Strategic planning and firm performance: a comparison across countries and sectors

Abstract

The level of uncertainty and pace of change in business environments is posing challenges for firms. The developed economies have transformed from the industrial era to the knowledge and service era, while emerging economies thrive with industrial growth. This poses the question of what the key drivers of corporate success are and how far they are different from the old earnings logic. We will focus on one special value-creating resource or capability, namely strategic planning. We empirically examine the performance consequences of strategic planning to determine in what contexts it pays off particularly well. We use data from a large-scale survey of about 2,500 organizations from developed and emerging countries. The survey responses represent a variety of industries from manufacturing to services. The analysis is based on general linear models, and the findings show significant performance differences across countries, industries, and firm size-with strategic planning explaining performance much better than any contextual characteristics.

The role of entrepreneurship on the foundations of dynamic capabilities

“…Other interesting path coefficients are 'entrepreneurship -strategic decision flexibility' and 'HR management capabilitiesperformance'. The first one suggests 'entrepreneurship' as a basis for 'strategic decision flexibility', as proposed by Kylaheiko et al (2016). The second reinforces the importance of HR in general firm performance and integrates in out model the seizing perspective proposed by Teece (2007).…”

“…Strategy is a value creating resource especially in business environments with high levels of uncertainty and pace of change (Kylaheiko et al, 2016). By recognizing the inherent complexity of dynamic capabilities, managers must deal with the paradox of combining continuous change with more stable organizational capabilities (Schreyögg & Kliesch-Eberl, 2007).…”

Culture, strategy formulation, and firm performance: a meta-analysis

“…Empirical evidence indicates that strategy formulation can be effective in enhancing firm performance (Aboramadan and Borgonovi, 2016; Andersen, 2000; Dibrell et al , 2014; Kylaheiko et al , 2016). However, firm outcomes vary greatly, which suggests situational specificity (Porporato and García, 2011).…”

“…Formulating and implementing a strategy, as compared to not having any strategy whatsoever, are assumed to enhance firm performance (de Sousa Batista et al , 2016; Grant, 2016), and there is ample empirical evidence on the positive relationship between strategy formulation and firm performance (Aboramadan and Borgonovi, 2016; Andersen, 2000; Dibrell et al , 2014; Kylaheiko et al , 2016). More specifically, extant evidence favors top-down, formal, sequential, deliberate, and prescriptive strategy formulation approaches, rather than bottom-up, informal, reflexive, and descriptive approaches (Alderson, 1959; Neugebauer et al , 2016).…”

“…In particular, the organizational and competitive context is an important determinant of the relative effectiveness of a particular strategic system. To be effective, strategy formulation should be coherent with the context (Beyene et al , 2016; Kew and Stredwick, 2017; Kylaheiko et al , 2016; Rigtering et al , 2017), the actions implemented, and the intended outcomes (Marquis and Raynard, 2015). A firm’s performance will be enhanced—or undermined—depending on the match—or mismatch—between its particular strategic approach and its environment (Casagrande and Machado, 2017; De Mooij and Hofstede, 2011; Nazel, 2007).…”