Towards a Contingency Theory of Planning

Although most managers and researchers believe planning is beneficial for organizations, many research studies have failed to prove these benefits are significant. Methodological problems have certainly detracted from researchers' abilities to show a planning-performance linkage.The article deals with definitional issues about planning and five planning modes. Contingency propositions are developed to link the planning modes with several strategic and contextual situations. For example, it is argued that, while (1) prospector-type strategies are best implemented with externally oriented planning systems like longer-range planning or strategic planning, (2) defender-type strategies are better with internal orientations, like comprehensive planning or implementation-oriented planning. In addition to strategy, other contingency variables examined are user sector, purchase frequency and the stage of product life cycle in which the planning is undertaken.Planning has adherents as well as detractors among managers and academics. Both sides of the debate can be seen in Mintzberg's (1994a & 1994b) recent publications on the “rise and fall” and “fall and rise” of strategic planning. Many have pointed to planning's benefits to organisations (eg Ansoff, 1977; Bryson, 1988; Langley, 1988). Yet research studies have failed to prove that these benefits are significant (eg Fredrickson & Mitchell, 1984; Fulmer & Rue, 1974; Grinyer & Norburn, 1975; Powell, 1992; Robinson & Pearce, 1983; Pearce, Freeman, & Robinson, 1987). Pearce, et al. (1987) noted a lack of attention to contextual influences; inconsistencies in operationalisation of planning; measurement validity problems; ignoring implementation factors, time frames, and size effects as the methodological problems in this area of research that may have affected researchers' chances of finding the expected link. Rhyne (1986: 423) also argued that some ambiguous findings were attributable to “the manner in which planning was actually carried out, rather than to planning itself”.Another possible weakness in the “planning” research is that it has not discriminated between modes or approaches to planning. The assumption seems to have been that “more planning is better,” or that longer-term, strategic planning should work in all or most contexts (Bryson, 1988; Eadie, 1983; James, 1984). The present article questions this view and suggests that less sophisticated planning may be better suited to some contexts and more elaborate approaches to others. Robinson and Pearce (1983) support such an approach, suggesting that less formalised planning may be preferable in certain situations.The article builds on Hofer's (1975) “contingency theory of business strategy,” as well as on Hambrick and Lei's (1985) “prioritization of contingency variables.” From a theoretical standpoint, a contingency approach is particularly well suited to strategy-related research (Galbraith & Kazanjian, 1986; Hofer, 1975) and this approach could hold the solution to an understanding of the elusive planning-performance link. Although past planning research has failed to provide conclusive evidence that a given planning system helps performance in all situations, certain planning systems may work well in some contexts but not in others.This article begins with a brief discussion of planning and some definitions of different planning modes. A number of contingency propositions are then developed to link these planning modes with variables that are of interest to contemporary management researchers and practitioners.