TY - JOUR
T1 - Strategic planning, budget monitoring and growth optimism
T2 - evidence from Australian SMEs
AU - Rice, John
AU - Martin, Nigel
AU - Raziq, Muhammad Mustafa
AU - Memon, Mumtaz Ali
AU - Fieger, Peter
N1 - Publisher Copyright:
© 2024, Emerald Publishing Limited.
PY - 2024
Y1 - 2024
N2 - Purpose: Growth optimism, which describes the expected future growth of a firm, is an important but underexplored construct in strategy. This paper aims to assess the planning antecedents of such growth optimism by using a large Australian sample of small enterprises. Design/methodology/approach: The authors use a secondary data set, gathered among Australian small to medium enterprises (SMEs), by the Australian Bureau of Statistics (ABS). The analysis adopts a regression approach including a mediated and a non-mediated path to explore the direct and indirect effects of strategic planning and budgetary planning and management on expected future revenues. Findings: This paper assesses the implications of concurrent strategic planning and financial management dynamic capabilities on anticipated future revenue growth, an important predisposition dynamic capability. The authors note that this configuration of actions and predisposition aligns closely with the necessary requirements for growth. The findings suggest that firms that use strategic planning and robust budget planning and monitoring processes exhibit higher optimism about future sales growth and firms that effectively configure these planning activities with market development tend to exhibit higher growth and more growth optimism. Research limitations/implications: In terms of theoretical contributions, the paper strongly supports the formality view in the formal/informal debates associated with effectuation strategies. The authors suggest that appropriate strategic and budgetary planning and control systems act as a counterbalance to organisational confusion and managerial capriciousness, leading to improved confidence among managers and their employees regarding future resource commitments and plans. Practical implications: The findings of the paper are potentially important for both managers and policy makers. For managers seeking to grow their future sales, planning is shown to be an important antecedent activity. The presence of financial and strategic planning may predispose firms to make important investment decisions that drive future growth. Also, a better understanding of the firm’s current and future strategic and financial position may be evidence of effective firm management, a situation that, in turn, drives growth. Social implications: In terms of social and policy implications, the data gathered for the survey by the ABS forms a valuable collection of information in relation to business practices. Australian firms are required by law to regularly report budget plans and outcomes. The research suggests that this data can inform policy initiatives, particularly in relation to programmes that may assist small and young firms to undertake prospective strategic and budgetary planning. Originality/value: To the best of the authors’ knowledge, this is the first paper to investigate the particular configuration of strategic and financial planning and anticipated sales growth in the SME context.
AB - Purpose: Growth optimism, which describes the expected future growth of a firm, is an important but underexplored construct in strategy. This paper aims to assess the planning antecedents of such growth optimism by using a large Australian sample of small enterprises. Design/methodology/approach: The authors use a secondary data set, gathered among Australian small to medium enterprises (SMEs), by the Australian Bureau of Statistics (ABS). The analysis adopts a regression approach including a mediated and a non-mediated path to explore the direct and indirect effects of strategic planning and budgetary planning and management on expected future revenues. Findings: This paper assesses the implications of concurrent strategic planning and financial management dynamic capabilities on anticipated future revenue growth, an important predisposition dynamic capability. The authors note that this configuration of actions and predisposition aligns closely with the necessary requirements for growth. The findings suggest that firms that use strategic planning and robust budget planning and monitoring processes exhibit higher optimism about future sales growth and firms that effectively configure these planning activities with market development tend to exhibit higher growth and more growth optimism. Research limitations/implications: In terms of theoretical contributions, the paper strongly supports the formality view in the formal/informal debates associated with effectuation strategies. The authors suggest that appropriate strategic and budgetary planning and control systems act as a counterbalance to organisational confusion and managerial capriciousness, leading to improved confidence among managers and their employees regarding future resource commitments and plans. Practical implications: The findings of the paper are potentially important for both managers and policy makers. For managers seeking to grow their future sales, planning is shown to be an important antecedent activity. The presence of financial and strategic planning may predispose firms to make important investment decisions that drive future growth. Also, a better understanding of the firm’s current and future strategic and financial position may be evidence of effective firm management, a situation that, in turn, drives growth. Social implications: In terms of social and policy implications, the data gathered for the survey by the ABS forms a valuable collection of information in relation to business practices. Australian firms are required by law to regularly report budget plans and outcomes. The research suggests that this data can inform policy initiatives, particularly in relation to programmes that may assist small and young firms to undertake prospective strategic and budgetary planning. Originality/value: To the best of the authors’ knowledge, this is the first paper to investigate the particular configuration of strategic and financial planning and anticipated sales growth in the SME context.
KW - Growth expectations
KW - Operational planning
KW - Optimism
KW - Strategic planning
UR - http://www.scopus.com/inward/record.url?scp=85190784073&partnerID=8YFLogxK
U2 - 10.1108/EBR-09-2023-0285
DO - 10.1108/EBR-09-2023-0285
M3 - Article
SN - 0955-534X
JO - European Business Review
JF - European Business Review
ER -