The Influence of Systematic Strategic Planning and Strategic Business Innovation on the Sustainable Performance of Manufacturing SMEs: The Case of Palestine

Abstract

Small and Medium Enterprises’ (SMEs) impact on economic growth is widely acknowledged. Nevertheless, the literature lacks empirical evidence as to how the sustainable performance of manufacturing SMEs in developing countries with unstable and turbulent business environments, such as Palestine, could be enhanced. Relying on the Triple Bottom Line (TBL), Resource-based View (RBV) theory, and sustainable performance literature, this study explores the influence of systematic strategic planning (SSP) and strategic business innovation (SBI) on the sustainable performance (SP) of Palestinian manufacturing SMEs. Based on a sample of 377 manufacturing SMEs in Palestine, 245 valid surveys have been subjected to Partial Least Squares Structural Equation Modeling for analysis using Smart PLS 3.0 software. The results show that various factors can enhance manufacturing SMEs’ sustainability performance, such as adopting a supporting national policy to enhance the concept of sustainability at the policy level. However, implementing proper systematic strategic planning (SSP) and strategic business innovation (SBI) in a collaborative culture and a participatory management style at the firm level in manufacturing SMEs positively influences and enhances the sustainable performance of those firms. This study’s contribution to the literature expands the knowledge on sustainable performance in manufacturing SMEs in developing countries experiencing political and economic uncertainty. Hence, the research findings demonstrate how (SSP) and (SBI) are crucial management tools for businesses operating in a highly competitive and turbulent environment.

Does Organizational Performance Increase with Innovation and Strategic Planning?

“…They found that strategic agility significantly affects organizational performance and innovation capability, and innovation capability improves the relationship between strategic agility and organizational performance. Dwikat et al [33] found that strategic business innovation and systematic strategic planning enhance the sustainability of Palestinian small and medium manufacturing enterprises.…”

Entrepreneurial orientation and Palestinian family-owned businesses: does governance or geographic location make a difference?

“…Family-owned businesses constitute more than 70% of total enterprises that operate within the Palestinian territories (Dwikat et al, 2022;Sultan, 2014;Sultan et al, 2017).…”

Modern planning strategy and a course in achieving the competitive advantage in the mixed sector institutions in the Republic of Yemen

“…These challenges can be categorized into three main issues: intrinsic, structural, and internal. The first challenge is external because of the political conflict that restricts economic growth in some developing countries [11]. Likewise, the second challenge is internal and is classified as a structural obstacle attributed to the weak role of the policy of some companies and sustainable development institutions in controlling, organizing and strengthening the environment conducive to the prosperity of the private sector and the manufacturing industry [12][13][14].…”

“…The third major challenge, which will be the main focus of this study, is the internal issues at the level of the organization, which are attributed to the application of best management practices at the level of the company, such as the implementation of sound strategic planning and the application of sustainable development standards. Moreover, the majority of small and medium-sized companies are family businesses that have started to face real challenges to their survival and sustainability, which has led to the bankruptcy of a large number of small and medium-sized companies [15][16][17][18][19][20]. More precisely, previous studies of the strategic planning sector revealed that these challenges can be summed up by the fact that the market share of locally manufactured products in the local market does not exceed 20 percent [21].…”

“…It is worth noting that small and medium industrial companies in manufacturing do not fully utilize their energies. They work at only 50% of their available production capacity, and increasing it to 70% will create about 40,000 new job opportunities [11,14,22]. On the other hand, small and medium industrial companies face stiff competition from imported products, which has led to a trade deficit of $5.4 billion in some Middle Eastern countries [23].…”