effective way of strategic planning to improve the organizational performance is documented in the

strategic management literature (McIlquham-Schmidt, 2010). The empirical research on strategic

planning has kept attention on both the influence of 35 strategic planning on organizational
performance and the role of strategic planning in strategic decision-making (Grant, 2003). Strategic
planning has been more important for an organization to deal with the construct change of many
aspects of life, making strategic planning more crucial for organization competitiveness and
sustainability (Al-Shaikh, 2001). The definition of strategic planning varies in the literature, thus there is
no universal definition among the researchers. According to Bryson (1995) strategic planning can be
defined as ―a disciplined effort to produce fundamental decisions and actions that shape and guide
what an organization is, what is does, and why it does it‖ (p. 4-5). Strategic planning also can be defined
as a process to define the vision, mission and long-term goals of an organization, as described by Gunn
(2001) in his article. He points out that strategic planning is the process that is used to determine the
long-term goals and the objectives that further the vision and mission of the organization. Strategic
planning is considered as an important tool of management (Aldehayyat, 2011). Stonehouse and
Pemberton (2002, p. 854), state that strategic planning is ―centers on the setting of long-term
organizational objectives and the development and implementation of plans designed to achieve them‖.
Daft (2012, p. 180) describes that planning is ―the act of determining goals and defining the means for
achieving them and planning helps managers think toward the future rather than thinking merely in
terms of day-to day activities‖. Bryson (1995, p. 4-5) emphasized that strategic planning ―can help
facilitate communication and participation, accommodate divergent interests and values, foster 36 wise
and reasonably analytic decision making, and promote successful implementation‖. Similarly, Rezvani,
Gilaninia and Mousavian (2011) mentioned that ―strategic planning was sequence of ideas, procedures
and techniques that were arranged to assist the leaders, managers, and planners to strategically think
and act‖. Thus, it can be concluded that strategic planning is the process to determine the longterm
goals and the objectives of the organization and determine the guidelines and procedures to attain
them. Crittenden and Crittenden (2000) urged strategic planning process have 5 (five) interrelated steps,
namely, ―(1) goal/objective setting, (2) situation analysis, (3) alternative consideration and selection,
(4) implementation and (5) evaluation‖. In the literature, the benefits of the strategic planning for the
organization have been recognized. For instance, the advantages of strategic planning have been
summarized by Aldehayyat, Al Khattab and Anchor (2011) from work of Greenley, 1986 and Koufopoulos
and Moorgan (1994) which include: ―enhancing co-ordination; controlling by reviewing performance
and progress toward objectives; identifying and exploiting future marketing opportunities; enhancing
internal communication between personnel; encouraging personnel in a favourable attitude to change;
and improving the corporate performance of companies (e.g. bringing together all business unit
strategies within an overall corporate strategy)‖. Beside the benefits of strategic planning according to
Aldehayyat et al., (2011), the advantages of strategic planning for the organization are to prioritize what
will be accomplished by the organization, to be proactive in solving problems, to build commitment to
achieve a common goal, to determine the direction of the organization, to determine the stage for
effective 37 decision making, and to keep management relatively faster in response to changes and
unplanned events (Gunn, 2001). Al-Shaikh (2001) argued that the benefits of strategic planning are:
generating information, ensuring thorough consideration of all feasible options, forcing the company to
evaluate its environment, stimulating new ideas, increasing motivation and enhancing internal
communication and interaction. Long-term planning is important not only for large businesses, but also
for small and medium sized businesses. No reason for them to ignore doing it, because the strategic
planning enables them to capitalize on the opportunities that lie in the future and be able to prevent the
threats it contains (Steiner, 1967, p. 4). Drucker (1985) also points out that every business needs a
strategy to be developed, even smaller business as well. Previous research has noted that strategic
planning in small busineses is illustrated as informal, unstructured, and not comprehensive (Sexton &
Van Auken, 1985). In the fact, compared with large companies, SMEs are believed to focus more on a
shortterm orientation rather than long term planning. Still, in terms of decision-making it is more
flexible and influenced by the circumstance (Jones, 1982; Stonehouse & Pemberton, 2002). In addition,
in order to do planning, SMEs face some problems, such as lack of staff, expertise and time (Gibson &
Cassar, 2002). In addition, Wheelen and Hunger (2008) suggested that lack of time, unfamiliar with the
strategic planning, lack of skills and lack of trust and openness are some reasons that cause lack of
strategic planning practices in the SMEs. 38 Regarding of preparation the strategic planning, big
companies prepare it frequently, while small firms mostly prepare planning in order to face big events
where strategic planning is needed, such as acquisition of business and financial banking (Singhvi, 2000).
While, Schwenk and Shrader (1993) in their meta-analysis found that strategic planning fosters the long-
term thinking and minimizes the focuses on operational details, yields structured ways for recognizing
and evaluating alternatives of strategy, which in turn can enhance the small business performance. In
SMEs context, processes of strategy-making and the strategic planning effectiveness are mostly
neglected (O‘Regan & Ghobadian, 2002). Moreover, Mazzarol, Reboud, and Soutar (2009) identified
some determining factors in the capacity of small businesses to grow, which include the competency of
owners/managers, entrepreneurial orientation skills, strategic planning skills, and the ways they manage
the resources which are available in their firms. Subsequently, O‘Regan and Ghobadian (2002) criticize
that the failure of strategic planning in the SMEs is mostly related to the implementation matter.
Strategic planning is favorable to the companies (Brockmann & Lacho, 2010). Furthermore, Clayton
(1996) mentioned that the organization, including SMEs, which do not perform strategic planning
cannot survive for a long period. He added that the absence of strategic planning leads to old-fashioned
management practices. Kraus, Reiche and Reshke (2007, p. 3), illustrated that ―strategic planning is the
attempt to prepare for future contingencies and thus to account for environmental dynamics and
complexity‖. In this regard, Miller and Cardinal (1994) claimed that 39 strategic planning is equally
beneficial in the SMEs and large companies in terms of encouraging for a better performance. Previous
studies also have shown that strategic planning has strongly related to the firms financial success (Katz &
Green, 2007; Wheelen & Hunger, 2008). This is also supported by Sexton and Van Auken (1985) who
believe that firms with lower levels of strategic planning have a higher percentage of failure compared
with those with higher levels of strategic planning. This implies that strategic planning assists firm to
survive. Furthermore, the importance of strategic planning for the business is also shown by Singhvi
(2000) who says that the key success of firms is by having proper strategic planning. Hence, from the
literature on strategic planning, it‘s known that strategic planning has a such great role in the
organization in order to assist the leaders, owners or managers to achieve organizations goals. 2.6
Previous Studies on Strategic Planning Based on Size of Companies The importance of the strategic
planning for the companies had been discussed in the prior literature, however, a shortage of studies
which focusing on the medium sized enterprises. Given that the characteristics of each firm, whether
small, medium or large are differentiated with one another, as suggested by Storey (2002); Preuss and
Perschke (2010). They believe that medium sized is not a bigger form of small firms (Preuss & Perschke,
2010) or down-sizing of big companies (Storey, 2002). In Indonesia, Bank Indonesia (2016) has