliza- tion is generally used as an indicator of the ‘fullness’ of plans produced.’ Formal planning is believed by many authors to lead to increased strategic effective- ness (Powell, 1992; Hart and Banbury, 1994) and financial performance4 (Lyles et al., 1993). Phillips (1998) argues that formalization makes the planning activity compulsory and ensures that it is performed regularly. Moreover, there has been a discussion from a number of authors, on whether formality increases in a highly competitive and turbulent environment and yet, there is no a clear answer. A highly turbulent environment and with the hospital- ity sector being very competitive, managers seem to use formalized planning processes. This finding agrees to Falshaw et al. (2006) who found that for their sample of 113 UK companies, the formality of an organization’s planning system increases with increasing environmental turbulence.

In French et al.,24 Bracker et al. (1988) examined planning process sophistication and found that firms employing structured strategic planning pro- cedures outperformed all other firms. They con- cluded that one of the most important aspects of planning was the level of sophistication applied to the planning process and that it was the quality of the planning and not the time spent on planning that was the most important determinant of finan- cial performance. This finding concurred with the earlier work of Bracker and Pearson (1986) who determined that many small firm owners believe that they have a sophisticated planning process, when at best their processes are rudimentary. Also Robinson and Pearce16 maintained that it is the process of providing written documentation that determines the level of formality. Lyles et al. (1993) then built Robinson and Pearce’s concepts of for- mality into their model of planning sophistication and came to the conclusion that it is the process of planning not the plan itself that is important. Small businesses that adopted a more formal plan- ning process will place greater emphasis on the

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quality of the strategic decision-making process. And as previously cited that, the greater the degree of sophistication of the planning process, the better the performance.11 Based on the above- cited agreements, the following hypothesis is set:

H1. There is a strong and positive relationship between FSP and OP.

Industry sector This section is a trial to explore the SP–OP relation- ship in banking, tourism and hospitality, and man- ufacturing industries (drug, chemical and machinery, food, oil, and steel) as sample of studies representing all industry sectors. A research of Beard and Dess25 and Beard and Dess

(1981) has suggested that ‘industry’ is a key determi- nant of the level of profitability. In Robinson et al.,16 a study of Rue (1973) found no consistent difference between planners and non-planners in non-durable industries while finding that, non-planners outper- formed planners in service industries. In Moutinho et al.,21 the strategic planning and performance relationship in the banking sector has been the focus of several studies over the last three decades10,16

(Klein, 1981; Sapp and Seiler, 1981; Whitehead and Gup, 1985), and more recently studies by Jenster and Overstreet (1990); and Hopkins and Hopkins13

found positive relationships between planning and performance (in bank sector). Also, a study of Hopkins and Hopkins13 using data from 112 banks found that, the intensity with which banks engage in the strategic planning process has a direct, positive effect on banks’ financial performance. Results also indicated a reciprocal relationship between strategic planning intensity and performance. That is, strategic planning intensity causes better performance and, in turn, better performance causes greater strategic plan- ning intensity. In Hopkins and Hopkins,13 it is men- tioned that, inconsistent results of bank-related research, however, have not fully resolved the issue of whether strategic planning leads to improvements in banks’ financial performance. In one study, for instance, it was found that banks that formally engage in the strategic planning process tend to have significantly lower ROIs than banks that engage in the process informally (Gup and Whitehead, 1989). In contrast, Clausen (1990) attribu- ted BankAmerica’s return to profitability to the bank’s formal commitment to the strategic planning process. Referring to Moutinho and Phillips21 study and

respected number of studies quoted therein, is a good indicator supporting the important SP process in banking sector. Even though, Hopkins and Hopkins13 quoted some inconsistent studies

results of bank-related research which contradicted with what resulted by Moutinho. These inconsisten- cies between what mentioned by Hopkins (1997) and Moutinho led the author of this paper to raise some questions in concurrent with Hopkins and Hopkins,13 when they raised their arguments ‘why have the results of studies that have focused on stra- tegic planning–performance relationships in banks been mixed? The inconsistencies in these results might be attributed to spurious research findings, resulting from the researchers focusing on the wrong performance measures and not considering the length of time banks have been involved in formal strategic planning and extraordinary environmental pressure and other factors that are unique to banks. Hopkins and Hopkins13 reasoned these inconsistencies to fact that researchers have neglected to study important aspects of the relation- ship between strategic planning and financial per- formance in banks. Specifically, we contend that past research has neglected exploring the impact of strategic planning intensity on financial perform- ance. Also, the author of this paper noted the dates different of Moutinho and Hopkins studies (2000) and (1997), respectively. This different encou- rage this study to take Moutinho’s results as an updated supporting and approving evidence to the SP–OP in banking sector. In a study done by Phillips et al.(2000) the strategic

planning–performance relationship appears to have been largely overlooked in the tourism and hospital- ity management literature. Recently, two empirical studies have made some progress by exploring the study of strategic planning in the tourism and hospi- tality fields26 (Phillips, 1996a). Also, a study of Athiyaman and Robertson26 has been suggested that tourism businesses lag behind manufacturing firms in the use of strategic planning. Since tourism firms are no less vulnerable to environmental threats than manufacturing firms, it is hypothesized that strategic planning procedures adopted by tourism firms are of equal sophistication to those used by manufacturing firms. This hypothesis was tested on data from a small sample of large Australian firms. The results support the view that tourism firms have well-devel- oped strategic planning processes. The implications of the results are discussed. Phillips (1996b), using a multidimensional model, sought to conduct an exploratory investigation of the relationship between strategic planning and business performance in the UK hotel sector. His research findings provided evi- dence of a statistically significant relationship between business performance and the key planning characteristics of formality, participation, sophisti- cation, and thoroughness.

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In Wood and LaForge,10 a review of previous research reveals that, Ansoff et al. (1970) team was one of the first to investigate the relationship between formal planning and financial perform- ance. These researchers studied the relationship between formal planning and financial performance for USA manufacturing firms. Results showed that planners outperformed non-planners. Also, Thune and House9 investigated the long-range planning practices of 36 firms of six industries, their data showed that formal planning firms consistently out- performed the informal planning firms in the drug, chemical and machinery industries, but failed to show any clear association for food, oil, and steel industries. Healthcare and specially hospitals have not found sufficient portion of studies. However, the alignment is so important and beneficiary to all organizations. A study of Ali 27 found that the strategic alignment of decision makers had signifi- cant impact on healthcare organizational perform- ance. Also, Correia (2011) argued that in order to achieve efficiency in the delivery of healthcare ser- vices, it is essential to align more closely the behav- ior of physicians with the goals of the healthcare organization with which they are affiliated. This argument leads to the following hypothesis:

H2. The industry sector will impact SP–OP relationship.

The business size In Pearce et al.,4 the influence of the firm’s size on the planning–performance relationship is a major meth- odological concern. They call for explicit research attention to firm size, particularly regarding how this variable may interact with the formality dimen- sion. Size has been argued to be a significant contin- gency variable to be considered when designing effective strategic planning systems. Also, Robinson and Pearce16 argue that the organization’s size is a critical contingency variable in the plan- ning–performance relationship, and found evidence to support this position when they examined the planning–performance relationship among small banks. This finding was also confirmed by Powell28 who found that the correlation between strategic planning and performance was greater among large firms than among small firms. It may be further argued that in large organizations the strategic planning system functions as a co-ordina- tion mechanism. Small firms, however, tend to relin- quish formal strategic planning since they operate in relatively less complex industry environments and their internal operations are highly manageable by a single manager or small group of managers,

without the need for being engaged in comprehen- sive planning (Minzberg, 1979).

As a mission is a key factor of SP, French et al.24

stated that finding no relationship with performance indirectly supports and extends the recent work of O’Gorman and Doran,12 who found no evidence for the proposition that high-growth small and medium enterprises (SMEs) have more comprehen- sive mission statements than low-growth SMEs. From their results, O’Gorman and Foran (1999, p. 65) draw the conclusion that ‘management time spent developing a mission statement could be better spent on the management of the business’. In French et al.,24 Lowe and Clemens (1990) also examined strategic effort and strategic process across a variety of small firms in various industries Australia-wide. They came to the conclusion that Australian small firms are less involved in strategiz- ing than comparable American firms. Also, in a further Australian study of strategic planning in small enterprises in Queensland, Glen, and Weerawardena29 claim that there is an absence of theory or a consistent body of knowledge pertaining to small firm strategic planning. They came to the conclusion that the majority of small firms do not engage in strategic planning.

As the above-cited studies and literature theories found no relationship, and more than that, some found no benefits from planning for small firms (waste of time as per O’Gorman and Foran). The opposite perspectives was cited in a study of French et al.24 by Herter (1995) who agreed that every business, regardless of size, needs an effective and comprehensive business plan, because the process of developing the plan forces the entrepre- neur to think about the harsh ‘reality’ of the business world, rather than the more common dream world. He believed that this is a necessary first step toward success and that it should have a well-defined format and parts. It should answer age-old ques- tions such as where are you now, where do you want to be, and, most importantly, how are you going to get there? These are the same fundamental questions that were also postulated by Andrews.30

Also, in Fletcher and Harris,39 Pearson (1986) found that firms using structured strategic planning perform better than firms using other types of plan- ning. Ackelsberg and Arlow (1985) also found that greater use of analytical aspects of planning improves economic performance, although warn that excessive formality could deter the flexible responses and entrepreneurial behavior within a volatile environment. Gibb and Scott (1985) con- clude that, although small firms that use some form of planning procedure do perform better.

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The author believes that, a firm size could affect the SP process. Regardlessto its size, a firm must have a SP or FSP. This is in concurrent with agreement of Herter (1995), and French et al.24 who assured that calls for improved and more extensive planning in the small firm sector are frequently cited in the literature. It is understandable; if it is small, it does not need to share many departments and sections since the number of staff is few, and the capacity of operation is limited. But market is market and competition is competition, a firm must have a future direction (SP). As the world becomes one village, the SMEs are working with large and multinational companies. It is thought that, an owner of small business might not has FSP (documented and structured, etc.), but it is assumed that, a plan is circulating in his mind and a dream is visionalizing in his heart. As stated by Herter (1995) in French et al.24 through the process of planning, informally, or formally, firms remove them- selves from the ‘dream world’ andinto the ‘real world’. Hopkins and Hopkins13 proposed in their study

that the intensity with which managers engage in strategic planning depends on managerial (e.g., stra- tegic planning expertise and beliefs about plan- ning–performance relationship), environmental (e.g., complexity and change), and organizational (e.g., size and structural complexity) factors. They added that the effects of these factors on strategic planning intensity have been suggested by several studies16 (Kallman and Shapiro, 1978; Unni, 1981; Robinson et al., 1984; Orpen, 1985; Robinson et al., 1986; Gable and Topol, 1987; Cragg and King, 1988; Shrader et al., 1989; Watts and Ormsby, 1990b). In Geller,31 it was cited that Gibson et al. (2002)

studied 3554 small businesses over a period of 3 years (1995, 1996, and 1997), and revealed that 18.9% of the small businesses practiced strategic business planning on a regular basis (every year of the 3-year study), while 31.97% of the participating small businesses planned at least once during the 3-year study. The Gibson study included companies ranging in size from 1 to 200 employees however, and does not provide specific breakdown of companies’ sizes. Thus, according to the Gibson Cassar et al. study, about two 2 of 10 small businesses do plan on a regular basis, and 3 of 10 small companies on an occasional basis. This finding begs the question: What makes some small businesses plan while others do not? These considerations lead to the third hypothesis.

H3. The size of the organization impacts the SP–OP relationship.

State of business environment (stable or unstable) Any organization must interact with its environ- ment. In this interaction, it will positively or

negatively impact or be impacted depend on some factors. One of these factors is the state of business environment. Some organizations strongly believe that within stable environment no need for planning others see the opposite. Yasai-Ardekani and Haug32 argue that organiz-

ations that operate in highly competitive environ- ments tend to use practices that give emphasis to flexibility in their structures. In other words, high levels of competition may cause avoidance of the formalized structuring of planning processes such as extensive use of documentation, planning review schedules and timetables as guiding mech- anisms for development of strategies and evaluation and control of strategy implementation. Formalized planning is harder to exist in unstable environments, as constant and unpredictable changes can be a strong barrier. Grinyer et al. (1986) believe that such bureaucratic structures may be more often found in organizations that operate in non-competi- tive environments, with more stable environmental conditions. However, this is not always the case, as formality can also appear helpful in highly competi- tive environments. In a study of Hopkins and Hopkins13 cited some

studies conducted by scholars such as Keats and Hitt,33 Romanelli and Tushman (1986), and Dess and Beard (1984) who suggest that the degree of firms’ involvement in the strategic planning process may directly and indirectly be a function of the degree of complexity and change in their competitive environment. It has also been suggested that if an environment is characterized by low complexity and slow change, thereby exerting no or only weak com- petitive pressures on a firm, there will be no incentive to become very much involved in the strategic plan- ning process (Steiner, 1979). This argument is contra- dicted with what was quoted by Yasai-Ardekani and Haug32 who justified not utilizing the formal plan- ning. In Falshaw et al. (2006), Andersen (2004b, p. 270) confirmed that decentralized strategic emer- gence in conjunction with strategic planning is associ- ated with higher performance for organizations with a high degree of international business activities that operate in turbulent industrial environments. The author, thinks that, as an external organiz-

ational environment is so dynamic (marketing, custo- mer demand, technology changes, etc.), the organization strategy also, must be dynamic, and both of them aligned with each other to friendly interact. Having an effective alignment organization must thoroughly know and understand its external environment. What you know better you manage better. Such aligned relationship will definitely enhance the organization performance. This

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argument illustrated in more detail in O’Regan et al.34

that the greater use of information on the environ- ment is consistent with the argument put forward by Murray and Kotabe35 that a firm’s strategy and environment need to interact in a dynamic co-align- ment process. If effective alignment operates, then enhanced performance is more likely (Venkatraman and Prescott, 1990). The literature indicates that a greater awareness of the operating environment impacts positively on degrees of profitability.36

In Gkliatis et al.,22 centralization is considered as the planning responsibility of different management levels depending on the needs of the organization, mainly determined by the nature of the environment. Kukalis37 suggests that as the environment becomes more complex the strategic planning is more centra- lized, whereas in a relatively simple environment the corporate planning staff has a higher level of partici- pation. Yasai-Ardekani and Haug32 argue that CEOs, top management and line management get more involved when there is high demand for proac- tiveness and speed of adjustment in conditions of high competitive pressure. On one hand, line management interfaces closer with the market and is more aware of the competitive conditions. On the other hand, CEOs and top management assures better control over the organization’s central direction. Consequently, centra- lization of the planning process has to do with the nature of the environmental factors and its level. In Yusuf et al. (2011), the impact of perceived environ- mental uncertainty on planning on large organizations has been studied extensively over a long period of time. The general conclusion is that in the face of increasing uncertainty, the need for planning increases in large firms. In the case of small businesses, on the other hand, there are not many studies analyzing the impact of uncertainty on planning. The conclusions arrived at by the few existing studies are varied and often contradictory. The author’s question, why high competition and

dynamism cause avoidance of SP or FSP? Might this avoidance lead to management chaos? Or is it not possible to have a FSP in a kind of meeting any unpre- dictable scenarios? Firm needs to have a FSP for instable or unexpected situation. As future events (not known) based on assumptions, and these assumptions might occur or not (to be true or false), in both cases, organizations must prepare themselves by having alternatives and choices for that unknown future. Or organizations should create the future. Also, one might say flexibility in an environment (stable) means that, future is clear and easiest for organization to do business smoothly or guaranteed future result. But, as known and agreed future is uni- dentified, any firm (small, medium, or multi) need to

have FSP. At least, how to response in a way to enhance the OP? As we are in knowledge-based economy and change is a must, we need to plan for not having a plan. All these considerations lead the author to the following hypothesis:

H4. The SP–OP relationship is stronger in instable business environment.

Research model

Samples A total of 15 related studies have been chosen from well renowned electronic academic resources and databases (e.g. Emerald, Elsevier, ProQuest, Sage, Wiley Online, University Utara Malaysia, etc.). The selected samples of study were conducted in North America, Europe, Asia, and Australia. Majority of these samples from USA, European, Australian, Turkish, and Asian firms. These studies have been reviewed and analyzed in depth. The researcher’s empirical experiences, prac- titioners, and academic peer perspectives were put into much consideration and usage (Fig. 1).

Variables The paper assessed the SP–OP relationship based on contingent variables identified by previous studies as strategic formality, sort, size, and environment of business. Assuming that, these contingent vari- ables impact the SP–OP. The paper has been con- structed on reviewing and analyzing disciplines, literature, and previous studies.

Organizational performance measures As argued by many management scholars, research- ers, and practitioners, the major problem is the choice of appropriate measures to be used when assessing OP. Falshaw et al. (2006) stated in their study titled (evidence on formal strategic planning and company performance) that, research limitation is ‘measurement validity may be a problem’. Also,

Figure 1: The model of SP–OP relationship.

Ali – Strategic planning–organizational performance relationship

15International Journal of Healthcare Management 2018 VOL. 11 NO. 1

Glaister et al.18 indicated ‘it is generally recognized that it is difficult to select a single measure of firm performance’. Glaister et al. manifested this by quoting notes of Greenley (1994) that, strategic man- agement literature lists several quantitative objec- tives that can be set to guide performance over a period of time, as well as qualitative objectives (Hunger and Wheelen, 1993; Thompson, 1993; Thompson and Strickland, 1992). Also, Shrader et al. (1994) noted that the dependent (performance) variables have been measured in numerous ways in the literature (sales, profit, productivity, revenue, dividends, growth, stock price, capital, cash flow, return on assets, return on capital, return on equity, return on investment, earnings per share, as well as other financial ratios). The author in this study has chosen to examine the SP–OP relationship based on the different performance measures used in these 15 selected studies, ranging from objective to subjective approach or both of them.

Findings and discussions

In Appendix A, Table A1 showing the sample of selected studies covering the model constructs as per the hypotheses. These studies and their findings are as follows:

1. Study of Glaister et al. (2008) found that there is a strong and positive relationship between FSP and firm performance. The study also, verified the moderating roles of environment turbulence, and firm size on strategic plan- ning–performance link.

2. Study of Kopkins et al. (1997) found that intensity with which banks engage in the stra- tegic planning process has a direct, positive effect on bank financial performance.

3. Study of Yusuf et al.17 found that small firms do not respond to uncertainty with increased planning. But when they plan their perform- ance record some improvement.

4. Study of Efendioglu et al. (2010) found that many firms in their sample studies have a strategy process in place. Involving top man- agement and having mission statement posi- tively impact the OP.

5. Study of Wood and LaForge10 found that the sample banks that engaged in comprehensive long-range planning significantlyoutperformed those that had no formal planning system.

6. Study of Pearce et al.4 found a strong positive correlation between the degree of planning formality and firm performance. Additionally, interactive analysis disclosed

that this relationship pervaded various grand strategies; the implication being that formalized strategic planning was consist- ently a positive factor associated with high levels of organizational performance.

7. Moutinho et al.21 found that, overall perform- ance of branch bank depends highly on both long-term thinking and innovation (SP). And precision attached to planning, program- ing, budgeting, and control seems to trigger high levels of marketing effectiveness.

8. Study of O’Rean et al. (2008) findings indicate that the degree of awareness of external environ- ment threats is associated with the degree of overall emphasis on the strategic-planning process. Strategic planning in manufacturing SMEs is positively linked to overall corporate performance. The findings suggest the need to align the degree of emphasis on strategic plan- ning and environmental awareness.

9. Study of Althiyaman et al.26 The results support the view that tourism firms have well-developed strategic planning processes.

10. Study of Richard et al.38 indicate a positive rationality–performance relationship for firms facing dynamic environments, but no relationship between rationality and perform- ance for firms facing stable environments. Implications for future research are discussed.

11. Study of Robinson et al.16 found that small organizations do not appear to benefit from a highly formalized planning process, exten- sive written documentation, or the use of mission and goal identification.

12. Study of French et al.24 found a significant relationship between net profit and informal planning.

13. Study of Mufudz et al.47 found that it would be very difficult to formulate and implement the plan in time of turbulent. Noted that, strategy formulation and implementation are time-consuming and resource wasting which causes most strategies formulated to become obsolete before being implemented.

14. Study of Falshaw et al. (2006) found that no relationship between FP process and subjec- tive company performance was observed.

15. Study of Fletcher and Harris39 found that there is no association between the use of business plans and growth.

H1-F SP–OP Generally, and as per literature and studies available to, and viewed by the author, the results are not

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16 International Journal of Healthcare Management 2018 VOL. 11 NO. 1

consistent in regard to the impact of strategic for- mality (formal strategic plan) on OP. The study find- ings of Glaister et al.18 showed that, ‘a strong and positive relationship was formed between FSP and firm performance’. Even though Glaister et al.18

have mentioned – in their study – diverged findings where they declared that ‘many of the preceding study findings have proved inconclusive’, examples of these studies9,19; who suggested that the FSP enhanced performance, but20 concluded by affirm- ing that there was no clear systematic relationship between FSP and OP. The study of Phillips and Appiah-Adu23 found that planning formality was the most effective, arguing that formalization makes the planning activity compulsory and ensures of its regularity. Phillips also mentioned that formal planning is believed by many authors to lead to increased strategic effectiveness (Powell, 1992; Hart and Banbury, 1994, etc.). Also, French et al.24 cited the findings of Bracker et al. (1988) that firms employing structured SP procedures out- performed all other firms and the level of sophisti- cation applied on planning process is so important as quality of the planning. In this study and precisely referring to Appendix

A, Table A1, there are 8 studies out of 15 supporting the FSP–OP relationship. In spite that these support- ing studies have come up with many previous studies findings which have evidenced inconclusive and not quantifiable benefit (e.g. Glaister et al.18

cited Shrader et al.20; Grinyer and Norburn, 1975; Kudla, 1980; Fulmer and Rue, 1974; Whitehead and Gup, 1985). Based on H1 of this study, there is a strong and

positive relationship between FSP and OP.

H2-industry sector As per the literature review and studies mentioned in ‘Industry Sector’ section and Appendix A, the SP–OP relationship in banking and tourism sectors are positively explored in the previous studies and literature. The intensity of SP in banking sector causes better performance. Four studies of the sample studies are from bank sector. Three of them fully agreed on the positive relationship between strategic planning and performance, exactly the FSP–OP relationship. Although SP–OP relationship have been largely neglected in tourism and hospitality industry (noted by Phillips et al.,40

the relationship between SP–OP in the tourism and hospitality sector had showed a significant relation- ship, especially the planning formality (another study of Phillips, 1996b). Studies of Thune and House9 mentioned in Wood and LaForge10 found that the FSP positively impacts the OP in drug,

chemical, and machinery industries. Based on these findings, the H2: the relationship between SP–OP varies between industrial sectors.

As per the author knowledge, the healthcare sector has not been so much explored and not found sufficient portion of study in the subject of alignment, worth mention it is so important and critical sectors. Correia (2011) argued that in order to achieve efficiency in the delivery of healthcare ser- vices, it is essential to align more closely the behav- ior of physicians with the goals of the healthcare organization with which they are affiliated. Also, the study of Ali27 found that the strategic alignment of decision makers had significant impact on health- care organizational performance. Other studies for instance, the study of O’reilly et al.41 has confirmed that leader behavior influences group and organiz- ational behavior. Achieving collective and aggregate alignment in formulating and implementing the hospital strategy presents a great challenge. In organizations of any size, it is likely that organiz- ational performance should be related to the aggre- gate effects of leaders at different hierarchical levels. The author suggests that more studies covering other aspects of healthcare activities must be seriously explored (internal and external factors and elements).

H3-business size Referring to sample of studies. Five of these studies are small business size. Three of these studies found no significant relationship between SP–OP in fact, the impact of firm size on SP–OP relationship has not yet reached a final conclusion. The majority of studies and literature suggest the non-existence of this relationship. As previously cited in this study, Powell28 found the relationship is greater in large firms than small ones. Another study by Glen and Weerawardena29 claimed that there is an absence of theory or a consistent body of knowledge pertain- ing to small firm strategic planning, and colluding that, the majority of these firms do not engage in SP. The study of Geller31 found that there is a corre- lation between a company’s size and the need for outside funding and between the need of this funding and FSP. The author is afraid that the SP in such a case being done only for the sake of getting the fund, and top management (owner) has no any intention or believe in such approach. This a strong reason justifying the strategic failure since the champion of the firm does not believe in it or has no any kind of purpose to have FSP or to implement that plan, it is only for getting the fund. In Fletcher and Harris,39 Auken (1985) found higher failure rates in small businesses with low

Ali – Strategic planning–organizational performance relationship

17International Journal of Healthcare Management 2018 VOL. 11 NO. 1

levels of strategic orientation; and both Bracker and Perason (1986) and Sandford (1982) conclude that a lack of planning beyond the immediate future con- tributes to small firm failure. The above argument is an evidence for fulfilling the hypothesis (H3) that the smaller the size of the organization the less or non-formal strategic planning.

H4-business environment Reference to literature review and Appendix A in this study, the impact of environment on the SP–OP relationship is inconclusive. The study of Glaiser et al. (2008) found that the positive effect of FSP on firm performance is greater when environ- ment turbulence is high than when environment turbulence is low. Also, the findings study of O’Regan et al.34 suggested that the need to align the degree of emphasis on strategic planning and environmental awareness. Also, the study of Richard et al.38 indicate a positive rationality–perfor- mance relationship for firms facing dynamic environments, but no relationship between ration- ality and performance for firms facing stable environments. On the other contradicted side, there are studies found no relationship. Examples: the study of Falshaw et al. (2006) found no relation- ship was observed between formal planning process and company performance. Also, the case study of Mufudz et al.47 tried to highlight the feasibility of strategic planning in a turbulent environment. It was noted that although it is important for an organ- ization to have a strategic plan in times of turbulent (hyperinflation), it would be very difficult to formu- late and implement the plan in such times. This paper focused on every step of the strategic plan and tried to argue that each step becomes irrelevant in times when there are rapid changes in the economy. It was noted that strategy formulation and implementation are time-consuming and resource wasting, which causes most strategies for- mulated to become obsolete before being implemented. Different economic environments demand different approaches to strategic planning. Some of the strategic planning stages, however, remain vital in all situations, for example, scanning the environment, as this enables the organization to quickly adapt to change. In spite of the differences in literatures review,

majority of studies consistently assured the existence of the assuming relationship between the state of environment and SP when environment turbulent is high, the need for FSP is low. Or when environ- ment is characterized by low turbulent or complex- ity and slow change, there will be no need for strategic planning process. To conclude is that the

impact of FSP on OP is varied and contradictory in instable environments (complex and change environment with high competition). Findings of some studies support this hypothesis others found that it is difficult to formulate and implement a plan. Based on the sample studies (Appendix A), there

are five studies tried to explore the SP–OP relation- ship in instable environment. Three of them support this hypothesis (H4) and two of them found no relationship.

Conclusion

This result may help explain the conflicting findings of previous and upcoming studies. Example of such conflicts: Fredrickson (1984) and Fredrickson and Mitchell (1984) versus the findings of Bourgeois and Eisenhardt (1988) and Eisenhardt (1989). Both views are supported to a certain extent by our findings.

Recommendations

1. It would be more beneficiary to conduct a study with samples of many studies from different context.

2. Updated and new studies are needed to explore same issue.

3. It is recommended to conduct a separate study about the impact of different definitions and concepts of SP on performance.

4. To conduct a study exploring the impact of the different strategic concepts and definitions on OP.

5. In industry sector part, a separate study for each industry sector is high recommended. Especially in tourism and hospitality and healthcare sector, especially hospitals.

6. Incorporation of performance measures (finan- cial and non-financial) would be more benefits.

7. Conducting a study exploring the impact of planners and non-planners on SP.

Disclaimer statements

Contributors None.

Funding None.

Conflicts of interest None.

Ethics approval None.

Appendix A

See Table A1.

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18 International Journal of Healthcare Management 2018 VOL. 11 NO. 1

Table A1 Showing the relationship between findings of previous selected studies and this study (SP–OP)

Author/s and title Purpose and design Findings SP–OP hypoth.

Consistent

Yes No

1-Glaister et al.18 The purpose of this paper is to examine the nature of strategic planning–performance relationship by drawing on data from a sample of Turkish firms. H1: for Turkish firms there is a positive and direct relationship between FSP and FP. H2: in Turkish context the positive effect of FSP on FP is greater when environment turbulence is high than when environment turbulence is low H3: in the Turkish context the positive effect of formal strategic planning on firm performance is greater among large firms than among small firms. – 500 largest manufacturing companies

The findings show that there is a good deal of support for the study’s hypotheses. 1-A strong and positive relationship was formed between FSP and firm performance, which tends to confirm the arguments of the prescriptive strategic management literature. The test results also verify the moderating roles of environmental turbulence, organization structure and firm size on the strategic planning–performance link

H1 Yes A causal analysis of formal strategic planning

and firm performance H3 Yes

H4 Yes

2-Hopkins and Hopkins13 An integrative model of relationships among managerial, environmental, and organizational factors, strategic planning intensity, and financial performance was developed and tested using data from 112 banks

The results suggested that the intensity with which banks engage in the strategic planning process has a direct, positive effect on banks’ financial performance, and mediates the effects of managerial and organizational factors on banks’ performance. Results also indicated a reciprocal relationship between strategic planning intensity and performance. That is, strategic planning intensity causes better performance and, in turn, better performance causes greater strategic planning intensity. Finally, the results hold implications for other financial services institutions subject to similar conditions that banks must operate under

H1 Yes Strategic planning–financial performance

relationships in banks: a causal examination FSP

3-Yusuf and Nyomori45

Uncertainty, planning sophistication and performance in small New Zealand firms

Using data from a sample of small firms in New Zealand, this study tries to examine the relationship between environmental uncertainty, planning and performance

The results suggest that small firms do not respond to uncertainty with increased planning. However, when they plan their performance does record some improvement

H1 Yes FSP

4-Efendioglu46

Impact of strategic planning on financial performance of companies in Turkey

The purpose of this study is to explore the impact of strategic planning on financial performance of Major Industrial Enterprises of Turkey

Our findings show that many domestic and foreign firms in our sample have a strategic process in place. Two positively influence the OP:

Involvement of top management Having mission statement

H1 FSP

Yes

Continued

A li – Strateg

ic p lan

n in g –o

rg an

izatio n al

p erfo

rm an

ce relatio

n sh ip

1 9

In te

rn a tio

n a l Jo u rn

a l o f H e a lth

ca re

M a n a g e m e n t

2 0 1 8

V O L. 1 1

N O . 1

Table A1: Continued

Author/s and title Purpose and design Findings SP–OP hypoth.

Consistent

Yes No

5-Wood and LaForge10

The impact of comprehensive planning on financial performance

The research investigates the relationship between formal planning procedures and subsequent financial performance for selected US banks. It was hypothesized that large US banks had more comprehensive planning would financially outperform those that had less comprehensive planning

It was found that the sample banks that engaged in comprehensive long-range planning significantly outperformed those that had no formal planning system. They also outperformed a randomly selected control group

H1 FSP

Yes

6-Pearce et al.4

The impact of grand strategy and planning formality on financial performance

Abstract: An empirical study involving 97 manufacturing firms that averaged $20 million in annual sales yielded

A strong positive correlation between the degree of planning formality and firm performance. Additionally, interactive analysis disclosed that this relationship pervaded various grand strategies; the implication being that formalized strategic planning was consistently a positive factor associated with high levels of organizational performance

H1 FSP

Yes

7-Moutinho and Phillips21 Research study focuses on the analysis of the perceptions of 58 bank branch managers selected from 14 branches belonging to two major Scottish banks of the impact of a variety of planning practices on competitiveness, overall performance, strategic planning effectiveness

Bank branch effectiveness is affected by effective management practices; the overall performance of the branch depends highly on both long-term thinking and innovation; long-term thinking seems to have also, a high degree of impact on strategic planning effectiveness; and finally the degree of precision attached to planning, programing, budgeting and control seems to trigger high levels of marketing effectiveness

H1 Yes The impact of strategic planning on the

competitiveness, performance and effectiveness of bank branches: a neural network analysis

Continued

A li – Strateg

ic p lan

n in g –o

rg an

izatio n al

p erfo

rm an

ce relatio

n sh ip

2 0

In te

rn a tio

n a l Jo u rn

a l o f H e a lth

ca re

M a n a g e m e n t

2 0 1 8

V O L. 1 1

N O . 1

Table A1: Continued

Author/s and title Purpose and design Findings SP–OP hypoth.

Consistent

Yes No

8-O’Regan et al.34

Leaders, loungers, laggards The strategic- planning–environment performance relationship re-visited in manufacturing SMEs

This paper aims to assess the link between strategic planning, aspects of the external environment and overall corporate performance in manufacturing SMEs

The findings indicate that the degree of awareness of external environment threats is associated with the degree of overall emphasis on the strategic-planning process. Strategic planning in manufacturing SMEs is positively linked to overall corporate performance. The findings suggest the need to align the degree of emphasis on strategic planning and environmental awareness

H1/ H4 SP

Yes

9-Althiyaman and Robertson26 It has been suggested that tourism businesses lag behind manufacturing firms in the use of strategic planning. Since tourism firms are no less vulnerable to environmental threats than manufacturing firms, it is hypothesized that strategic planning procedures adopted by tourism firms are of equal sophistication to those used by manufacturing firms. This hypothesis was tested on data from a small sample of large Australian firms

The results support the view that tourism firms have well-developed strategic planning processes. The implications of the results are discussed

H1 SP‘Strategic planning in large tourism firms: an

empirical analysis’ Tourims management, 16:199–205

10-Richard, et al.38 This study tests competing theories of how the relationship between rationality in strategic decision processes and firm performance may be moderated by environmental dynamism

Results, based on a survey of 101 manufacturing firms, indicate a positive rationality–performance relationship for firms facing dynamic environments, but no relationship between rationality and performance for firms facing stable environments. Implications for future research are discussed

H4 Yes ‘The relationships between top management

demographic characteristics, rational decision making, environmental munificence, and firm performance’

11-Robinson and Pearce16 To examine the relationship between formality of planning procedures and financial performance for a sample of small US banks

The study found that, small organizations do not appear to benefit from a highly formalized planning process, extensive written documentation, or the use of mission and goal identification

H1–H3 No The impact of formalized strategic planning

on financial performance in small organizations

12-French et al.24

The role of strategic planning in the performance of small, professional services firms

Using a sample of small, regional professional service firms, this paper investigates relationships between firm performance and aspects of strategic planning

While no significant relationship between the performance measures and factors is identified, a significant relationship between net profit and informal planning emerges. These mixed results bring into question the value of the classical strategic planning process as a means of achieving a sustainable competitive advantage in the market analyzed

H1 FSP

No

Continued

A li – Strateg

ic p lan

n in g –o

rg an

izatio n al

p erfo

rm an

ce relatio

n sh ip

2 1

In te

rn a tio

n a l Jo u rn

a l o f H e a lth

ca re

M a n a g e m e n t

2 0 1 8

V O L. 1 1

N O . 1

Table A1: Continued

Author/s and title Purpose and design Findings SP–OP hypoth.

Consistent

Yes No

13- Mufudz et al.47 This paper tried to highlight the feasibility of strategic planning in a turbulent environment. It focused on every step of the strategic plan and tried to argue that each step becomes irrelevant in times when there are rapid changes in the economy

It was noted that it would be very difficult to formulate and implement the plan in time of turbulent. It was noted that strategy formulation and implementation are time-consuming and resource wasting, which causes most strategies formulated to become obsolete before being implemented. Different economic environments demand different approaches to strategic planning. Some of the strategic planning stages however, remain vital in all situations, for example, scanning the environment, as this enables the organization to quickly adapt to change

H4 No

The usefulness of strategic planning in a turbulent economic environment: a case of Zimbabwe during the period 2007–2009

14-Falshaw et al. (2006) Evidence on formal strategic planning and

company performance

Attempts to examine the relationship between formal strategic planning and financial performance in a non-US context (UK) while taking into consideration the important contingent variables identified by previous researchers of organizational size, environmental turbulence and industry

While hypotheses explaining the formality of a company’s planning process were well accounted for, no relationship between formal planning process and subjective company performance was observed

H1 No FSP

15-Fletcher and Harris39

‘Seven aspects of strategy formation: exploring the value of planning’

The study defines planning and emergent approaches within seven constituent aspects of strategy formation, and explores their association with growth. Data were gathered from participants of a Graduate Enterprise business start-up program (small firms) in Scotland. Study is to address the research question, ‘Is there an association between the use of specific planning or emergent procedures by entrepreneurs and their growth performance, and if so, what is that association?

Using the emergent approach most frequently than planning Concerning formalities of strategy (business plans, objectives and performance review) neither the growth nor the low-growth firms measured, tend to use business plans. There is no association between the use of business plans and growth

H1 No

H1, H2, H3, and H4 = hypotheses of this study.

A li – Strateg

ic p lan

n in g –o

rg an

izatio n al

p erfo

rm an

ce relatio

n sh ip

2 2

In te

rn a tio

n a l Jo u rn

a l o f H e a lth

ca re

M a n a g e m e n t

2 0 1 8

V O L. 1 1

N O . 1

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