The relationship between strategic planning and business performance: an empirical study of manufacturing SMEs in Western province in Sri Lanka

The economic growth of developing countries can be sustained by the expansion of private sector, as they are the engine of growth. As a consequence, it is important to accelerate the growth of SMEs in order to gain sustainable development in this era. Many scholars have argued that the strategic planning is one of the salient factors which contribute to the performance of SMEs. However the recent literature provides contradictory findings about the relationship between strategic planning and performance. Based on these evidences, the main objective of the study was to examine the relationship between strategic planning and performance of SMEs. More importantly the study focused on strategic planning process where, there is a dearth of studies which have concentrated on strategic planning process. Specific objectives include toi dentify the level of involvement in the process of strategic planning and to examine difficulties faced by SMEs in engaged in strategic planning process. Data were collected through personally attended structured questionnaire distributed among 275 owner/managers of SMEs in Western province. Both descriptive and inferential statistics techniques were used to analyze the collected data. The findings revealed that the SMEs are moderately engaged in strategic planning process and there is a positive relationship between strategic planning and business performance.The Kelaniya Journal of Management, Vol. 3(1); 2014: 23-41