Strategic Planning and Small Firm Growth: An Empirical Examination

Abstract

Strategic thinking is important for small firms in the time of global competition, technological change and increased dynamics in markets. Even if many entrepreneurs do not formulate business plans, the strategic planning and systematic decision-making can be considered a key determinant of survival and success of small firms. The paper examines the relationship between strategic planning and small firm growth in terms of empirical analyses that include various strategic planning elements, which have not been given enough attention in past research. Seven hypotheses on the relationship between strategic planning and growth are developed and empirically tested by using data collected via questionnaire from 114 Slovenian smaller firms. The study has practical implications. Entrepreneurs need to be aware that strategic planning practices, processes and techniques can be beneficial for growth of the firm. In order to enable their firms to grow, entrepreneurs may like to consider exactly formulating vision and strategy, incorporating the elements of internationalization and networking in the firm vision, focusing on growth, profit, and market, among strategic analysis techniques paying special attention to analysis of market and competition, and exactly formulating generic business strategies. All these strategic planning efforts need to be reinforced by practices that follow the key growth and market orientations, and have company-wide support. The key implication of this study for research is that the assessment of the relationship between strategic planning and small firm growth needs to be done across various elements or dimensions.

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