Literature Review: Strategic Planning and Performance in Small Business

Since the mid-seventies, we see that scholars make the distinction between small and large firms in terms of needs, the level of complexity and scope of strategic planning. Bracker and Pearson (1986), Rue and Ibrahim (1998), Perry (2001) and WIJEWARDENA, Zoysa, Perera and Fonseka (2004) to make all definitions of strategic planning that have the uniqueness of small businesses in mind and allow the fact that small businesses can not rely on the management and material resources in a manner similar to that of large organizations.

Empirical studies on the results show a correlation between strategic planning and performance. However, the results are mixed. A survey of twenty-six experimental studies enabled Miller and Cardinal (1994) to identify a significant positive relationship between strategic planning and performance of small businesses. Robinson (1982) found a significantly high level of profitability and an increase in sales and profitability of sales and the number of full-time employees in a group of small businesses operating outside consultants to strategic planning. Compared with other companies, Bracker and Pearson (1986) found a significant increase in income and pay by the employer by the companies that prepared strategic plans (the highest of four levels designated in the planning strategic). was not detected a significant increase in the extent of wage costs divided by the sum of total sales. An important part of differentiation in the rate of increase in sales was found by Rue and Ibrahim (1998) in small businesses that incorporate planning for writing (basic or sophisticated), unlike other companies. Perry (2001) found a significant difference in the degree to which planning is conducted in small businesses that do not apply in bankruptcy against those that did. WIJEWARDENA et al. (2004) defines three levels of planning: no written planning basic planning and detailed planning. The results indicate that the level of planning is in direct proportion to the level of increase of sales. Saffu and Yusuf (2005) classified three planning levels: low, moderate and high. We found a relationship between increased sales and the low level of planning. No correlation was found between strategic planning and increased market share or profitability.