Performance management literature review

1. Performance management literature review
From the mid seventies we can note that scholars makes the distinction between small
and large businesses in terms of needs, level of sophistication and range of strategic
planning. Bracker and Pearson (1986), Rue and Ibrahim (1998), Perry (2001) and
Wijewardena, Zoysa, Fonseka and Perera (2004) all formulate definitions of strategic
planning which take the uniqueness of small businesses into account and allow for the
fact that small businesses cannot draw on management and material resources in a
manner similar to that of large organizations.
Empiric studies' findings indicate at a correlation between strategic planning and
performance. Nevertheless, the findings are mixed. A survey of twenty-six experimental
studies enabled Miller and Cardinal (1994) to identify a significant positive connection
between strategic planning and small business performance.
Robinson (1982) found a significantly high level of profitability as well as an increase in
sales and returns on sales and the number of full time employees in a group of small
businesses that employed external consultants for the purpose of strategic planning.
Compared with other businesses, Bracker and Pearson (1986) discovered a significant
increase in income and remuneration per entrepreneur in businesses that prepared
strategic plans (the highest of four designated levels of strategic planning). No significant
increase was detected in the measure salary expenditure divided on the sum total of sales.
A significant differentiation in the rate of sales increase was found by Rue and Ibrahim
(1998) in small businesses that incorporated written planning (basic or sophisticated), as
opposed to other businesses.
Perry (2001) detected a significant differentiation in the degree to which planning was
conducted in small businesses that did not applied for bankruptcy as opposed to those that
did. Wijewardena et al. (2004) define three levels of planning: no written planning; basic
planning; and detailed planning. The findings indicate that the level of planning stands in
direct proportion to the level of increase in sales. Yusuf and Saffu (2005) classify three
levels of planning: low; moderate; and high. A connection was found between increase in
sales and the low level of planning. No correlation was found between strategic planning
and increases in market share or in profitability.
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