Planning Behavior Variables in Small Firms

By Gibson, Brian; Cassar, Gavin | Journal of Small Business Management, July 2002 | Go to article overview

Planning Behavior Variables in Small Firms


Gibson, Brian, Cassar, Gavin, Journal of Small Business Management


Much of the empirical data that identifies the incidence of planning in small firms and the variables associated with that planning is based on small samples subject to geographic and industry constraints. The intent of this article is to partially overcome those limitations by testing relationships using results from a large Australian-wide, multiple-period sample. For each of three years, the frequency with which firms maintained documented business plans was determined and tested for associations with a range of traditional "business structure" demographic variables and a group of "management structure" variables. Results support expectations that size, volume, training, intention to change operations, and the major decision-maker's education are positively associated with business planning. Results also indicate that a significant number of firms change planning behavior states over time.

**********

Dealing with the future is an essential activity in the management of all businesses regardless of size. Because planning can help a firm structure future expectations, it is not surprising that there is strong support for the notion that planning generates some positive outcomes for firms (Schwenk and Shrader 1993). However, in the research on these outcomes, the empirical data identifying the extent to which planning takes place and the variables associated with planning often are based on small samples subject to geographic and industry constraints. For example, Matthews and Scott (1995) obtained their findings from 130 small businesses located in one United States city. Risseeuw and Masurel (1994) used a sample of 1,211 businesses located in the Netherlands, but the sample was comprised entirely of real estate firms. The absence of large samples with a substantial variation in business characteristics such as industry and location has made drawing inferences from previous planning studies to other busine ss populations difficult. As Matthews and Scott (1995) conclude, 'Additional studies with larger samples are needed.., to more fully explain sophistication of planning in small and entrepreneurial firms" (p. 49). The objective of this study was to partially overcome the small sample problem by examining a large, multiple-period sample in a database collected by the Australian Bureau of Statistics (ABS).

Interest in the study of planning in small firms seems to have emerged for two reasons. First, there is a general belief that planning, because it is so prevalent in large firms, is a good management practice. This is supported by the belief, reflected in most business practice research, that rational economic behavior dictates the structured evaluation of alternatives (as present in traditional planning activities) as the dominant decision-making approach in firms of all sizes (Gibson 1997). Because large organizations that use sophisticated planning systems are seen to be successful, "entrepreneurs are urged to follow suit and install planning systems" (O'Neill, Saunders, and Hoffman 1987, p. 38). When smaller firms are observed to "not engage in the type of structured planning reflected in . . . normative models" (Shuman and Seeger 1986, p. 8), they often are regarded as exhibiting inappropriate behavior. This insistence on the large firm model continues to be dominant despite the frequent warnings that e xtending large firm practices to small firms is not always appropriate (O'Neill, Saunders, and Hoffman 1987; Glen and Weerawardena 1996).

Second, and more importantly in the context of small enterprises, there is a growing body of research that finds some association between planning activity in small businesses and a variety of performance measures. The underlying construct in such studies concentrates on either the content of the plans or the process of planning (Rue and Ibrahim 1998). However, Matthews and Scott (1995) suggest that in the planning literature the most widely used dimension of strategic planning has been the mere existence of planning documents (formality). …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Planning Behavior Variables in Small Firms
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.