Strategic Planning and Financial Performance in UK SMEs: Does Formality Matter?

Strategic Planning and Financial Performance in UK SMEs: Does Formality Matter? SUMMARY The majority of the literature on corporate performance in SMEs has indicated that the absence of formal strategic planning (or inadequacies in its process) can be directly linked with failure, while its presence can be linked to success (Bracker and Pearson, 1986; Stoner, 1983). However, other empirical evidence fails to find a relationship (Robinson and Pearce, 1983). These differences are due to methodological and theoretical problems facing research in this domain. This paper attempts to improve on both issues. The hypothesis that ‘formal planning is not associated with better‐than‐average performance’ is tested on a sample of SMEs, controlled by sector, using a 5‐year operating period. Five measures of financial performance are utilized, including both the arithmetic and geometric measurements of central tendency as appropriate. Moreover, perceptions of CEOs, rather than the aggregation of scale‐based measurements of organizational variables, are used to prescribe the measure of formality used in the analysis. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png British Journal of Management Wiley

Strategic Planning and Financial Performance in UK SMEs: Does Formality Matter?

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Publisher
Wiley
Copyright
Copyright © 1994 Wiley Subscription Services, Inc., A Wiley Company
ISSN
1045-3172
eISSN
1467-8551
DOI
10.1111/j.1467-8551.1994.tb00128.x
Publisher site
See Article on Publisher Site

Abstract

SUMMARY The majority of the literature on corporate performance in SMEs has indicated that the absence of formal strategic planning (or inadequacies in its process) can be directly linked with failure, while its presence can be linked to success (Bracker and Pearson, 1986; Stoner, 1983). However, other empirical evidence fails to find a relationship (Robinson and Pearce, 1983). These differences are due to methodological and theoretical problems facing research in this domain. This paper attempts to improve on both issues. The hypothesis that ‘formal planning is not associated with better‐than‐average performance’ is tested on a sample of SMEs, controlled by sector, using a 5‐year operating period. Five measures of financial performance are utilized, including both the arithmetic and geometric measurements of central tendency as appropriate. Moreover, perceptions of CEOs, rather than the aggregation of scale‐based measurements of organizational variables, are used to prescribe the measure of formality used in the analysis.

Journal

British Journal of ManagementWiley

Published: Dec 1, 1994

References

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