IMPACT OF FORMALITY AND INTENSITY OF STRATEGIC PLANNING ON CORPORATE PERFORMANCE

Abstract

This paper aims to examine the level of formality of the content and process of the strategic planning, to reveal variables that best describe the strategic planning intensity and to measure the nature of relationship between the strategic planning intensity and performance. Literature on planning-performance relationship yields mixed results and commonly disregards non-financial aspect of performance. Focusing on listed banks, finance and insurance organizations in Sri Lanka it is determined to what extent the formality and intensity of strategic planning affects financial and non-financial performance. A multiple indicator measure of strategic planning process and usage of a written strategic plan were employed to measure strategic planning intensity and formality respectively. Respondents' preference in formality of the content and process of strategic planning positively correlated with performance. Confirmatory factor analysis corroborated the measurement model while the relationship between the latent and observed variables favored the notion of greater intensity on strategic planning results in superior performance. Rich financial and non-financial performance indicators can be derived by engaging in strategic planning, more intensely and formally.

Key Words: strategic planning; performance; intensity; formality

For full paper: fmscresearch@sjp.ac.lk