The value of formal planning for strategic decisions: Review of empirical research

Abstract

A review of research from organizational behaviour supported the guidelines by corporate planners: that is, use an explicit approach for setting objectives, generating strategies, evaluating strategies, monitoring results, and obtaining commitment. To determine whether these findings could be applied to strategic decision making in organizations, a review was made of all published field research on the evaluation of formal planning. Formal planning was superior in 10 of the 15 comparisons drawn from 12 studies, while informal planning was superior in only two comparisons. Although this research did not provide sufficient information on the use of various aspects of the planning process, mild support was provided for having participation by stakeholders. Formal planning tended to be more useful where large changes were involved, but, beyond that, little information was available to suggest when formal planning is most valuable. Future research should assess the formal planning process, the situation in which it is used, and its effects on the total system.