UNTANGLING THE RELATIONSHIP BETWEEN STRATEGIC-PLANNING AND PERFORMANCE - THE ROLE OF CONTINGENCY FACTORS

Previous studies of the planning-performance relationship have produced inconsistent findings, largely because of a neglect of contingency factors. This study aims to advance planning-performance research by accounting for the role of contingency factors, particularly firm size, industry stability, and generic strategy. In the empirical study, a direct, significant correlation between planning and profitability is found to be spurious, vanishing when firm size effects are removed. The study also finds that planning is more profitable in an unstable industry than in a stable one, and more profitable among cost leaders than among differentiators. These findings and their research implications are discussed