The impact of strategic planning on the performance of small and medium-sized businesses in Nigeria

Abstract

This cross-sectional research explores the relationship between strategic planning practices and performance of SMEs in the Nigerian service-related sector, to establish empirically whether adopting strategic planning impacts performance, as previous studies covering the developed world have found. It appraises the attitudes to and perceptions of SME owners and managers in Nigeria towards strategic planning, to determine if strategic planning adoption impacts on performance. It also attempts to ascertain the extent to which SMEs in the Nigerian service-related sector make use of strategic planning and the role the peculiar Nigerian socio-cultural dynamics (such as the patronage culture, corruption, religion, societal norms, and education) play in hampering adoption. It intends to provoke debate about and generate awareness of the need for Nigerian SMEs to plan strategically for continuity. It also presents a framework for deducing the relationship between strategic planning and SMEs’ effectiveness from the Nigerian perspective. A mixed methods approach was adopted and primary data were collected from owners and managers of SMEs, using both questionnaires (136) and semi-structured interviews (20). The findings indicated a low level of strategic planning adoption among Nigerian SMEs, partly due to the social factors mentioned. They corroborate findings from extant research covering the developed world, that adopting strategic planning impacts positively on the performance of SMEs. The study suggests that systematic re-orientation is required, for SME owners in Nigeria to embrace the concept of long-term planning for continuity, and for responsible government agencies to actively promote it. Finally, this study extended and expanded the scope of previous research by proposing a model suggesting that the decision to adopt strategic planning depended partly on the business and owners’ attributes, and partly on the socio-cultural influences of the business location and business owners’ socio-cultural orientation.