Influences on Strategic Planning Processes among Irish SMEs

Patrick T. Gibbons and Tony O'connor

Journal of Small Business Management, 2005, vol. 43, issue 2, 170-186

Abstract: In this study we argue that the approach to strategy formation reflects organizational and individual influences. The study, based on questionnaire responses from 359 firms, examines a number of organizational and individual factors influencing the type of strategy formation process adopted. The constructs of strategic posture, organization structure, management ownership, and Chief Executive Officer (CEO) experience are measured. Three models predicting strategy formation approaches are explored. First, an organizational model emphasizing the impact of strategic posture and organization structure is analyzed. Second, a model is tested dealing with CEO and top management team characteristics reflecting the effects of agency costs and experience base. Finally, an integrative model combining both organizational and individual factors is evaluated. The results highlight the importance of organizational factors and show, for instance, that entrepreneurial firms tend to adopt more formal strategic planning approaches, while conservative firms adopt more incremental approaches. In addition, both management shareholding and CEO experience are negatively related to formal strategic planning activities.

Date: 2005
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DOI: 10.1111/j.1540-627x.2005.00132.x

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