The Relationship between Strategic Planning and Malaysian SMEs Business Performance: The Effect of Employee Participation, Implementation Incentive and Strategy Evaluation and Control

Abstract

The aim of this study is to examine the effect of strategic planning on Malaysian SMEs business performance as well as the effect of employee participation, implementation incentive, strategy evaluation and control on strategic planning process. This study considered the research framework proposed by Dubihlela & Sandada (2014), thus the research findings of Dubihlela & Sandada (2014) are used to compare with this study. The data was gathered via electronic mail and manually from SMEs around Kuala Lumpur. Out of 1000 questionnaires were distributed, a total of 204 questionnaires were collected back from the respondents, however only 183 questionnaires were usable. The data were analyzed using statistical package for social science (SPSS) software version 22.0. Pearson Correlation and multiple regressions were used in testing the hypotheses. The finding concluded that the strategic planning process delivers a significant and positive effect on Malaysian SMEs' business performance. It is also found that employee participation and strategic evaluation and control have a significant and positive effect on strategic planning process. However, implementation incentive does not have significant and positive effect on strategic planning process. This study suggests SMEs in Malaysia to adopt a formal strategic planning process as it leads SMEs to achieve high business performance. SMEs in Malaysia also needs to involve employees in the strategic planning process and apply strategy evaluation and control to enhance the strategic planning effectiveness. However, SMEs have to find other ways to motivate employees to achieve the company's goals as incentives does not affect the strategic planning process.