Strategic planning in smaller enterprises: New empirical findings

Purpose To analyze the performance implications of essential elements of strategic planning (time span, formalization, frequency of control, and use of planning instruments) in smaller enterprises in a simultaneous way. Design/methodology/approach The main methods being used for this article were a thorough review of literature for the development of hypotheses and a logistical regression analysis for the empirical evaluation. The study is based on a representative sample of small Austrian enterprises (n = 290). Findings Planning formalization has a positive and highly significant impact on the probability of belonging to the group of growth firms, whereas other aspects of strategic planning (time horizon, strategic instruments, and control) did not contribute to performance. Research limitations/implications Employee growth has been used as an indicator for firm performance. Other indicators (e.g. sales growth, profitability, and subjective evaluation of the entrepreneur) might be used to draw a more detailed picture. Additionally, dichotomizing the dependent variable has some weaknesses. Furthermore, only a limited number of industry categories have been controlled for. Practical implications Practitioners might want to emphasize formal strategic planning in order to enhance the probability of performance. Also, they might want to regard the business plan as a management and learning tool rather than as a pure means to generate funding. Originality/value This paper is the first to analyze different dimensions of strategic planning in small firms simultaneously. Additionally, it is one of only very few studies outside of the Anglo-American realm, which might be a help especially for European SMEs (small and medium-sized enterprises).