Abstract
In this globalized world, every company is struggling to sustain and improve its performance. This study investigated the role of formal strategic planning on organizational performance. Moreover, this relation is explored further with the moderation of stakeholders’ involvement. The empirical data were collected from 220 chief executives or general managers of manufacturing companies using a questionnaire survey. AMOS software was used to analyze the collected data. Structural equation modeling (SEM) was conducted to test the hypothesis, and moderation was investigated using a slop test. The results of the study revealed that formal strategic planning could enhance the performance of the organization. Furthermore, the results highlighted that stakeholder's involvement could strengthen the relationship between formal strategic planning and organizational performance. Previous studies have highlighted the importance of overall strategic management in enhancing an organization's performance. The research also revealed that performance was affected mainly by formal strategic planning and stakeholder involvement. The study used manufacturing companies in Jordan. Moreover, the data was collected from 220 respondents. Therefore, future studies should be conducted from any other country's perspective and use a larger sample size. This study has used moderation of stakeholder's involvement to get more specific results. Future studies should use organizational culture as a moderating variable.
Highlights
Improving organizational performance by conducting formal strategic planning is not an easy job for corporate executives (George et al, 2019)
Results show that composite reliability (CR) is greater than 0.60, average variance extracted (AVE) is greater than 0.50, maximum share variance (MSV) is less than AVE, and the square root of AVE is less than the correlation values, which conform both discriminant and divergent validity (Henseler et al, 2015; Fornell & Larcker, 1981)
While the literature emphasizes the practice of strategic planning as a necessary component in the organizational strategy, the research of the strategic planning process used by manufacturing companies in both developed and developing economies contexts received very low attention
Summary
Improving organizational performance by conducting formal strategic planning is not an easy job for corporate executives (George et al, 2019). In order to manage corporate performance effectively, organizations need to make sustained efforts and plan long-term strategies (Iqbal et al, 2019). These practices are referred to as strategic management (SM) practices, which is known as making sure that these organizations manage their role by giving importance to the performance, planning, and key stakeholders (Fitri et al, 2019; Amir et al, 2016). An organization's performance is the major research topic for a recent study that measured strategic performance and stakeholder involvement. Effective execution of organizational formal strategic management planning depends on corporate executive members, executive committees, governance boards, and syndicate (Elbanna et al, 2016). A variation in the extent of stakeholder involvement is seen as an important reason behind the decrease in organizational performance (Kroll et al, 2019)
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