Lectures Notes Explanations for the Absence of Strategic
Planning in Small Business Research on the lack of strategic planning done by
small businesses has focused on identifying the barriers that discourage or prevent planning.
For example, Robinson and Pearce have suggested that a lack of time, lack of specialized
expertise, inadequate knowledge of the planning processes, or reluctance to share strategic
plans with employees and external consultants were obstacles to strategic planning (1984). In
an exploratory interview and subsequent pilot studies, O'Regan and Ghobadian found eight
main barriers to strategic planning:
communication was inadequate, implementation took longer than anticipated, shortfall in
employee capabilities, overall goals of strategy not well enough understood by staff,
coordination of implementation not effective enough, crises distracted attention from
implementation, unanticipated external problems arose, and external factors impacted on
implementation (2002).
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
1. To describe small businesses in Louisiana on the following characteristics:
a) Years the organization has been in business;
b) Industry in which the small business is positioned;
c) Current number of full time and part time employees on the organization's
payroll;
d) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
e) Possession of a written long-term plan.
2. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
3. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
4. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
5. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
j) Years the organization has been in business;
k) Industry in which the small business is positioned;
l) Current number of full time and part time employees on the organization's
payroll;
m) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
n) The perceived degree to which the organization conducts strategic
planning;
o) The perceived quality of the organization’s employees;
p) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
q) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(s) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(t)2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
6. To describe small businesses in Louisiana on the following characteristics:
f) Years the organization has been in business;
g) Industry in which the small business is positioned;
h) Current number of full time and part time employees on the organization's
payroll;
i) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
j) Possession of a written long-term plan.
7. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
8. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
9. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
10. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
r) Years the organization has been in business;
s) Industry in which the small business is positioned;
t) Current number of full time and part time employees on the organization's
payroll;
u) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
v) The perceived degree to which the organization conducts strategic
planning;
w) The perceived quality of the organization’s employees;
x) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
y) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(u) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(v) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
11. To describe small businesses in Louisiana on the following characteristics:
k) Years the organization has been in business;
l) Industry in which the small business is positioned;
m) Current number of full time and part time employees on the organization's
payroll;
n) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
o) Possession of a written long-term plan.
12. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
13. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
14. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
15. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
z) Years the organization has been in business;
aa) Industry in which the small business is positioned;
bb) Current number of full time and part time employees on the organization's
payroll;
cc) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
dd) The perceived degree to which the organization conducts strategic
planning;
ee) The perceived quality of the organization’s employees;
ff) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
gg) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(w) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(x) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry, Size of Business, number of employees
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
16. To describe small businesses in Louisiana on the following characteristics:
p) Years the organization has been in business;
q) Industry in which the small business is positioned;
r) Current number of full time and part time employees on the organization's
payroll;
s) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
t) Possession of a written long-term plan.
17. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
18. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
19. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
20. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
hh) Years the organization has been in business;
ii) Industry in which the small business is positioned;
jj) Current number of full time and part time employees on the organization's
payroll;
kk) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
ll) The perceived degree to which the organization conducts strategic
planning;
mm) The perceived quality of the organization’s employees;
nn) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
oo) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(y) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(z) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
21. To describe small businesses in Louisiana on the following characteristics:
u) Years the organization has been in business;
v) Industry in which the small business is positioned;
w) Current number of full time and part time employees on the organization's
payroll;
x) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
y) Possession of a written long-term plan.
22. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
23. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
24. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
25. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
pp) Years the organization has been in business;
qq) Industry in which the small business is positioned;
rr) Current number of full time and part time employees on the organization's
payroll;
ss) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
tt) The perceived degree to which the organization conducts strategic
planning;
uu) The perceived quality of the organization’s employees;
vv) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
ww) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(aa) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(bb) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
26. To describe small businesses in Louisiana on the following characteristics:
z) Years the organization has been in business;
aa) Industry in which the small business is positioned;
bb) Current number of full time and part time employees on the organization's
payroll;
cc) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
dd) Possession of a written long-term plan.
27. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
28. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
29. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
30. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
xx) Years the organization has been in business;
yy) Industry in which the small business is positioned;
zz) Current number of full time and part time employees on the organization's
payroll;
aaa) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
bbb) The perceived degree to which the organization conducts strategic
planning;
ccc) The perceived quality of the organization’s employees;
ddd) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
eee) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(cc) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(dd) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry, Size of Business, number of employees
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
31. To describe small businesses in Louisiana on the following characteristics:
ee) Years the organization has been in business;
ff) Industry in which the small business is positioned;
gg) Current number of full time and part time employees on the organization's
payroll;
hh) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
ii) Possession of a written long-term plan.
32. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
33. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
34. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
35. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
fff) Years the organization has been in business;
ggg) Industry in which the small business is positioned;
hhh) Current number of full time and part time employees on the organization's
payroll;
iii) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
jjj) The perceived degree to which the organization conducts strategic
planning;
kkk) The perceived quality of the organization’s employees;
lll) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
mmm) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(ee) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(ff) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
36. To describe small businesses in Louisiana on the following characteristics:
jj) Years the organization has been in business;
kk) Industry in which the small business is positioned;
ll) Current number of full time and part time employees on the organization's
payroll;
mm) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
nn) Possession of a written long-term plan.
37. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
38. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
39. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
40. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
nnn) Years the organization has been in business;
ooo) Industry in which the small business is positioned;
ppp) Current number of full time and part time employees on the organization's
payroll;
qqq) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
rrr) The perceived degree to which the organization conducts strategic
planning;
sss) The perceived quality of the organization’s employees;
ttt) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
uuu) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(gg) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(hh) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
41. To describe small businesses in Louisiana on the following characteristics:
oo) Years the organization has been in business;
pp) Industry in which the small business is positioned;
qq) Current number of full time and part time employees on the organization's
payroll;
rr) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
ss) Possession of a written long-term plan.
42. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
43. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
44. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
45. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
vvv) Years the organization has been in business;
www) Industry in which the small business is positioned;
xxx) Current number of full time and part time employees on the organization's
payroll;
yyy) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
zzz) The perceived degree to which the organization conducts strategic
planning;
aaaa) The perceived quality of the organization’s employees;
bbbb) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
cccc) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(ii) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(jj) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry, Size of Business, number of employees
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
46. To describe small businesses in Louisiana on the following characteristics:
tt) Years the organization has been in business;
uu) Industry in which the small business is positioned;
vv) Current number of full time and part time employees on the organization's
payroll;
ww) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
xx) Possession of a written long-term plan.
47. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
48. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
49. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
50. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
dddd) Years the organization has been in business;
eeee) Industry in which the small business is positioned;
ffff) Current number of full time and part time employees on the organization's
payroll;
gggg) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
hhhh) The perceived degree to which the organization conducts strategic
planning;
iiii) The perceived quality of the organization’s employees;
jjjj) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
kkkk) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(kk) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(ll) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
51. To describe small businesses in Louisiana on the following characteristics:
yy) Years the organization has been in business;
zz) Industry in which the small business is positioned;
aaa) Current number of full time and part time employees on the organization's
payroll;
bbb) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
ccc) Possession of a written long-term plan.
52. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
53. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
54. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
55. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
llll) Years the organization has been in business;
mmmm) Industry in which the small business is positioned;
nnnn) Current number of full time and part time employees on the organization's
payroll;
oooo) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
pppp) The perceived degree to which the organization conducts strategic
planning;
qqqq) The perceived quality of the organization’s employees;
rrrr) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
ssss) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(mm) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(nn) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
56. To describe small businesses in Louisiana on the following characteristics:
ddd) Years the organization has been in business;
eee) Industry in which the small business is positioned;
fff) Current number of full time and part time employees on the organization's
payroll;
ggg) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
hhh) Possession of a written long-term plan.
57. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
58. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
59. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
60. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
tttt) Years the organization has been in business;
uuuu) Industry in which the small business is positioned;
vvvv) Current number of full time and part time employees on the organization's
payroll;
wwww) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
xxxx) The perceived degree to which the organization conducts strategic
planning;
yyyy) The perceived quality of the organization’s employees;
zzzz) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
aaaaa) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(oo) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(pp) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry, Size of Business, number of employees
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
61. To describe small businesses in Louisiana on the following characteristics:
iii) Years the organization has been in business;
jjj) Industry in which the small business is positioned;
kkk) Current number of full time and part time employees on the organization's
payroll;
lll) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
mmm) Possession of a written long-term plan.
62. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
63. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
64. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
65. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
bbbbb) Years the organization has been in business;
ccccc) Industry in which the small business is positioned;
ddddd) Current number of full time and part time employees on the organization's
payroll;
eeeee) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
fffff) The perceived degree to which the organization conducts strategic
planning;
ggggg) The perceived quality of the organization’s employees;
hhhhh) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
iiiii) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(qq) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(rr) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
66. To describe small businesses in Louisiana on the following characteristics:
nnn) Years the organization has been in business;
ooo) Industry in which the small business is positioned;
ppp) Current number of full time and part time employees on the organization's
payroll;
qqq) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
rrr) Possession of a written long-term plan.
67. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
68. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
69. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
70. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
jjjjj) Years the organization has been in business;
kkkkk) Industry in which the small business is positioned;
lllll) Current number of full time and part time employees on the organization's
payroll;
mmmmm) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
nnnnn) The perceived degree to which the organization conducts strategic
planning;
ooooo) The perceived quality of the organization’s employees;
ppppp) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
qqqqq) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(ss) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(tt) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
71. To describe small businesses in Louisiana on the following characteristics:
sss) Years the organization has been in business;
ttt) Industry in which the small business is positioned;
uuu) Current number of full time and part time employees on the organization's
payroll;
vvv) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
www) Possession of a written long-term plan.
72. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
73. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
74. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
75. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
rrrrr) Years the organization has been in business;
sssss) Industry in which the small business is positioned;
ttttt) Current number of full time and part time employees on the organization's
payroll;
uuuuu) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
vvvvv) The perceived degree to which the organization conducts strategic
planning;
wwwww) The perceived quality of the organization’s employees;
xxxxx) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
yyyyy) The perceived available time the organization has to strategically plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(uu) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(vv) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry, Size of Business, number of employees
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
76. To describe small businesses in Louisiana on the following characteristics:
xxx) Years the organization has been in business;
yyy) Industry in which the small business is positioned;
zzz) Current number of full time and part time employees on the organization's
payroll;
aaaa) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
bbbb) Possession of a written long-term plan.
77. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
78. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
79. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
80. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
zzzzz) Years the organization has been in business;
aaaaaa) Industry in which the small business is positioned;
bbbbbb) Current number of full time and part time employees on the
organization's payroll;
cccccc) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
dddddd) The perceived degree to which the organization conducts strategic
planning;
eeeeee) The perceived quality of the organization’s employees;
ffffff) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
gggggg) The perceived available time the organization has to strategically
plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(ww) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(xx) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
81. To describe small businesses in Louisiana on the following characteristics:
cccc) Years the organization has been in business;
dddd) Industry in which the small business is positioned;
eeee) Current number of full time and part time employees on the organization's
payroll;
ffff) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
gggg) Possession of a written long-term plan.
82. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
83. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
84. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
85. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
hhhhhh) Years the organization has been in business;
iiiiii) Industry in which the small business is positioned;
jjjjjj) Current number of full time and part time employees on the organization's
payroll;
kkkkkk) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
llllll) The perceived degree to which the organization conducts strategic
planning;
mmmmmm) The perceived quality of the organization’s employees;
nnnnnn) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
oooooo) The perceived available time the organization has to strategically
plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(yy) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(zz) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
86. To describe small businesses in Louisiana on the following characteristics:
hhhh) Years the organization has been in business;
iiii) Industry in which the small business is positioned;
jjjj) Current number of full time and part time employees on the organization's
payroll;
kkkk) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
llll) Possession of a written long-term plan.
87. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
88. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
89. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
90. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
pppppp) Years the organization has been in business;
qqqqqq) Industry in which the small business is positioned;
rrrrrr) Current number of full time and part time employees on the organization's
payroll;
ssssss) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
tttttt) The perceived degree to which the organization conducts strategic
planning;
uuuuuu) The perceived quality of the organization’s employees;
vvvvvv) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
wwwwww) The perceived available time the organization has to strategically
plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(aaa) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(bbb) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang, Inadequate knowledge of the planning
Walker, Redmond, 2007) process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
91. To describe small businesses in Louisiana on the following characteristics:
mmmm) Years the organization has been in business;
nnnn) Industry in which the small business is positioned;
oooo) Current number of full time and part time employees on the organization's
payroll;
pppp) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
qqqq) Possession of a written long-term plan.
92. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
93. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
94. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
95. To determine if a model exists explaining a significant portion of the variance in
Louisiana small business owners' perceived degree to which the small business conducts
strategic planning using the following characteristics:
xxxxxx) Years the organization has been in business;
yyyyyy) Industry in which the small business is positioned;
zzzzzz) Current number of full time and part time employees on the
organization's payroll;
aaaaaaa) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
bbbbbbb) The perceived degree to which the organization conducts strategic
planning;
ccccccc) The perceived quality of the organization’s employees;
ddddddd) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
eeeeeee) The perceived available time the organization has to strategically
plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(ccc) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(ddd) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
96. To describe small businesses in Louisiana on the following characteristics:
rrrr) Years the organization has been in business;
ssss) Industry in which the small business is positioned;
tttt) Current number of full time and part time employees on the organization's
payroll;
uuuu) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
vvvv) Possession of a written long-term plan.
97. To describe small businesses in Louisiana on the perceived degree to which the
organization conducts strategic planning.
98. To describe small businesses in Louisiana perception regarding the following
perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
99. To determine if a relationship exists between Louisiana small business owners'
perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
100. To determine if a model exists explaining a significant portion of the
variance in Louisiana small business owners' perceived degree to which the small
business conducts strategic planning using the following characteristics:
fffffff) Years the organization has been in business;
ggggggg) Industry in which the small business is positioned;
hhhhhhh) Current number of full time and part time employees on the
organization's payroll;
iiiiiii) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
jjjjjjj) The perceived degree to which the organization conducts strategic
planning;
kkkkkkk) The perceived quality of the organization’s employees;
lllllll) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
mmmmmmm) The perceived available time the organization has to strategically
plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(eee) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(fff) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
101. To describe small businesses in Louisiana on the following characteristics:
wwww) Years the organization has been in business;
xxxx) Industry in which the small business is positioned;
yyyy) Current number of full time and part time employees on the organization's
payroll;
zzzz) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
aaaaa) Possession of a written long-term plan.
102. To describe small businesses in Louisiana on the perceived degree to
which the organization conducts strategic planning.
103. To describe small businesses in Louisiana perception regarding the
following perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
104. To determine if a relationship exists between Louisiana small business
owners' perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
105. To determine if a model exists explaining a significant portion of the
variance in Louisiana small business owners' perceived degree to which the small
business conducts strategic planning using the following characteristics:
nnnnnnn) Years the organization has been in business;
ooooooo) Industry in which the small business is positioned;
ppppppp) Current number of full time and part time employees on the
organization's payroll;
qqqqqqq) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
rrrrrrr) The perceived degree to which the organization conducts strategic
planning;
sssssss) The perceived quality of the organization’s employees;
ttttttt) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
uuuuuuu) The perceived available time the organization has to strategically
plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(ggg) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(hhh) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang, Inadequate knowledge of the planning
Walker, Redmond, 2007) process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
106. To describe small businesses in Louisiana on the following characteristics:
bbbbb) Years the organization has been in business;
ccccc) Industry in which the small business is positioned;
ddddd) Current number of full time and part time employees on the organization's
payroll;
eeeee) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
fffff) Possession of a written long-term plan.
107. To describe small businesses in Louisiana on the perceived degree to
which the organization conducts strategic planning.
108. To describe small businesses in Louisiana perception regarding the
following perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
109. To determine if a relationship exists between Louisiana small business
owners' perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
110. To determine if a model exists explaining a significant portion of the
variance in Louisiana small business owners' perceived degree to which the small
business conducts strategic planning using the following characteristics:
vvvvvvv) Years the organization has been in business;
wwwwwww) Industry in which the small business is positioned;
xxxxxxx) Current number of full time and part time employees on the
organization's payroll;
yyyyyyy) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
zzzzzzz) The perceived degree to which the organization conducts strategic
planning;
aaaaaaaa) The perceived quality of the organization’s employees;
bbbbbbbb) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
cccccccc) The perceived available time the organization has to strategically
plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(iii) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(jjj) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
Some small business owners have achieved an ideal balance between their business and
personal lives and have little interest in moving their businesses to the next level (Hathaway,
2014). Other small businesses perform in clearly defined markets in which operations are
straightforward and consistent. For these businesses, such as a neighborhood store that maintains
a steady business or a manufacturer that relies on a well-tested formula for success, strategic
planning may be viewed as an overly elaborate process (Hathaway, 2014). Some departments or
individuals within a small business may view strategic planning with suspicion, fearing that the
shared cooperation essential to planning may cause them to lose power or become vulnerable
(Hathaway, 2014). Businesses that operate in highly competitive markets or use highly complex
supply chains may recognize that they need to plan but do not know where to begin.
Management may lack experience in strategic planning or may be focused on projects that
generate revenues to the exclusion of planning (Hathaway, 2014). In this latter, and common,
situation, a crisis typically compels a decision to start strategic planning (Hathaway, 2014).
Other researchers have proposed that uncertainty in the business environment, the number
of employees, the specific industry, barriers to internal implementation, or the business life-
cycle/stage of development (Berry, Orlov, & Eremin, 1998; Wang et al., 2007) may account for
what Sexton and Van called an "anemic" level of strategic planning in small businesses (1985).
Baird, Lyles, and Orrie, with an N of 188 employees, found that small businesses that planned
formally had an average of 101 employees, while those that did not had an average of 47
employees (1994). Baird, Lyles, and Orrie's research suggests that the size of the small business
predicated whether the firm participated in strategic planning or not (1994). Another barrier may
be due to the inability of a small business to acquire the necessary resources for planning, thus
preventing effective implementation (Kraus et al., 2011). Smaller companies typically have less
access to financial capital and selling markets and generally their administrations are
inadequately developed. Due to these factors, the mechanism for planning is frequently absent.
Thus small businesses, up to a certain critical size, do not engage in planning (Kraus et al.,
2011).
Summary
Although strategic planning has been studied since the 1950's, research has primarily
focused on larger organizations (Mazzarol, 2004). Research on small business strategic planning
is still in its infancy (Kraus, Reiche, & Reschke, 2007). Furthermore, even though the literature
suggests that strategic planning and performance have a positive relationship (Kraus, Harms, &
Schwarz, 2006), most small businesses do not plan, and researchers still do not fully understand
why (Wang et al., 2007). Therefore, the primary purpose of this study is to determine the factors
that influence small business owners' perceptions of obstacles to strategic planning in Louisiana
small businesses.
CHAPTER III: METHODOLOGY
Perceived Obstacles to Strategic Planning in Small Businesses The primary
purpose of this study was to determine the factors that influence small business owners'
perceptions of obstacles to strategic planning in Louisiana small businesses. The researcher
developed an instrument that examines perceptions of obstacles to strategic planning, which
was administered to small business owners throughout the State of Louisiana. Although the
existing literature maintains that strategic planning and performance are positively related
(Kraus, Harms, & Schwarz, 2006), most small firms do not plan (Wang et al., 2007). Given
their economic significance, understanding the obstacles to strategic planning is of vital
importance to Louisiana small business owners.
Research Objectives
The following specific objectives were formulated to guide this research study:
111. To describe small businesses in Louisiana on the following characteristics:
ggggg) Years the organization has been in business;
hhhhh) Industry in which the small business is positioned;
iiiii) Current number of full time and part time employees on the organization's
payroll;
jjjjj) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
kkkkk) Possession of a written long-term plan.
112. To describe small businesses in Louisiana on the perceived degree to
which the organization conducts strategic planning.
113. To describe small businesses in Louisiana perception regarding the
following perceived obstacles to strategic planning:
d) The perceived quality of the organization’s employees;
e) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
f) The perceived available time the organization has to strategically plan.
114. To determine if a relationship exists between Louisiana small business
owners' perceived obstacles to strategic planning and the following variables:
d) Industry in which the small business is positioned in;
e) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
f) Years the organization has been in business;
g) Current number of full time and part time employees on the organization's
payroll;
h) The perceived degree to which the organization conducts strategic
planning.
115. To determine if a model exists explaining a significant portion of the
variance in Louisiana small business owners' perceived degree to which the small
business conducts strategic planning using the following characteristics:
dddddddd) Years the organization has been in business;
eeeeeeee) Industry in which the small business is positioned;
ffffffff)Current number of full time and part time employees on the organization's
payroll;
gggggggg) Structure of the organization i.e. Limited Liability Corporation,
Subchapter S
Corporation, Partnership, etc.;
hhhhhhhh) The perceived degree to which the organization conducts strategic
planning;
iiiiiiii) The perceived quality of the organization’s employees;
jjjjjjjj) The perceived degree to which the organization’s leadership has
knowledge of the
planning process;
kkkkkkkk) The perceived available time the organization has to strategically
plan.
Validity
The validity of the criterion was not tested, as no existing instruments pertaining to
perceived obstacles to strategic planning were found. The researcher contacted Calvin Wang,
PhD, Beth Walker, PhD, and Janice Redmond PhD, who authored the theoretical paper
"Explaining the Lack of Strategic Planning in SMEs: The Importance of Owner Motivation" in
2007. Their paper maintained that, “The majority of [small businesses] do not plan and the
reasons why are not well understood” (Wang, Walker, & Redmond, 2007, p. 1), a statement
integral to the rationale for the paper. Via email, the authors confirmed that to their knowledge no
survey instruments exist that measure the obstacles to strategic planning in small businesses.
Instead, Wang, Walker, and Redmond conducted one-on-one interviews with micro and solo
groups for their study.
To investigate content validity, the researcher employed a panel of six experts whose
academic areas of study included research and theory, and industry consultants whose experience
included strategic planning consultation. The panel reviewed The Perceived Obstacles to
Strategic Planning Inventory to ensure that the content represented in the instrument measured
what it was designed to measure. The researcher made modifications to the instrument based on
input from the panel.
Population
The population of interest for this study consisted of small businesses within the State of
Louisiana that employ 500 or fewer employees and are not publically traded. The sources
include, but are not limited to, the LexisNexis Academic database. The small businesses were
described using the following demographic characteristics: (1) age of the small business, (2)
number of employees on payroll, (3) legal structure of the business, and (4) industry the small
business is positioned in. Additionally, the researcher measured perceptions of small business
leadership, where leadership is described as CEO, Chief Executive Office, VP, Vice President,
Owner, and Co-Owner, using the following characteristics: (1) the perceived degree to which the
organization attempts strategic planning, (2) the perceived degree to which the organization
executes strategic planning, (3) the perceived quality of the organization’s employees, (4) the
perceived degree to which the organization’s leadership has knowledge of the planning process,
and (5) the perceived available time the organization has to strategically plan.
Using Cochran’s sample size determination formula, the researcher has calculated that
119 usable responses would maintain the established margin of error:
Where (t)2 = alpha level of .05
(kkk) 2 = estimated variance in population 1
(d)2 = acceptable margin of error .18
(lll) 2 * (s) 2 (1.96)2 * (.83) 2 3.8416 *
no= ----------------- no= ----------------- (.6889)
(d)2 (.18)2 no= -------------------
.0324
2.645
no= ----------------- no= 83
.0324
Research Design
This study used a survey research design. By definition, a survey gathers information
about the characteristics, actions, or opinions of a large group of people, referred to as a
population (Tanur, 1982). Specifically, a survey consists of predetermined questions that are
administered to a sample of a defined population. The goal is that the sample represents the
larger population, thus enabling the researcher to extrapolate the attitudes, thoughts, and opinions
of the larger population from the sample (Shaughnessy, Zechmeister, & Jeanne, 2011).
This study is correlational and descriptive. In correlational research, the co-variation of
two or more variables is studied (Webster, 2000). In descriptive research, the opinions and
attitudes held by a particular population are defined. Descriptive research examines the
distribution of a phenomenon in a sample, allowing the researcher to describe a distribution or
compare distributions. Thus, the researcher intends to ascertain facts rather than test theory
(Pinsonneault & Kraemer, 1993).
For this study, a survey was used to determine the opinions and thoughts of Louisiana
small business owners. The goal is to advance knowledge concerning the perception of obstacles
to strategic planning.
Instrument Development
Since an existing theoretical framework for studying perceived obstacles to small
business strategic planning could not be located, the researcher constructed The Perceived
Obstacles to Strategic Planning Inventory using a conceptual framework. This instrument was
designed to measure small business owners' perceived obstacles to strategic planning. A content
analysis was conducted on theoretical and empirical studies by Robinson and Pearce (1984);
Wang, Walker, Redmond (2007); Anderson (1970); Hathaway (2014); Hastings (1961); Berry,
Orlov, and Eremin (1998); Perry (2001); Kraus et al. (2011); Baird, Lyles, and Orrie (1994); and
O'Regan and Ghobadian (2002) to determine what obstacles prevented small businesses from
engaging in strategic planning. The obstacles to planning and corresponding authors are listed in
Table 3.
Table 3 Content Analysis of the Obstacles to Planning
Content Analysis
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2008; Anderson, 1970;
Hathaway 2014: Hastings, 1961)
Lack of time
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007; Anderson, 1970;
Hathaway, 2014)
Lack of specialized expertise, experience,
education, and training
(Robinson and Pearce, 1984, Wang,
Walker, Redmond, 2007)
Inadequate knowledge of the planning
process
(Robinson and Pearce, 1984; Wang,
Walker, Redmond, 2007)
Reluctance to share strategic plans with
employees and external consultants
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998; Perry, 2001;
Kraus et al, 2011; Baird, Lyles, & Orrie’s,
1994)
Size of Business, number of employees
(Wang, Walker, Redmond 2007; Berry,
Orlov, & Eremin, 1998) Type of Industry
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998)
Business Life0cycle/Stage of
Development
(Hathaway 2014; Hastings, 1961) Unsure where to start
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Internal Implementation Barriers
(Wang, Walker, Redmond, 2007; Berry,
Orlov, & Eremin, 1998) Environmental Uncertainty/Turbulence
(Anderson, 1970)
Owner/managers were more service
oriented than profit-oriented- spending
80% of their time with customers
(O’Regan and Ghobadian, 2002) Shortfall in employee capabilities
(Kraus et al, 2011) Small business to acquire the necessary
resources for planning
(Wang, Walker, Redmond, 2007) Personal Fulfilment Owner’s Manager’s
motivation
(Perry, 2001) Lack of a formal written business plan
Data were collected from small business leaders who held one of the following titles:
CEO, Chief Executive Office, President, VP, Vice President, Owner, or Co-Owner. The
researcher selected time, quality of employee, and knowledge of the planning process from the
obstacles identified in the content analysis as factors to include in the survey instrument. These
specific factors were determined by the researcher to reasonably fall within the small businesses’
sphere of control and thus be of use to small business leadership. The factors lack of specialized
expertise, experience, education and training, business life-cycle/stage of development,
environmental uncertainty, type of industry, and necessary resources potentially fell outside of
the sphere of control of the small business. Due to the potential overlap, the following two
factors were excluded from the study: (1) unsure of where to start and (2) knowledge of the
planning process. Due to the potential overlap, the following two factors also were excluded
from the study: (1) owner/manager were more service oriented than profit-oriented with lack of
time and (2) owner/manager were more service oriented than profit-oriented. Finally, the
following two factors were determined to be potentially indecipherable should the respondent be
a non-owner or non-co-owner of the small business: (1) personal fulfillment of the owner’s
motivation and (2) owner’s reluctance to share strategic plans with employees and external
consultants.
Use of a Six-Point Likert-Type Scale
The researcher used a six-point Likert-type scale for responses in the instrument. The
literature suggests that the use of a 5-7 point scale is optimal (Lyberg et al, 1997). While
guidance on using midpoints is less clear, some researchers suggest that including midpoints may
lessen the quality of measurement (Lyberg et al, 1997). Therefore, midpoints were excluded in
favor of a force choice six-point scale.
