Hostname: page-component-cd9895bd7-8ctnn Total loading time: 0 Render date: 2024-12-18T13:26:46.817Z Has data issue: false hasContentIssue false
  • English
  • Français

Is Strategic Planning Worth the Effort? A Study of Firm Performance Versus Planning Comprehensiveness in Australia

Published online by Cambridge University Press:  18 September 2015

Peter Devenish  and
Tom Fisher
Peter Devenish
Affiliation:
Campbelltown College of TAFE, SWSIT, Campbelltown NSW 2560, Australia, Tel: +61 2 4620 1790, Email: [email protected]
Tom Fisher
Affiliation:
School of Management, University of Technology, Sydney, NSW 2007, Australia, Tel: +61 2 9514 3620, Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

The planning-performance literature suggests that there is a weak positive correlation between strategic planning and financial performance. This study has been undertaken to determine whether this weak positive correlation is true for Australian firms.

Strategic planning for the purposes of this study is arranged in three levels of planning complexity. A sample of 77 listed firms was surveyed to determine their level of planning complexity, and this was correlated with the firm's financial performance over a three year period.

A range of statistical tests did not reveal any significant correlation between strategic planning at any of the three levels and the financial performance of the firm. This negative finding is generally in line with other recent studies conducted in Australia, the United States and the United Kingdom.

However, positive correlations were found with several subjective performance measures, suggesting that respondents generally believe that strategic planning is helping their company.

Keywords

Strategic planningplanning complexityfinancial performance
Type
Research Article
Information
Journal of Management & Organization , Volume 6 , Issue 1 , January 2000 , pp. 1 - 13
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2000

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Australian National Accounts National Income, Expenditure and Product 1993-94 (1995) Australian Bureau of Statistics, AGPS, Canberra, Catalogue No. 5204.0Google Scholar
Australian Standard Industry Classification (1983) ABS Catalogue No. 1201.0 Australian Bureau of Statistics, Canberra.Google Scholar
The Australian Financial Review (1995) Shareholder The Handbook of Australian Public Companies, 8th edn, Stafford McWilliams, Sydney.Google Scholar
Babbie, E (1992) The Practice of Social Research, 6th edn, Wadsworth Publishing Company, BelmontGoogle Scholar
Bahaee, MS (1992) ‘Strategy-Comprehensiveness Fit and Performance’, Australian Journal of Management, vol. 17, no. 2, pp. 195–215CrossRefGoogle Scholar
Boyd, BK (1991) ‘Strategic Planning and Financial Performance: A Meta-Analytic Review’, Journal of Management Studies, vol. 28, no. 4, pp. 353–374CrossRefGoogle Scholar
Bracker, JS and Pearson, JN (1986) ‘Planning and Financial Performance of Small, Mature Firms’, Strategic Management Journal, vol. 7, no. 6, pp. 503–522CrossRefGoogle Scholar
Bracker, JS, Keats, BW and Pearson, JN (1988) ‘Planning and Financial Performance among Small Firms in a Growth Industry’, Strategic Management Journal, vol. 9, no. 6, pp. 591–603CrossRefGoogle Scholar
Capon, N, Farley, JU and Hulbert, JM (1987) Corporate Strategic Planning, Columbia University Press, New YorkGoogle Scholar
Christodoulou, C (1984) Strategic Planning Practices of Australian Organizations, Unpublished Doctoral Thesis, Monash UniversityGoogle Scholar
Davis, E, Flanders, S and Star, , (1991) ‘Who are the world's most successful companies?’, Business Strategy Review, Summer, pp. 1–33Google Scholar
Dean, JW Jr and Sharfman, M (1996) ‘Does Decision Process Matter? A Study of Strategic Decision-Making Effectiveness’, Academy of Management Journal, vol. 39, no. 2, pp. 368–396Google Scholar
Dean, JW Jr and Snell, SA (1996) ‘The Strategic Use of Integrated Manufacturing: An Empirical Examination’, Strategic Management Journal, vol. 17, no. 6, pp. 459–4803.0.CO;2-8>CrossRefGoogle Scholar
Dess, GG and Robinson, RB Jr (1984) ‘Measuring Organizational Performance in the Absence of Objective Measures: The Case of the Privately-held Firm and Conglomerate Business Unit’, Strategic Management Journal, vol. 5, no. 3, pp. 265–273CrossRefGoogle Scholar
Frese, M, Kring, W, Soose, A and Zempel, J (1996) ‘Personal Initiative at Work: Differences Between East and West Germany’, Academy of Management Journal, vol. 39, no. 1, pp. 37–63Google Scholar
Grinyer, PH and Norburn, D (1974) ‘Strategic Planning in 21 U.K. Companies’, Long Range Planning, 08, pp. 80–88.Google Scholar
Hair, FJ JrAnderson, RE, Tatham, RL and Black, WC (1992) Multivariate Data Analysis with Readings, 3rd edn., Macmillan Publishing Co., New York.Google Scholar
Hax, AC and Majluf, NS (1991) The Strategy Concept and Process: A Pragmatic Approach, Prentice-Hall, Sydney.Google Scholar
Herold, DM (1972) ‘Long-Range Planning and Organizational Performance: A Cross-Validation Study’, Academy of Management Journal, vol. 15, no. 1, pp. 91–102.Google Scholar
Hofer, CW (1976) ‘Research on strategic planning: a survey of past studies and suggestions for future efforts’, Journal of Economics and Business, vol. 28, 3, Spring-Summer, pp. 261–286.Google Scholar
Howell, DC (1995) Fundamental Statistics for the Behavioral Sciences, 3rd edn, Duxbury Press, Belmont.Google Scholar
Javidan, M and Dastmalchian, A (1988) ‘Why Planning in State Enterprises Doesn't Work’, Long Range Planning, vol. 21, no. 3, pp. 98–104.CrossRefGoogle Scholar
Jobson's Year Book of Australian Companies 1993/94, 65th edn, Riddell Information Services, Sydney, 1993.Google Scholar
Jobson's Year Book of Australian Companies 1995/96, 67th edn, Riddell Information Services, Sydney, 1995.Google Scholar
Judd, CM, Smith, ER and Kidder, LH (1991) Research Methods in Social Relations, Harcourt Brace Jovanovich, Sydney.Google Scholar
Karger, DW and Malik, ZA (1975) ‘Long Range Planning and Organizational Performance’, Long Range Planning, vol. 8, no. 6, pp. 60–64.CrossRefGoogle Scholar
Methods in Social Relations, 5th edn, CBS College Publishing, New York.Google Scholar
Kudla, RJ (1980) ‘The Effects of Strategic Planning on Common Stock returns’, Academy of Management Journal, vol. 23, no. 1, pp. 5–20.Google Scholar
Loasby, BJ (1967) ‘Long-Range Formal Planning in Perspective’, Journal of Management Studies, 10, pp. 300–308.CrossRefGoogle Scholar
Mintzberg, H (1994) The Rise and fall of Strategic Planning, Prentice Hall, Sydney.Google Scholar
Mintzberg, H and Quinn, JB (1996) The Strategy Process Concepts, Contexts, Cases, Prentice Hall, New Jersey.Google Scholar
Papadakis, V and Barwise, P (1998) Strategic Decisions, Kluwer Academic Publishers, Norwell, Mass.CrossRefGoogle Scholar
Pearce, JA, Freeman, EB and Robinson, RB (1987) ‘The Tenuous Link Between Formal Strategic Planning and Financial Performance’, Academy of Management Review, vol. 12, no. 4, pp. 658–675.CrossRefGoogle Scholar
Pearce, II, John, A, Robbins, DK and Robinson, RB (1987) ‘The Impact of Grand Strategy and Planning Formality on Financial Performance’, Strategic Management Journal, vol. 8, no. 2, pp. 125–134.CrossRefGoogle Scholar
Powell, TC (1996), ‘How Much Does Industry Matter? An Alternative Empirical Test’, Strategic Management Journal, vol. 17, no. 4, pp. 323–334.3.0.CO;2-5>CrossRefGoogle Scholar
Private Final Consumption Expenditure, Australian Economic Indicators, 11 1994, ABS Catalogue No. 1350.0, Australian Bureau of Statistics, Canberra.Google Scholar
Reserve Bank of Australia Bulletin, various issues, Reserve Bank of Australia, SydneyGoogle Scholar
Robinson, RB Jr and Pearce, JA II (1983) ‘The Impact of Formalized Strategic Planning on Financial Performance in Small Organizations’, Strategic Management Journal, vol. 4, no. 3, pp. 197–207.CrossRefGoogle Scholar
Rue, LW and Fulmer, RM (1973) ‘Is Long-Range Planning Profitable?’, Proceedings of the Academy of Management, pp. 66–73.Google Scholar
Sekaran, U (1992) Research Methods for Business A Skill-Building Approach, 2nd edn, John Wiley & Sons, Brisbane.Google Scholar
Smith, NI (1994), Down-to-Earth Strategie Planning, Prentice Hall, Sydney.Google Scholar
StatView 4.5 for the Macintosh, 1994, Abacus Concepts, Inc., Berkeley.Google Scholar
Stoner, JAF, Collins, RR, and Yetton, PW (1985), Management in Australia, Prentice Hall, Sydney.Google Scholar
Thune, SS and House, RJ (1970) ‘Where long-range planning pays off – findings of a survey of formal, informal planners’, Business Horizons, vol. 13, no. 4, 08, pp. 81–87.CrossRefGoogle Scholar
Viljoen, J (1994) Strategic Management: Planning and Implementing Successful Corporate Strategies, 2nd edn, Longman Cheshire, Melbourne.Google Scholar
Welch, JB (1984) ‘Strategic Planning Could Improve Your Share Price’, Long Range Planning, vol. 17, no. 2, pp. 144–147.CrossRefGoogle Scholar
Wood, DR and LaForge, RL (1979) ‘The Impact of Comprehensive Planning on Financial Performance’, Academy of Management Journal, 22, pp. 516–526.Google Scholar
Zikmund, WG (1994) Business Research Methods, 4th edn, The Dryden Press, Fort Worth.Google Scholar