DESIGN OF STRATEGIC PLANNING SYSTEMS IN LARGE CORPORATIONS: A CONTINGENCY APPROACH.

Abstract

Most of the conceptual and empirical work to date leads one to conclude that the contingency approach to understanding strategic planning systems is still in a formative stage. Overall, there seems to be few potential generalizations that emerge from these contingency based studies and even these few are tentative in nature. Furthermore, it seems that most of the contingency based studies had inadequate research designs. This inadequacy probably contributed to the relatively low degree of conclusiveness that has emerged from these studies. This study is intended to be a step forward in filling some of the gaps revealed in the literature. Its purpose is to better understand what strategic conditions need to be considered when designing strategic planning systems. The research questions triggering this research were: (1) What is the impact of the external environment on the design of strategic planning systems? (2) What variables determine the intensity, and structure of strategic planning? (3) What variables determine the role of the corporate planning staff, and CEOs in the planning process? The data were collected by a mail questionnaire and from published data of 174 firms (a response rate of 43.5%). A contingency model linking some contextual variables of business firms to a number of design parameters of strategic planning systems was developed. The findings point out that both the extent and different design parameters (e.g. the planning horizon) of planning systems are influenced by the unpredictability of environmental changes. In addition, other contextual variables such as organization technology are found to influence the extent and structural characteristics of strategic planning systems. Finally, the roles of both the corporate planning staff and chief executive officers in the planning process are identified. These roles are found to be influenced by a variety of contextual variables and non-contextual variables such as the type of industry.