Strategic planning as a complex and enabling managerial tool

• Author: Y. Lisa Zhao,Subin Im,Richard J. Arend,Michael Song
• Date: 01 August 2017
• DOI: http://doi.org/10.1002/smj.2420
• Published date: 01 August 2017

Strategic Management Journal

Strat. Mgmt. J.,38: 1741–1752 (2017)

Published online EarlyView 13 September 2015 in WileyOnline Library (wileyonlinelibrary.com) DOI: 10.1002/smj.2420

Received 27 August 2010;Final revisionreceived 8 June 2012

STRATEGIC PLANNING AS A COMPLEX AND

ENABLING MANAGERIAL TOOL

RICHARD J. AREND,1Y. L I S A Z H A O , 2MICHAEL SONG,3*and SUBIN IM4

1Institute of Entrepreneurship and Innovation, University of Missouri– Kansas City,

Kansas City, Missouri, U.S.A.

2Department of Management, Albers School of Business and Economics, Seattle

University, Seattle, Washington, U.S.A.

3School of Management, Harbin Institute of Technology, Institute for Innovation

and Entrepreneurship, Harbin, China

4School of Business, Yonsei University, Seoul, Korea

Research summary: The role of the strategic planning process in the ongoing generation of

innovative knowledge is vital to the survival and growthof a rm, especially when technologies and

market conditions are rapidlychanging. We analyze data from a surveyof rms in high-technology

industries to determine whether it is possible to break the commonly experiencedtrade-off between

strategic planning’s positive inuence on rm protability and its negative inuence on rm

innovation. Wedraw on Adler and Borys’s (1996) conceptualization of bureaucratic process types

to identify several rm characteristics that have the potential to affectwhether employees perceive

strategic planning as enabling to their creativeendeavors. We nd that contingent effects between

strategic planning and the identied rm characteristics exist that can break the trade-off.

Managerial summary: A tension exits in the literature about whether strategic planning hurts

or helps innovative activity. Our analysis of data from 227 business units in high-technology

industries indicates that strategic planning is a complex process that can be perceived by

employees as enabling or coercive. Our results conrm that strategic planning negatively

affects innovative activity but positively affects protability for average rms. We nd, however,

controllable rm characteristics—risk-taking and knowledge-based reward systems— affect the

trade-off. Given the higher levels of risk-taking and knowledge-based reward systems, rms can

use strategic planning to achieve both high returns on investment and a high level of innovative

activity. Copyright © 2015 John Wiley& Sons, Ltd.

INTRODUCTION

A tension exists in the literature about whether

strategic planning hurts or helps innovative activity

(e.g., Cardinal, 2001; Craig, 1995; Damanpour,

Keywords: strategic planning; new product development;

contingencies; protability; innovation output

*Correspondence to: Michael Song, School of Management,

Harbin Institute of Technology, 13 Fayuan Street, Nangang

District, Harbin, 150001, China. E-mail: michaelsong@hit.edu.cn

[Article corrected on May 24, 2017, after rst online publication

on September 13, 2015: the article has been updated to reect

changes in authorship agreed upon by all the authors.]

Copyright © 2015 John Wiley & Sons, Ltd.

1991; Tushman and Anderson, 1997). A common

assertion is that a trade-off arises when a rm

practices strategic planning: the rm gains

performance-enhancing efciencies but loses

innovative activity due to the inexibilities intro-

duced. A counter assertion is that strategic planning

increases exibility in some contexts by making the

rm more responsive through efciencies created

in related processes (e.g., in contingency plans,

faster coordination, faster communication, greater

awareness through planned scanning for changes,

less internal conict, etc.). Adler and Borys (1996)

have proposed one explanation for the tension: