The role of strategic planning and HR managerial involvement and types and sources of analytic information on SME performance

Abstract

The concepts and role of strategic planning and HR managerial involvement is less examined in the context of small and medium enterprise than it is in the rubric of larger firms. Further, the types and sources of analytic tools which SMEs utilise are even less the focus of HR and organisational research, despite the plethora of theory (i.e. network, institutional, resource-based) available to scholars. Our paper focuses on the problem of examining the mediation of strategic planning and HR managerial involvement in driving each of three different analytic sources or tool clusters/factors, and their subsequent impact on two SME performance measures (financial and an alternative performance measure). Our three measures of analytic types include: Normative; Tools; and Network oriented analytic tools used by the SME. Normative analytics includes: Use of SWOT analysis, spreadsheets, brainstorming, and professional referents such as company accountants and external consultants. Tool-based analytics comprises: TOWS, Internal and External Factor Evaluation, Company Performance Matrix, and Porter’s five forces model. Finally, Network analytics focuses on using informal networks including knowledgeable friends, knowledgeable family and company auditors. The data draws from a large SME survey of over 1200 Australian firms, broadly representative of population industry and size characteristics. Our results indicate a tension between formal or normative/tool analytic elements and positive and negative outcomes: Somewhat predictably, strategic planning and HR managerial involvement best drive Normative analytic approaches, and these, in turn have a positive, but weak, impact on SME Financial performance. However, Normative analytics also drives uptake of Tool-oriented analytics (association between the analytic types), which in turn had a weak negative impact on Alternative performance. Finally, and perhaps most interestingly for SME scholars, we found a positive, but weak, relationship between Network-oriented analytics and Alternative performance. These results are quite pertinent given the significant relationship between Alternative performance and Financial performance, which reveals the indirect negative impact of Normative/Tool-oriented analytics on Financial performance, through Alternative performance, and the positive impact of what is largely informal Network analytic sources on Financial performance through Alternative performance.