The mediating role of employee strategic alignment in the relationship between rational strategic planning and firm performance: A European study

• Date: 01 September 2013
• Author: Noufou Ouedraogo,Mohamed Laid Ouakouak
• Published date: 01 September 2013
• DOI: http://doi.org/10.1002/cjas.1259

The mediating role of employee strategic

alignment in the relationship between

rational strategic planning and firm

performance: A European study

Mohamed Laid Ouakouak*

IDRAC International School of Management

Noufou Ouedraogo

Grant MacEwan University

Abstract

Previous empirical studies examining the direct relationship

between rational strategic planning and f‌irm performance

have produced contradictory results. Therefore, in order to

better understand the nature of this relationship, it is impor-

tant to take into consideration the role of some mediating

and moderating variables. We take into account this aspect

by testing the mediating role of employee strategic alignment in

the rational strategic planning–f‌irm performance relationship.

Based on a quantitative empirical study conducted among 372

European f‌irms, we f‌ind that employee strategic alignment is a

full mediator in this relationship. We then discuss the theoreti-

cal contributions and practical implications of our study.

Copyright © 2013 ASAC. Published by John Wiley & Sons, Ltd.

JEL Classif‌ication: M19

Keywords: strategic planning, employee alignment,

employee participation, performance

Résumé

Les travaux empiriques antérieurs examinant la relation

directe entre la planif‌ication stratégique rationnelle et la

performance de l’entreprise ont débouché sur des résultats

contradictoires. Pour mieux comprendre la nature de cette

relation, il importe de prendre en compte le rôle de certaines

variables médiatrices et modératrices. La présente étude

prend en compte cet aspect en testant le rôle médiateur

de l’alignement stratégique des employés dans la relation

planif‌ication stratégique rationnelle-performance de

l’entreprise. Grâce à une étude quantitative réalisée dans

372 f‌irmes européennes, l’étude révèle que l’alignement

stratégique des employés est un médiateur à part entière

dans la relation. L’article s’achève par une analyse des

contributions théoriques et des implications pratiques de

nos résultats.

Mots-clés : planif‌ication stratégique, alignement des

employés, participation des employés, performance

Strategic planning is a rational and systematic process

to evaluate an organization’s goals, explore its competitive

context, analyze its strategic alternatives, coordinate its

activities, and formulate the policies that will guide its

decisions and actions (Andersen & Nielsen, 2009). It has

received special attention in strategic management research,

particularly in terms of its relationship with f‌inancial perfor-

mance and its role in strategic decision-making (Grant, 2003).

In fact, researchershave made considerableefforts to study the

relationship between strategic planning and f‌irm performance

because understanding the nature of this relationship is

crucial to organizations. However, the results of these

studies are considered uncertain and contradictory with

no clear conclusions (Falshaw, Glaister, & Tatoglu, 2006;

Grant, 2003; Mintzberg, 1994). For instance, Sarason and

Tegarden (2003) found a positive relationship between ratio-

nal strategic planning and f‌irm performance, Fredrickson and

Mitchell (1984) a negative relationship, and Robinson and

Pearce (1983) no signif‌icant relationship at all.

Given these mitigated results, studies examining the

direct bivariate relationship between rational strategic plan-

ning and f‌irm performance have been strongly criticized.

Some researchers have argued that context plays a consider-

able role in explaining the relationship between f‌irm pro-

cesses and outcomes (Child, Elbanna, & Rodrigues, 2010).

Therefore, several contingency factors, such as the organiza-

tional struc ture, th e nature of t he envir onment , and the

size of the organization, have been introduced in the study

of the relationshipbetween strategic planning and f‌irm perfor-

mance (Miller, Burke, & Glick, 1998). It has equally been

*Please address correspondence to: Mohamed Laid Ouakouak, IDRAC

International School of Management, 47 rue Sergent Michel Berthet - CP

607, 69258 Lyon, France. Email: mohamed.ouakouak@gmail.com

Canadian Journal of Administrative Sciences

Revue canadienne des sciences de l’administration

30: 143–158 (2013)

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/CJAS.1259

Can J Adm Sci

30(3), 143–158 (2013)Copyright © 2013 ASAC. Published by John Wiley & Sons, Ltd. 143

suggested that some factors may have a mediating role in this

relationship(Rudd, Greenley, Beatson, & Lings, 2008).In this

research, we are testing the mediating role of employee

strategic alignment in the relationship betweenrational strate-

gic planning and f‌irm performance.

The literature distinguishes between two levels of strategic

alignment: the alignment of the organization’sstrategytothe

external environment (external alignment) and the alignment

between the strategy and the organization itself (internal

alignment) (Beer, Voelpel, Leibold, & Tekie, 2005). External

alignment supposes that during their strategy development,

organizations take into consideration external variables that

can positively or negatively affect them. Such variables are,

for example, market opportunities (Chandler, 1962), product

life cycle, market growth rate, and the relative competitive

position of the organization (Venkatraman & Camillus,

1984). Internal alignment supposes that internal variables

such as organizational structure (Chandler, 1962), man-

agement system, organizational culture, human resources

(Boswell, John, & Alexander, 2006; Khadem, 2008), and

leadership style align with and support the organization’s

strategy. In this research, we focus solely on internal align-

ment and more specif‌ically on employee strategic align-

ment. We aim to contribute to a better understanding of

the relationship between rational strategic planning and

f‌irm performance. Also, since there is a lack of empirical

evidence on how to enhance employee alignment (Beehr,

Glazer, Fischer, Linton, & Hansen, 2009), our study provides

insights into addressing this important issue. Specif‌ically, we

answer the followingtwo questions: (a) Does rational strategic

planning improve f‌irm performance? In fact, this question

deserves a lot of attention currently because previous

research on the question was carried out between 1980 and

1990, and the environment in which organizations operate

has drastically changed since then; (b) Does employee

strategic alignmenthave a mediating effect on the relationship

between rational strategic planning and f‌irm performance?

This second question also needs consideration given the

contradictionsin previous research f‌indings mentioned above.

The paper is organized as follows: f‌irst, we present

the different concepts that appear in our research model

as well as our research hypotheses. Then, we describe

our research methodology followed by our research f‌indings.

We also discuss our theoretical contributions and the applied

implications of our research. We end our paper by presenting

the limitations of our study and by exploring future research

directions.

Conceptual Framework

The research model is presented in Figure 1. It postu-

lates that employee strategic alignment has a mediating

effect on the relationship between rational strategic planning

and f‌irm performance. It also postulates a possible direct

effect of rational strategic planning on f‌irm performance.

All the variables included in the model have been the subject

of theoretical interest and/or have empirical support, which

increases the possibility of comparing the results of this

research with those of previous studies.

Rational Strategic Planning

Two distinct approaches to strategy making have

attracted the attention of practitioners and researchers: the

rational approach and the adaptive approach (Grant, 2003).

The adaptive approach, which is a process of making strategy

based on intuition, creativity, and learning (Mintzberg, 1994),

is gaining more interest in today’s dynamic environment. In

contrast, rational strategic planning has been known since

the 1950s through the work of Selznick (1957). It is “a

Figure 1.

Research model

Rational Strategic

Planning

- Formalization

- Comprehensiveness

- Strategic Control

Employee Strategic

Alignment

Firm Performance

-Financial

-Nonfinancial

Employee

Participation

Direct path

Mediating path

Moderating path

RATIONAL STRATEGIC PLANNING AND FIRM PERFORMANCE OUAKOUAK AND OUEDRAOGO

Can J Adm Sci

30(3), 143–158 (2013)Copyright © 2013 ASAC. Published by John Wiley & Sons, Ltd. 144