EFFECTS OF FORMAL PLANNING AND CONTROL ON GROWTH: A CASE STUDY APPROACH

Abstract

While planning and control and their impact on small firm growth are implicit in many academic discussions, much of our understanding of these phenomena are based on speculation and opinion. Thus, they seem neglected areas of small business research. This paper seeks to improve the understanding of formal planning and control systems and their relationship to the growth of small business in Australian manufacturing. First, a framework is developed which incorporates the main contextual variables which independently and simultaneously have been shown to have a major relationship with growth. Second, the study provides empirically-based qualitative evidence to further the understanding of causality in the growth of small business by focusing on how formal planning and control systems are embedded within the external or internal contextual variables of small business and the characteristics of their management. Evidence is also provided as to the conditions and circumstances under which formal planning and control are likely to be most effective in controlling the effects of contextual variables, and to the differences between high growth and low growth firms in the use of formal planning and control. The findings of this study are important for two principal reasons. First, it has provided the opportunity to conduct exploratory research into how a small business is managed within the context in which the processes are applied. Second, it has provided the opportunity to identify factors which encourage or discourage small firms to plan, thus providing a better understanding of the planning and control process adopted by small firms.