Assessing the relationship between formal strategic planning and firm's financial performance: An emphasis on flexible planning and innovation

Most research in strategic management ope rationalizes firm financial performance by using either accounting‐or market‐based measures. Recently, some have suggested that subjective measures may be useful in assessing a firm's financial performance. We argue that there is a theoretical basis for viewing firm financial performance as having a higher order structure consisting of three separate yet distinct dimensions. Using second‐order confirmatory factor analysis, we found that while differences exist among accounting, market, and subjective measures of firm financial performance, there is evidence to support the concept of a single underlying construct. While our findings are statistically significant and thus support our hypotheses, the substantive nature of our results suggests that much more research is needed before we fully understand the dimensionality of firm financial performance.RésuméDans la majorité des recherches en gestion stratégique, on opérationnalise la performance financière d'une entreprise au moyen de mesures fondées sur la comptabilité ou le marché. Récemment, certains ont suggéré que des mesures subjectives pourraient ětre utiles dans l'évaluation de la performance financière d'une entreprise. Nous avançons l'hypothèse qu'il existe une base théorique pour considérer que la performance financière d'une entreprise consiste en une structure supérieure de trois dimensions séparées et distinctes. Par l'analyse des facteurs de confirmation secondaires, on a trouvé qu'il existe des différences dans les mesures de performance financière d'une entreprise, que ce soit la mesure de comptabilité, de marché ou subjective, et on peut prouver le concept d'une base unique commune. Bien qu'ils soient statistiquement significatifs et prouvent nos hypothèses, nos résultats suggèrent qu'il faut effectuer des recherches plus poussées avant de comprendre tout à fait la dimension de la performance financière d'une entreprise.

PurposeAlthough the halal orientation strategy (HOS) plays a key role in protecting the halal status of any product, research on the impacts of HOS on the financial performance of halal firms is lacking in the literature. As the main objective of all companies is to maximize their profit, this study aims to examine the influence of HOS on the financial performance of halal food firms with respect to halal culture as a moderator.Design/methodology/approachData were obtained from a survey of 154 halal food firms in Malaysia and were analyzed using the partial least squares technique.FindingsThe results indicate that halal materials and halal storage and transportation positively affect financial performance, whereas the halal production process negatively affects financial performance. It is also interesting to observe that halal culture moderates the relationship between the production process and the financial performance of the firm.Practical implicationsThe findings can help managers of halal food firms to enhance the financial performance of their respective firms by investing in HOS and giving attention to halal culture. It also helps decision makers to understand the importance of revising requirements for halal certification.Originality/valueThis study also contributes to the advancement of knowledge on the relationship between HOS and the financial performance of halal food firms.

Although planning remains a core function in the management process, the planning-performance relationship found in literature is both diverse and inconsistent. To address these inconsistencies, scholars have suggested examining the role of strategy implementation in the planning-performance relationship as it supports the realization of stated plans. Another critical dimension in understanding the planning-performance relationship is the role of strategic leadership. Although it is found in current literature, it is not adequately tested. To address this gap in knowledge, the study sought to investigate the effect of environmental turbulence, strategic leadership, strategy implementation, and formal strategic planning on non-financial organizational performance to build a good predictive model. The literature review focused on the concepts, definitions, theories, and indicators of the variables under study. It also reviewed the theoretical and empirical findings on the relationship between those variables. Adopting a positivist perspective, the study followed a quantitative approach, using a cross-sectional design and survey as strategy in collecting data to test 6 hypotheses. Using structural equation modeling, this study developed a model to explain non-financial organizational performance by studying its antecedents. Data for this study was collected in Haiti using a 5-point Likert Scale rated questionnaire from 274 respondents. Stratified random sampling was used to select the institutions and convenience sampling to select the respondents for the study. The structural equation modeling was used to analyze the data and answer the research questions of this study. Environmental turbulence directly and positively influences strategic leadership and strategy implementation. It also indirectly influences formal strategic planning and organizational performance. Strategic leadership directly and positively influences strategy implementation, has direct and indirect effects on formal strategic planning, and indirectly affects organizational performance. Strategy implementation directly influences formal strategic planning and indirectly organizational performance. Particularly, formal strategic planning was the only variable that has a direct effect on organizational performance. Further, environmental turbulence was found to be a good predictor for organizational performance in this model. The model that emerged explained 94% of the variance observed in non-financial organizational performance. The findings contribute significantly to the body of knowledge on strategic management and organizational performance. The practical implication of the study is in the area of understanding environmental turbulence, playing strategic leadership roles, detailing action plan for strategy implementation, and formalizing strategic planning processes. First, managers, CEOs, directors, and board members playing leadership roles should learn to interact with environmental turbulence because it influences formal strategic planning and ultimately organizational performance through strategy implementation and strategic leadership. Second, managers, CEOs, directors, and board members need to assume strategic leadership roles as it influences organizational performance through formal strategic planning. Third, organizations need to have a detailed action plan for strategy implementation as it influences organizational performance through formal strategic planning. Fourth, organizations need to strengthen their formal strategic planning processes as it directly influences organizational performance. Future studies can consider adding strategy evaluation and control to the model to enhance its usefulness. In addition, future researchers can also consider the internal environment of the firm in developing a more complete model.

Manuscript type: Research paper Research aims: This study investigates the relationship between formal strategic planning and corporate social responsibility (CSR) in the South African context, considering JSE-listed companies. Design/Methodology/Approach: This study employed multiple-scale items with a five-point Likert scale to measure CSR and formal strategic planning. A chi-square test was performed to test the significance of the relationship between the variables. Research findings: The analysis of all South African listed companies (i.e., JSE-listed companies) revealed that formal strategic planning is significantly associated with CSR, suggesting that CSR concerns are addressed during the formal strategic planning process. Theoretical contribution/Originality: The respondents are only limited to JSE-listed companies and the findings are related to the links only between formal strategic planning and CSR. Practitioner/Policy implication: The JSE is the largest stock exchange in Africa. Thus, it is becoming increasingly important for them to maintain their corporate reputation with stakeholders. Accordingly, addressing stakeholders’ demand for CSR through the formal strategic planning process would benefit the organisation is vital. Originality/Value: This study contributes a deep intuitive knowledge of companies’ perceptions of CSR demonstrations by considering formal strategic planning in the South African context.

Extant research exploring the relationship between servitization, digitalization, and firm financial and market performance provides valuable insights, but yields inconsistent and inconclusive results. This study argues that these inconsistencies arise from the ambiguous nature of servitization. Prior research have operationalized servitization as a business model (service type) or a set of service capabilities, treating these distinct constructs interchangeably. This study, therefore, advanced the proposition that both service capabilities and service type need to be incorporated into an integrated framework. To test this, the research develops and empirically validates a moderated-mediation model for the relationship between digitalization, service type (moderator), service capabilities (mediator) and firm financial and market performance using data from 204 manufacturing firms. The results indicate that service capabilities positively mediate the relationship between digitalization and firm financial and market performance. The moderating effect of the service type on service capabilities and firm financial and market performance are more pronounced for services supporting customers than services supporting products. The findings underline the imperative for manufacturers to develop their digital capabilities to enhance their service capabilities, irrespective of the type of services they offered. The findings contribute by enriching our understanding of the relationship between servitization, digitalization and firm performance.

This article finds the impact of corporate income tax and asset turnover on financial performance of the corporate sector with panel data in Pakistan. Panel data of sixteen non-financial firms listed in Pakistan Stock Exchange during the time period from 2006 to 2021 are used for analysis. Panel data are collected from the Data Services & Innovations Department, State Bank of Pakistan (SBP). The fixed effect model (FEM) estimates are found more appropriate for estimation on the basis of Hausman test. The study utilizes Tobin q as an indicator of firm financial performance. Findings of study explain that corporate income tax effects firm financial performance positively. However, this impact is not significant. Further, the impact of asset turnover is negative and significant. Negative relation is found between liquidity ratio and firm financial performance. It indicates that a lesser amount of liquid assets evade from expensive borrowing. Tax structure is important for firm financial growth and performance. The improvements in corporate tax structure to boost the investment in the corporate sector of Pakistan are recommended. Further, sales of Pakistani firms do not meet the neck and neck of firm’s assets. Firm is advised to improve product quality for its sale promotion and government can play its role in this regard by devising export policy.

Enterprise risk management (ERM) research has mostly been limited to factors determining its implementation and its effects on firm performance. Despite a clear need for its establishment in sound risk culture and its integration with strategic planning, organisational leaders continue to implement these management concepts in isolation. Academic research into these conjoint relationships has also received less attention in the literature. This study investigates whether ERM's effect on firm financial performance, measured by return on assets, is mediated by risk culture and strategic planning. The study provides empirical evidence that adopting ERM solely does not enhance a firm's financial performance. The ERM, risk culture, and strategic planning constructs are empirically determined to be correlated. Strategic planning has a direct and positive relationship with firm performance. The study further provides empirical evidence that the positive effects of ERM implementation on firm financial performance are mediated by risk culture and strategic planning. The size of a firm and its financial leverage are remarkable determinants of firm performance, while firm age and growth rate are not. The pieces of evidence have been presented from an under-investigated context in Africa with other contributions to the literature, such as, providing comprehensive measures of ERM and risk culture and responding to calls to synthesise risk and strategic management. This study also advances multiple mediation analysis and the use of PLS-SEM in the ERM literature.

Purpose: This study examines the impact of working capital management on the financial performance of the non-financial firms listed on the Nepal Stock Exchange (NEPSE). Design/Methodology/Approach: The study is based on panel data analysis of 23 non - financial firms listed in NEPSE from 2001 to 2018 with 194 firm-year observations. When the return on assets (ROA) is used as a dependent variable, the Hausman Test and Wald Test suggest that a Fixed Effect Model (FEM) is acceptable, whereas Random Effect Model (REM) is appropriate when the return on equity is used as a dependent variable. Findings: The results reveal that longer receivable conversion period and inventory conversion period negatively affect the financial performance of non-financial firms. In addition, a longer payable deferral period negatively affects the return on equity of non-financial firms in Nepal, indicating that firms can reap profit by reducing the deferral period. Finally, the study shows a statistically significant relationship between the cash conversion cycle and return on assets. Research Limitations/Implications: The research is based solely on secondary data. As a result, the study contains all of the drawbacks that come with financial statements in annual reports. Practical Implications: The findings of the study will help owners and financial managers in better understanding the relationships between working capital management and financial performance of the firms, as well as formulating firm-specific working capital policies. Moreover, research scholars will benefit from this study as it aims to add to the existing literature by enhancing knowledge of the impact of working capital management on financial performance. Originality/Value: This is an original research study and examines the relationship between working capital management and financial performance of non-financial firms listed in NEPSE.

Purpose The study is aimed at examining the impact of ESG on the financial performance (FP) of firms and determining the difference between the impact of ESG on market-oriented financial performance measure (Tobin’s Q) and internal productivity-based financial measure (ROA). The study has also explored the influence of managerial ability and institutional quality as moderating variables on the relation between ESG and the financial performance of firms (both measures of FP: Tobin’s Q and ROA). Design/methodology/approach The study is quantitative exploratory and uses panel data of 687 publicly listed companies from the year 2013–2023. Data has been acquired from the reputed data providers and OLS regression has been used for panel data analysis with fixed effects. Findings The study reaffirms the positive impact of ESG on the financial performance of firms. Each pillar of ESG (environmental, social, and governance) has been found positively related to both measures of financial performance (Tobin’s Q and ROA). The study reveals that managerial ability and institutional quality, acting as supplementary variables, moderate the relationship between ESG and financial performance of firms. Research limitations/implications A limited sample comprising data from only 687 firms was used for the analysis. The latest data was not available, therefore, data from 2013 to 2023 was used in the study. Practical implications This study indicates that ESG practices, which are mostly discretionary in Emerging Economies, can be induced through institutional pressures and ensuring higher quality managers. Policymakers in government institutions have to determine the inefficiencies, corrupt practices, and inconsistencies in policies that lower the effectiveness of institutions making them business-unfriendly. At the organizational level, policymakers need to ensure that responsible positions in the organization are held by managers with higher managerial ability. It is also to be ensured by shareholders that managers do not over-invest in ESG-related projects, particularly in organizations with weaker financial status. For managers, it is important to understand the positive benefits associated with ESG, even though they are in the long term. Social implications In Emerging Economies, the official monitoring and regulatory mechanisms are weak, and lack a supportive attitude toward ESG initiatives. Voluntary and proactive firm-level environmental and social initiatives need to be encouraged and rewarded by institutions with public acknowledgment. ESG should be given priority by organizations for improving the quality of services and better social impact of businesses on society. Originality/value Most of the past research explored the impact of ESG on financial performance in advanced countries or in emerging markets in a single/limited number of countries or industries. Also, past studies investigated the impact of institutional quality and managerial ability on ESG/financial performance in separate models. Conversely, this study has used a multi-country and multi-industry sample for more generalizable findings. Against the backdrop of the institutional environment of Emerging Economies, the study extends Institutional Theory and Upper Echelon Theory to include the role of managerial ability and institutional quality in the relationship between ESG and firms’ financial performance.

The objective of this paper is to study whether the presence of women on boards affects the financial performance of firms. This study builds upon other studies that have earlier tried to determine the impact of number of women directors in Indian corporates on their financial performances, in terms of market performance index, i.e. Tobin's Q. The new Companies Act, 2013 has mandated the appointment of at least one woman director in certain classes of listed companies in India as described in Section 149(1)(b), which could possibly bring about a change in the governance and thus the financial performance of firms. The focus of this study is on finding and analysing the impact of compliance with this provision on the financial performance of IPO firms. In order to test our hypotheses, we selected 41 Indian Companies that have made an Initial Public Offer (IPO) in the recent past and have been listed on Bombay Stock Exchange during the period 2012-2016. The performance of each of these firms has been measured in terms of Tobin’s Q for 3 successive years after their listing (IPO) as well as by using two gender diversity index values- Blau Index and Shannon index. The study concluded that the proportion of women on board is insignificant and that it could not impact the financial performance of the firms. Neither has it caused any adverse impact on the performance of these firms.

Linking the formal strategic planning process, planning flexibility, and innovativeness to firm performance

Corporate governance is an important factor in generating firm financial performance especially in the Covid-19 Pandemic. During the pandemic, the government announced to do social distance that effect on firm operation which could not run maximal comparing to normal conditions. Good corporate governance practice may help to prevent deterioration financial ratio due to decreasing firm financial performance. Moreover, external funding becomes important to back up back up firm operations because firm tend to suffering loss during the pandemic. The aims of this study are to analyse the impact of corporate governance practice and capital structure on firm performance, as well as firm value. This study applies Shariah-compliant firms (SCF) that listed on Indonesia stock exchange from 2015 – 2020. This study analyses using structural equation modelling - partial lease square (SEM-PLS). The results show that corporate governance have a significant positively on firm financial performance, but capital structure shows the adverse effect on firm financial performance. In terms of firm value, both corporate governance and firm financial performance have a positively associated to firm value. Moreover, firm financial performance has negatively impact on firm value. Finally, the findings may help stakeholders to create effective corporate governance practice in driving both firm performance and firm performance, as well as maintain the balance between debt and equity to optimize capital structure that may impact on the firm financial performance and firm value.

Purpose: This article analyses the effect of board diversity on the financial performance of non-financial firms listed in the Nifty Index. Specifically, it examines the mediation effect of the promoter’s presence and multiple directorships on the financial performance of the firm, that is, return on net worth (RONW), return on equity (ROE) and its sales growth. Methodology: The article uses the hierarchical regression model to analyse the effect of board diversity on financial performance. The presence of the promoters on the board and multiple directorships are taken as the control variables. Findings: Empirical results show the significant effect of the promoter’s presence on the board on the firm’s earnings and a significant positive effect of firm age, board size, age diversity and experience diversity on the financial performance. However, we do not find any statistically significant relationship between firm size and financial performance in any model. The results also show that the age and experience of the female directors are significantly less compared to the male directors. However, the age and experience of the non-executive directors and independent directors are found to be higher among the other positions held by the directors. We also find a negative relationship between multiple directorships in other firms and the financial performance of the firm. Value: The article proposes that there should be a greater number of independent directors in a firm that has its promoter on the board. One recommendation for the board is to reduce the number of directorships held in other boards to ensure more constructive contribution towards the firm’s financial performance. The article studies the effect of the promoter’s presence on the board and multiple directorships held by board members on the financial performance of the firm.

This study examined the relationship between process innovation, market innovation and firm financial performance of Indonesian pharmaceutical firms. This study also intended to investigate the moderating role of disruptive technology on the relationship of process innovation and market innovation with Indonesian pharmaceutical firms’ financial performance. To investigate the proposed relationship, this study collected the data from managers of pharmaceutical firms in Indonesia by using survey questionnaire. PLS statistical software was employed to analyse the data. The result of this study highlighted that there is a positive relationship between process innovation, market innovation and financial performance of firms. While, results indicated that disruptive technology moderate the relationship of process innovation with financial performance, but it has no moderating role on the relationship of market innovation with financial performance. The results of this study contribute to the body of knowledge by adding to the existing literatures in the domain of innovation capabilities and financial performance. Moreover, the findings of the study have shown that innovation capabilities are capable of influencing the performance of firms. How to Cite this Article Pubmed Style Hari Muharam, Fredi Andria, Eneng Tita Tosida. of Process Innovation and Market Innovation on Financial Performance with Moderating Role of Disruptive SRP. 2020; 11(1): 223-232. doi:10.5530/srp.2020.1.29 Web Style Hari Muharam, Fredi Andria, Eneng Tita Tosida. of Process Innovation and Market Innovation on Financial Performance with Moderating Role of Disruptive http://www.sysrevpharm.org/?mno=83858 [Access: March 29, 2021]. doi:10.5530/srp.2020.1.29 AMA (American Medical Association) Style Hari Muharam, Fredi Andria, Eneng Tita Tosida. of Process Innovation and Market Innovation on Financial Performance with Moderating Role of Disruptive SRP. 2020; 11(1): 223-232. doi:10.5530/srp.2020.1.29 Vancouver/ICMJE Style Hari Muharam, Fredi Andria, Eneng Tita Tosida. of Process Innovation and Market Innovation on Financial Performance with Moderating Role of Disruptive SRP. (2020), [cited March 29, 2021]; 11(1): 223-232. doi:10.5530/srp.2020.1.29 Harvard Style Hari Muharam, Fredi Andria, Eneng Tita Tosida (2020) of Process Innovation and Market Innovation on Financial Performance with Moderating Role of Disruptive SRP, 11 (1), 223-232. doi:10.5530/srp.2020.1.29 Turabian Style Hari Muharam, Fredi Andria, Eneng Tita Tosida. 2020. of Process Innovation and Market Innovation on Financial Performance with Moderating Role of Disruptive Systematic Reviews in Pharmacy, 11 (1), 223-232. doi:10.5530/srp.2020.1.29 Chicago Style Hari Muharam, Fredi Andria, Eneng Tita Tosida. Effect of Process Innovation and Market Innovation on Financial Performance with Moderating Role of Disruptive Technology. Systematic Reviews in Pharmacy 11 (2020), 223-232. doi:10.5530/srp.2020.1.29 MLA (The Modern Language Association) Style Hari Muharam, Fredi Andria, Eneng Tita Tosida. Effect of Process Innovation and Market Innovation on Financial Performance with Moderating Role of Disruptive Technology. Systematic Reviews in Pharmacy 11.1 (2020), 223-232. Print. doi:10.5530/srp.2020.1.29 APA (American Psychological Association) Style Hari Muharam, Fredi Andria, Eneng Tita Tosida (2020) of Process Innovation and Market Innovation on Financial Performance with Moderating Role of Disruptive Systematic Reviews in Pharmacy, 11 (1), 223-232. doi:10.5530/srp.2020.1.29

Purpose – The purpose of this paper is to examine the mediating effect of intellectual capital on the relationship between board governance and perceived firm financial performance. Design/methodology/approach – This study was cross-sectional. Analyses were by SPSS and Analysis of Moment Structure on a sample of 128 firms. Findings – The mediated model provides support for the hypothesis that intellectual capital mediates the relationship between board governance and perceived firm performance. while the direct relationship between board governance and firm financial performance without the mediation effect of intellectual capital was found to be significant, this relationship becomes insignificant when mediation of intellectual capital is allowed. Thus, the entire effect does not only go through the main hypothesised predictor variable (board governance) but majorly also, through intellectual capital. Accordingly, the connection between board governance and firm financial performance is very much weakened by the presence of intellectual capital in the model – confirming that the presence of intellectual capital significantly acts as a conduit in the association between board governance and firm financial performance. Overall, 36 per cent of the variance in perceived firm performance is explained. the error variance being 64 per cent of perceived firm performance itself. Research limitations/implications – The authors surveyed directors or managers of firms and although the influence of common methods variance was minimal, the non-existence of common methods bias could not be guaranteed. Although the constructs have been defined as precisely as possible by drawing upon relevant literature and theory, the measurements used may not perfectly represent all the dimensions. For example board governance concept (used here as a behavioural concept) is very much in its infancy just as intellectual capital is. Similarly the authors have employed perceived firm financial performance as proxy for firm financial performance. The implication is that the constructs used/developed can realistically only be proxies for an underlying latent phenomenon that itself is not fully measureable. Practical implications – In considering the behavioural constructs of the board, a new integrative framework for board effectiveness is much needed as a starting point, followed by examining intellectual capital in firms whose mediating effect should formally be accounted for in the board governance – financial performance equation. Originality/value – Results add to the conceptual improvement in board governance studies and lend considerable support for the behavioural perspective in the study of boards and their firm performance improvement potential. Using qualitative factors for intellectual capital to predict the perceived firm financial performance, this study offers a unique dimension in understanding the causes of poor financial performance. It is always a sign of a maturing discipline (like corporate governance) to examine the role of a third variable in the relationship so as to make meaningful conclusions.