Strategic Planning and Firm Performance: the mediating role of Employee Strategic Alignment

Abstract

Taking into account the relevant mediating and moderating variables is very important to understanding the link between strategy process and firm performance (Rajagopalan et al., 1993). This research takes into account this dimension by extending the debate over the relationship between rational strategic planning and firm performance. It highlights criticisms of previous empirical studies which generally studied only direct and bivariate relationships producing unclear and contradictory results. The reasons for the results contradiction are multiple, some authors noted that it is due to methodological errors, while others thought that the results contradiction is perhaps due to the fact that rational strategic planning may indirectly affect firm performance (Rudd et al., 2008). In other terms, the last group of authors argued that there are mediator variables that would explain the relationship between rational strategic planning and firm performance. For this reason, this research takes into account this view by attempting to examine the mediating effect of employee strategic alignment on rational strategic planning-firm performance relationship. To this end, a quantitative empirical study has been conducted among European firms reveals the following results: first, rational strategic planning affects positively and significantly employee strategic alignment. Second, we have observed that employee strategic alignment has a positive and significant effect on both financial and non-financial performance. Accordingly, we concluded that employee strategic alignment plays a mediating role in the relationship between rational strategic planning and firm performance. The last result is a new empirical knowledge that had never been found before.