Strategic Planning in SMEs: A Case Study in Indonesia

Hotels drive the growth and development of tourism. Despite their important role, many hotels are small and medium-sized firms (SME) that are struggling to survive against fierce competition. Experts agree that strategic planning is vital for SME survival, but it is not wholly applicable for SME managers. Meanwhile, Mintzberg's concept of crafting strategy offers a more productive insight into SME strategic planning, but its abstract nature has historically discouraged empirical research on its practical benefits. This study will be the first to empirically explore the operationalization of Mintzberg's crafting strategy characteristics, and analyze its influence on organizational learning using structural equation model. Using a sample of 50 hotels in Bali, Indonesia, this study reveals that managing pattern and stability, detecting discontinuity, and knowing the business have a positive but weak effect, whereas reconciling change and continuity proves to have a positive and significantly strong effect on organizational learning. This study has bridged the gap between the abstract concepts of crafting strategy, which is a potentially better approach for SMEs, with daily operational practices. This study also proves that Mintzberg's approach can be used to predict organizational learning. This relationship is crucial since previous studies concluded that organizational learning improves company performance.