Planning and Performance of Small and Medium Enterprise Operators in a Country in Transition

Abstract

This paper examines the relationship between planning and performance of small and medium enterprise operators in a country in economic transition. The literature on planning–performance relationship reports mixed findings. In a period of uncertainty, as exemplified by conditions of economic difficulties, one would expect firms to do more planning. On the contrary, our study shows that economic difficulties do not encourage firms to plan seriously. Our study also shows that firms that plan do not necessarily experience increased performance, with the exception of the manufacturing sector. Other findings of the study include a significant gender difference in the planning sophistication of small firms in Ghana, with firms managed or owned by males having sophisticated planning compared with female‐managed or female‐owned businesses. Size did not moderate planning performance in our study. Planning affected performance equally in both large and small firms in our study. We found no difference among the planning clusters for education. Firms with the highest growth in sales had low‐planning sophistication. This study contributes to our understanding and appreciation of situations in which planning does not necessarily add significant value to organizations (by way of increased performance).