THE RELATIONSHIP BETWEEN PLANNING SOPHISTICATION AND PERFORMANCE IN SMALL BUSINESSES

Numerous articles in academic publications as well as practitioner-ori ented journals have recognized the importance of planning for small bu sinesses. Yet there is surprisingly little empirical work that has exa mined the relationship between planning sophistication and organizatio nal performance among small businesses. The present study reports the results of a survey of 253 small firms. Specifically, it seeks to dete rmine whether these companies prepare written strategic plans and, if so, the extent to which their planning process attempts to identify ex ternal factors and includes quantified objectives and budgets. In addi tion, it determines whether the plan contains procedures for anticipat ing or detecting differences between the plan and actual performance a nd for preventing or correcting these differences. Finally, this study examines the relationship between the sophistication of the planning and evaluation process and organizational performance. Some explanatio ns as well as implications and limited generalizations are developed.