Since the mid-seventies we can see that scholars make a distinction between small and large companies in terms of needs, level of sophistication and range of strategic planning. Bracker and Pearson (1986), Rue and Ibrahim (1998), Perry (2001), and Wijewardena, Zoysa, Fonseka, and Perera (2004) formulate definitions of strategic planning that take into account the uniqueness of small businesses and allow for the fact that Small businesses cannot draw on management and material resources in the same way that large organizations do.
Findings from empirical studies indicate a correlation between strategic planning and performance. However, the findings are mixed. A survey of twenty-six experimental studies enabled Miller and Cardinal (1994) to identify a significant positive connection between strategic planning and small business performance.
Robinson (1982) found a significantly high level of profitability, as well as an increase in sales and sales performance and the number of full-time employees in a group of small businesses that used outside consultants for strategic planning purposes. Compared with other companies, Bracker and Pearson (1986) found a significant increase in revenue and compensation per entrepreneur in companies that prepared strategic plans (the highest of the four designated levels of strategic planning). No significant increase was detected in the wage expense measure divided by the total amount of sales. Rue and Ibrahim (1998) found a significant differentiation in the rate of increase in sales in small companies that incorporated written planning (basic or sophisticated), as opposed to other companies.
Perry (2001) found a significant differentiation in the degree to which planning took place in small businesses that did not file for bankruptcy compared to those that did. Wijewardena et al. (2004) define three levels of planning: without written planning; basic planning; and detailed planning. The results indicate that the level of planning is in direct proportion to the level of increase in sales. Yusuf and Saffu (2005) classify three levels of planning: low; moderate; and tall. A connection was found between the increase in sales and the low level of planning. No correlation was found between strategic planning and increases in market share or profitability.
