The relationship between strategic planning and business performance: Theoretical perspectives

Abstract

The importance of strategic planning to small- and- medium sided enterprises (SMEs) is well documented in many developed economies and emerging countries including South Africa, yet there seems to be an unresolved debate about its effect on business performance. To address this gap, the current study attempts to review the literature on previous studies that were carried out to examine the relationship between strategic planning and business performance. The finding indicate that previous studies report conflicting results. Some found a positive relationship while others report about negative and no relationships between strategic planning and business performance. However, a thorough analysis of these studies has noted that the majority of studies found a positive relationship. The study therefore concludes that strategic planning exhibits a positive relationship with business performance. Therefore, the managerial implication of the research findings is that businesses should implement strategic planning practices in order to improve their performance. The findings also provide a basis for further future research studies that seek to address the relationship between strategic planning practices and business performance.