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

Author ORCID Identifier

Devaki Rau:https://orcid.org/0000-0003-0871-0034

Publication Title

Management Decision

ISSN

00251747

Document Type

Article

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.

First Page

2200

Last Page

2216

Publication Date

1-1-2020

DOI

10.1108/MD-02-2020-0171

Keywords

Absorbed (human resource) slack, Organizational learning, Performance, Strategic planning, Unabsorbed (financial) slack

Department

Department of Management

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