Current State and Impact of Strategic Planning Activities on Entrepreneurs’ Financial Performance: Case of Serbia

Abstract

Research Question: The study was designed to explore the current state and the importance of strategic planning for entrepreneurs in the Republic of Serbia. Motivation:  Recognizing that different levels of sophistication of planning activity exist in small businesses (Bracker & Pearson, 1986), the positive impact of this managerial activity on entrepreneurial performance (Gibbons & O’Connor, 2005), as well as the fact that this is an underexplored research field (Parnell, Long & Lester, 2015), the research was undertaken in order to address these issues in the Serbian context. The paper aims to identify the features of strategic planning performed by Serbian entrepreneurs and the relation of this activity to their financial performance. By exploring the current state of these issues, the paper will point out directions for its improvement.  Idea: The research has been conducted with a main goal to explore the characteristics of the strategic planning undertaken by Serbian entrepreneurs and its impact on their financial performance. With an increasing importance of female entrepreneurship and going-on studies examining gender differences across different aspects of managerial behaviour of entrepreneurs, the paper investigates the existence of gender- based differences in strategic planning practice between female and male entrepreneurs in Serbia.  Data:  A random sample of 327 SMEs’ owners and individuals registered as entrepreneurs was drawn out of the Serbian Business Register Agency’s database. A questionnaire containing nine-itemed scale for evaluating the features of strategic planning of Serbian entrepreneur s was developed using the online platform  Google Docs. One hundred and one entrepreneurs from the sample responded, thus providing the data for further analysis. The data on financial performance of respondents were obtained from their publicly available financial statements.  Tools: Several statistical methods were used for testing the proposed hypotheses such as descriptive statistics measures, Cronbach alpha measure of scale’s internal consistency, one sample t-test, simple linear regression, Shapiro-Wilk test of normality and nonparametric Mann-Whitney U test. The data were analyzed in SPSS, Version 22. Findings: As it was expected, strategic planning is an underdeveloped activity among Serbian entrepreneurs. But surprisingly, although hypothesized, there were no gender-based differences regarding this aspect of managerial behaviour of entrepreneurs. The study also suggests that strategic planning contributes to financial performance of Serbian entrepreneurs. The results obtained on Serbian sample are comparable with others presented in relevant literature and obtained in other contexts. By tackling these issues, the paper reveals some areas of the strategic management academic courses and training programmes for entrepreneurs that should be emphasized in order that the competitiveness of the small business sector should be improved.  Contribution: This paper contributes to both the strategic management and entrepreneurship literature, thus filling the research gap that exists regarding the strategic management practice in small businesses.