The formality of the strategic planning formation process and its relation to the

Before developing this group of propositions it is essential to develop the appropriate measure for the SPFP. A number of scholars have identified the formality of the planning process as a means to measure the planning process. As noted under section 2.5, the measure of formality is an area of inconsistency in formal strategic planning literature. Whether the organisation has a written or unwritten strategic plan is used as a surrogate measure of formality (Robinson and Pearce, 1983; Bracker et al., 1988). However, the present research requires a more comprehensive measure of formality for two reasons: first, written or unwritten strategic plans measure the output of the planning process but not the process itself; the tangible and intangible benefits of the planning

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process are more than just producing a written document. The second reason, which is related to the context of the study, is government influences. The Dubai government issued a requirement to all government entities to formulate strategic plans. Measuring the formality of the planning process based on the availability of a strategic plan within this context is not an effective way to measure the formality because strategic plans were formed to satisfy external government requirements. For those two reasons another measure of formality was needed which takes into account the measurement of the SP process itself rather than the process output.

It was noted in the literature that strategic planning could be considered from a content or process viewpoint (O’Regan and Ghobadian, 2002, p. 418). The content relates to the distinct elements of the strategic plan, whereas the process relates to the mechanisms for the development of the strategic plan. Since the intention here is to measure the planning process, the process viewpoint will be considered in this part of the study. The content viewpoint will be considered under Group (C) propositions ‘strategic plan document’.

As noted in section 2.1, there are contrasting perspectives on the process of strategy formulation. For instance, Mintzberg and Lampel (1999) have classified ten schools of thought: three prescriptive (design, planning, and positioning schools); five descriptive (cognitive, learning, power, cultural, and environmental); and two which have elements of both (entrepreneurial and configuration schools). Essentially, the question regarding the nature of strategy formulation in organisations is centred on the so-called ‘design versus process’ debate that emphasises the difference between deliberate and emergent strategies (Mintzberg and Waters, 1985). Deliberate strategies refer to strategies that are formulated in advance based on intentions, whereas an emergent approach produces evolving strategic patterns despite or in the absence of intentions (Mintzberg and McHugh, 1985, p. 161). One side advocates a formal, systematic, rational, strategic planning process (Ansoff, 1991; Goold, 1992). The other supports an emergent process (Mintzberg, 1991 and 1994a; Mintzberg and Waters, 1985; Mintzberg and McHugh, 1985). Since the intention of this study is to assess the formality of the planning process, Ansoff’s (1991) perception of a formal, systematic, and rational strategic planning process is adopted.

The concept of planning formality has evolved over time along two separate (but related) dimensions (Chae and Hill, 2000). These were planning commitment (how rigorously planning guidelines were followed) and planning completeness (completion of essential steps of the planning process). Early researchers (e.g. Rue and Fulmer, 1973; Karger and Malik, 1975)

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regarded whether plans were written or not to be valid indicators of corporate commitment to strategic planning.

In relation to planning completeness, the second element of planning formality, it was noted that as planning became more process oriented researchers became more inclined to view the planning process by its component parts (Chae and Hill, 2000). For example, Armstrong (1982) identified objectives, strategy generation, strategic evaluation and results monitoring as four steps of the strategic planning process. This type of approach formalised the link between strategic planning and the processes prescribed by most strategic management theorists (e.g. Ansoff, 1965; Andrews, 1971; Hofer and Schendel, 1978; Prescott, 1983). In support of the above, Pearce et al. (1987) define formal strategic planning as the process of determining the mission, major objectives, strategies, and policies that govern the acquisition and allocation of resources to achieve organisational aims. Mintzberg and Lampel (1999) added that when the term formal strategic planning is used, the intent is to convey that a firm’s strategic planning process involves explicit systematic procedures used to gain the involvement and commitment of those principal stakeholders affected by the plan. Bryson (2004) identifies ten steps as essential steps to what he called the ‘strategy change cycle’ and concludes that each step in the process should be performed and has its own benefits.

From the above, the formality of strategic planning will be looked at from the process perspective, and ‘process formality’ is defined as the extent to which the steps of the planning process are conducted. This will be used as the measure of formality for the rest of this study.

The concept of planning formality as stated earlier has evolved over time along two separate (but related) dimensions. These were: planning commitment (measured by written plans) and planning completeness (completion of the planning process steps – adopted measure). The relationship between the two measures of formality is expected to be positive. This is because ‘process formality’ for SPFP takes into account the completion of all essential steps needed in the formation phase. Once this is completed then all necessary parts of the strategic plan document are available to be documented and for the strategic plan document to be formulated. The completion of each step in the process will affect the process output and contribute to it. For example, the development of vision and mission statements in the planning process leads to the inclusion of them in the produced strategic plan document. Also, the development of strategies and plans as one step in the planning process facilitates the documentation of strategies in the strategic plan document. From

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the above discussion it can be proposed that the two measures of SP formality (process formality and written strategic plans) are positively related. Thus the following proposition is developed.

Proposition A.1: Organisations practising a high process formality in their SPFP are more likely to formulate strategic plan documents than organisations with low process formality.