A moderated-mediated examination of the relations among strategic planning, organizational learning, slack and firm performance

Abstract

Purpose

Planning is a perennially popular management tool with an ambiguous relationship to learning and performance. The purpose of this study attempts to resolve this ambiguity. The authors suggest that the critical question is not whether firms need learning for planning to influence performance, but when different firms experience different performance outcomes. The authors propose firms will benefit from strategic planning only when they learn from planning and have the resources to act on their learning.

Design/methodology/approach

The authors collected data from a survey of 293 individuals from 191 publicly listed US firms.

Findings

Organizational learning mediates the relations between strategic planning and organizational performance. This mediated relationship is positively moderated by high levels of human resource slack and moderate to high levels of financial slack.

Research limitations/implications

The study provides evidence for previous theoretical arguments on the planning–learning relationship while extending this research by finding a complicated moderating effect of slack. The study also adds to the existing debate on optimal slack levels by suggesting that having bundles of slack resources may matter more than having uniformly high or low levels of slack. A cross-sectional study means the authors cannot infer causation.

Practical implications

While strategic planning is a common practice, companies may vary in their planning methodologies, influencing the outcomes of planning. Firms seeking to benefit from planning need to have both the mechanisms to learn from planning and slack to deploy these mechanisms.

Originality/value

These findings clarify the planning–learning–performance relationship while challenging the assumption of an average effect of planning on performance across firms.

Citation

Rau, D., Flores, L. and Simha, A. (2021), "A moderated-mediated examination of the relations among strategic planning, organizational learning, slack and firm performance", Management Decision, Vol. 59 No. 9, pp. 2200-2216. https://doi.org/10.1108/MD-02-2020-0171