Strategic business planning and success in small firms

Abstract

This paper attempts to identify the degree and the methods of strategic business planning in small enterprises. A broad literature review on strategic planning in small enterprises in entrepreneurship and strategy journals within the last 25 years reveals that strategic planning in small enterprises is still in its infancy, and the reports of its relationship regarding success are not consistent. This literature review serves as a starting point for the development of hypotheses. Using a sample of 248 small Austrian enterprises from various industries, we test if the time horizon of strategic plans, the degree of formalisation, the use of strategic planning instruments and the frequency of control relate to firm performance. We discover that the degree of formalisation has a positive, and highly significant, impact on firm performance. As a result, this paper seeks to provide a new conceptual definition of strategic planning in small enterprises.