Organizational management through strategic planning and financial practices : An empirical assessment from business firms of Kuwait

Article history: Received: December 16, 2018 Received in revised format: February 1, 2019 Accepted: February 6, 2019 Available online: February 6, 2019 The purpose of this research is to investigate the relationship between strategic planning as business management dimensions and financial management (FM) practices. To achieve this objective, employees from various firms working in Kuwait are under observation. A survey questionnaire is developed, considering fifteen items of strategic planning and five for financial management practices. A final sample of 276 respondents is considered for investigating the empirical relationship between the selected variables. Both descriptive and traditional linear regression modelling techniques are applied. However, the study findings are pre-tested through model specification for all five items of FM. It is found that various strategic planning items are significantly associated with financial management proxies including staff turnover, safeguarding physical and financial assets, and development of financial budgets in selected firms. Significance of the study can be viewed as emerging contribution in the present literature while assimilation strategic planning with financial management too. Besides, the study findings are useful for both strategic planning and finance departments in the business organizations for their better future development. Limitations of the study cover limited sample size and application of traditional method of analysis. Future studies should be in direction while addressing these boundaries. © 2019 by the authors; licensee Growing Science, Canada


Introduction
From the context of business management, strategic planning has prodigious attention in the literature (Sayer et al., 2011).It is assumed that strategic planning (SP) is associated with those decisions having longer impact on all the activities of the business and they are normally irreversible (Camillus & Datta, 1991;Goodstein et al., 1986;Grant, 2003;King, 1983).Long-run tactical planning like SP deals with all types of business decisions within and outside the business world (Steiner, 2010).It encompasses that business decisions have longer impacts on all activities, with their division in short run objectives.For the future growth of business organization, strategic planning uses all types of resources, either measured in financial terms or not (Carr & Smeltzer, 2000).As per the earlier findings, SP employs overall business purposes, its future orientation.Dealing with those factors in return can impact business in the future (Cassidy, 2016;Haines, 2016;Harrison, 1995;Wolf & Floyd, 2017;Anigbogu & Nduka, 2014).From 1980 to 1990, SP covered new trends as means of focusing on rapid changes in the business environment with effective decisions for the success (Carter, 1999;Haines, 2016;Kemp, 2018;Anyanwu et al., 2016).This concept has been widely applied in the retail industry where successful planning yields a reasonable output.Meanwhile, SP entitles as significant managerial process for the effective planning.For instance, in hotel industry, strategic planning as core business management element is explained through SP index which considers six factors.These are under the title of implementation of planning, performance in future, historical trends of company progress, functional coverage, dependence on analytical techniques, and accessing the planning for the assistance of staff (McLean, 2018;Phillips & Moutinho, 1999;Tikhomirov & Frenkel, 2017).In addition, the context of literature while "simplifying strategic planning" explains various alternatives which can save time in developing a business plan, making it easier for the implementation and focus on more significant issues (Sokol, 1992).Using quality function deployment (QFD), strategic planning for the business can be developed (Crowe & Cheng, 1996;Kahraman et al., 2006;Killen et al., 2005).
In addition, financial management practices (FMPs) cover vast bodies of literature.Several business organizations, either financial or non-financial, deal with financial matters as identified by the earlier researchers (Cordón-Pozo et al., 2006;Cuijpers et al., 2011).Various factors play their role in affecting the departmental collaboration (Quinlan & Åkerlind, 2000;Maldonado-Guzman et al., 2018).From the context of corporate finance, accounting and finance departments are known as the core heads, responsible for the overall financial affairs in the business.The objective of the present study is to evaluate the impact of various dimensions of strategic planning on financial management practices in business firms of Kuwait.Based on this phenomenon, the present study is contributing to the existing literature with the integration of strategic planning and its relationship with financial dimensions.The rest of the paper is as follows.Section two elaborates literature review.Section three indicates variables and methods.Sections four and five explain findings and their discussion, and the last section explains conclusions, limitations and future directions.

Literature Review of the Study
Business management through strategic planning has received significant attention since the 1990s.Strategic planning indicates a mean for monitoring rapid changes in the business environment and reacting against that situation.In his study, Carter (1999) explained that effective decision making is an integral component in the overall management process and explains the core elements of the successful planning.Meanwhile, planning horizon in the business firm considers those boundaries, deciding the future direction with the time (Das, 1991).He also explains the planning horizons with the concept of temporal framework as time plays its significant role and support.Some other studies convey the idea that strategic planning covers those decisions, having future implications and long-term effects on operational activities of the business (Camillus & Datta, 1991;King, 1983;King & Cleland, 1978).In addition, few researchers have focused on quality function deployment for the strategic planning and explain that it is a comprehensive process, covering the various issues, faced by the organization for its stakeholders.Their study design consists of two core stages of SP with the help of QFD (Chan & Wu, 2002;Crowe & Cheng, 1996;Kahraman et al., 2006;Killen et al., 2005;Tan & Shen, 2000;Tsai et al., 2003;Maroofi et al., 2017;Mowlaei, 2017;Santhi & Gurunathan, 2014).Findings show significant benefit through QFD and are the supporting outcome of developed strategies within the business firms.Practical implications imply that QFD model is very useful for the development of customer related strategy.Meanwhile, strategic planning and planning strategically are both inter-related ideas covering lengthy process of decision making (Linn, 2008).He explains that organization should not go for the intricate strategic planning process because it is a laborious process.
Financial management practices cover the title for all types of financial decisions in the business and relevant resources.For example, Rashid (2014) specifies that external financing decision of the firm is dealing with the risk factor through idiosyncratic and macroeconomic dimensions.His study covers the role of both type of risk factors through equity choices while using the panel data from 1981 to 2009.Findings of the study explains that both risk factors are significantly impacting on external financing choices in the region of Pakistan.As per the practical implications, his study is useful for the corporate financial practices especially relevant to external financing decisions, based on macroeconomic factors.Research work of Ali and Mehreen (2018) empirically explores the impact of succession planning for combating the employee turnover.They explained the fact that leader's development process is associated with the performance and retention of employees.The focus of their study was on banking professionals.They further narrated that success planning enhances the job security for the employees while creating more opportunities for them.The study uses the survey approach in retail banking through proposed model and structural relationship.As per the practical implications, their work helps the banking sector management develop proactive and strategic planning related to employee job security.Some other studies (e.g.Brooks & Mukherjee, 2013;Charnes et al., 1959;Dayananda et al., 2002;Froot & Stein, 1998;Kaka, 1994) consider financial budget as financial practices in the business firms, while security of financial and physical assets is another indicator for the dimension of financial practices (Ali & Haseeb, 2019;Haseeb et al., 2018;Suryanto et al., 2018;Malarvizhi et al., 2018).

Strategic planning
Strategic planning refers to long-term planning in the business to achieve the objectives over time (Dansoh, 2005;Grant, 2016;Kaplan & Norton, 1996;Mcdonald, 2016;Slawinski & Bansal, 2015).Various factors have been discussed in the literature to cover the idea of strategic planning as business management indicators.Strategic planning composes business mission and its meaningfulness to everyone within the organization (Klemm et al., 1991), and the contribution of SP in business (Bryson et al., 2009).Through strategic planning, businesses can maximize the market opportunities (Utterback, 1994), motivation of staff up to appropriate level through reward system, working as a team (Fisher, 2009;Lam & Lambermont-Ford, 2010) and safety of operational plans (Howlett, 2009;Sayer et al., 2011).Besides, profitability targets are met through strategic planning (Kaplan & Norton, 2001;Midler, 2013;Ruhanen, 2007), products meeting all the requirements of the market place, and revisiting innovation plans of the products and meeting the safety laws for the employees are under the title of strategic planning (Enz & Siguaw, 2003;Hopkins, 1981;Reese, 2008;Callaway, 2017).

Financial Practices
Financial practices in the business firms explain numerous factors covering both short term and long term impact.Among the various, external financing opportunities is the availability of the funds to the business from outside resources (Abor & Biekpe, 2007;Berger & Udell, 2002;Mayer, 1988;Stein, 1997), and adequate staffing of financial staff (Abor & Biekpe, 2007).While turnover of employees from accounting and finance department indicates that business practices have financial impact in the business (Guilding et al., 2014), development of financial budgets (Agarwalla et al., 2015;Alviniussen & Jankensgard, 2015;Dudin et al., 2015;Purnama, 2014) and protection of business assets with relevant strategies are some other practices relevant to the organization (Main, 2016).All these items are under consideration in present study.
This study focusses on the structural questionnaire approach from targeted respondents (employees), working in business firms in Kuwait.A sample of 350 questionnaires was proposed and distributed to various employees specifically responsible for the strategic planning and financial practices in their relevant firms.A period of 3 weeks was proposed to collect the delivered questionnaires.A final sample of 276 questionnaires was collected with no missing observations, covering all the responses from targeted respondents.After the collection of relevant data from targeted respondents in the industry, descriptive statistics were applied in the very first step.The key purpose to apply the descriptive technique was to evaluate the data set.In the second step, the model specification test was applied, referring to the goodness of relationship between the strategic planning and key dimensions of financial practices.In the last step, empirical results were generated through traditional regression modelling.

Results and Discussion
Descriptive results are presented under the first table of the study.To evaluate the layout of the data set, mean score, standard deviation, minimum & maximum scores are presented in Table 1.In addition, first percentile and 99 th percentile along with skewness and kurtosis are also demonstrated.For business management, strategic planning is observed as an independent variable of the study, based on fifteen items, ranging from BMSP1 to BMSP15.For financial management five items are added from existing literature.To get descriptive facts, SPSS-22 versions has been applied.For BMSP1, mean score of 4.438 indicates that on average, respondents agreed on the Likert scale, ranging from 1 to 5 (strongly disagree to strongly agree) with the argument that business mission is quite significant for all the individuals within the organization (BMSP1).Standard deviation for this average response is 1.272, assuming a reasonable aberration from the mean value.Range of response is 1 to 5 with positive skewed .311,while score for the Kurtosis is 2.001.For BMSP2, mean score is 4.108 indicating an agreed view from respondents, which demonstrates that strategic planning of the company is positively contributing towards mission; BMSP2.BMSP3 presumes the fact that business firms are maximizing their opportunities when they arise.However, as per the descriptive facts, respondents are somehow on the neutral scale as the mean value is 3.92.While the trend of data as identified through skewness is positive for second proxy of business management and negative for the third.For BMSP4, neutral response is observed with the mean value of 2.903 and standard deviation of 1.372.It indicates that when the staff members are asked about their motivation and get involved in their roles, they remained neutral in the strategic planning process.This trend puts significant light towards attracting the business attention about employees' motivation and their involvement in the business.Fifth dimension of business management generally and specifically deals with strategic planning and is associated with jobs accomplished by the employees with appropriate level.As per descriptive facts, respondents agreed with the argument that they were doing their job within a reasonable level.BMSP6 considers "staff feelings very well about the reward and recognition within the organization" with average response of 4.67 approximately.It indicates respondents are largely agreed about reward and recognition system within the organization.
In addition, strategic planning also takes the idea of working as a team and BMSP7 is addressing the statement that staff in the business firm is working as a crew to achieve the strategic objectives.Mean score for this statement is 3.092, indicating a neutral argument from the respondents.It implies that attention is required to get the proper feedback from the employees as they remain neutral in this regard.The eighth factor of strategic planning entitles that metrics were defined in the company, matching the strategic planning.It covers the average score of 1.94 which explains that respondents disagreed for the definition of metrics in the business.This idea elucidates that there was a strong need of metrics in the targeted business firms, which will help them in strategic planning.For BMSP9, focus is paid towards metrics, required to operate effectively.As it is linked with BMSP8, again respondents disagree on the Likert scale with the average score of 1.182, while customers served with significant attention were under observation in strategic planning covers BMSP10.It indicates that employees of selected firms strongly agree with the assumption that their organization was focusing on customer services while developing strategic planning.Items under the title of BMSP11 and 12 cover the operational safety of the plans being developed and achievements of profitability targets.Both items have a mean score of above 4, meaning that respondents agreed with the achievements of financial targets and operational safety of the plans being developed.Besides, "products are meeting the market needs" is evaluated under the title of BMSP13, while revisiting of the innovation plan is covered through BMSP14.For both factors, respondents agreed that management was focusing on these issues.Meeting health and safety criteria is entitled for BMSP15 with mean value of 2.013, explaining that employees disagreed about the business focus on HR practices through employees' safety and health.
The factors under the title of FM1 to FM5 predict various factors of financial management, covering the external financing of business projects or FM1, adequate staffing of financial staff FM2, turnover rate of accounting and finance personnel (FM3), development of financial budgets (FM4), proper policies for safeguarding physical and financial assets in the business (FM5).All these items for FM show a mean score near to Likert point of four, predicting that targeted respondents agree for all these financial practices, except FM3 with the average score of 2.23 assuming a neutral feedback.Table 2 presumes correlational coefficients among all the items of strategic planning for business management.Correlation between BMSP1 and BMSP2 is positively moderate and significant at five percent.Similar positive and significant trend is found between first and third item, between first and fourth item between first and sixth item, between first and seventh item, between first and 10 th item of business management.While for BMSP2, the highest correlation is examined with BMSP10.As per BMSP3, correlation is .351,significant at 5 percent with BMSP4 and with BMSP14 is .431.The rest of the indicators are showing a mixed trend but most of the correlation coefficients are found to be significantly positive.To address the queries for the problem of multicollinearity, VIF test is applied, measuring the tolerance and mean value of the tolerance for correlation.Table presents individual correlation and mean value of tolerance under the title of Mean VIF.It is observed that all the items of strategic planning for business management had a mean score of below 2, and overall mean VIF is 1.386.As per the findings of earlier researchers, mean VIF less than five can be assumed as enough evidence to conclude that explanatory variables had no problematic level of correlation.

Table 2 Pairwise correlations
Variables (1) (2)        Empirical association between strategic planning for business management and various practices under the title of financial management are presented in Table 9.For explanatory variables, fifteen items are finalized as presented in descriptive and correlational facts, while for FM, five items are finalized.For the first item of BMSP (meaningfulness of business mission), significant & positive impact of .177 is observed with the standard error of .100.It means that higher significance of business mission can positively impact external financing of the projects as more options of financing could be investigated for the growth of business.For FM5, business missions have a negative but insignificant impact.For BMSP2, clarity of strategic planning to business mission is measured on Likert scale and its impact on all five financial practices is empirically investigated.It is observed that if there is a clarity of mission in the business, it will significantly and positively influence the policy development of safeguarding physical and financial assets in the business.The coefficient of FM5 is .304,significant at 1 percent level, providing the evidence that positive impact on FM5 through BMSP2 is evident.BMSP3 reflects the consideration of maximizing the business opportunities and their impact on FM1 is -.171.It indicates that employees of selected firms agree with the maximization of business opportunities, but they have an adverse effect on FM1.However, for FM5, its impact is .135,meaning that higher opportunities can positively impact safeguarding financial and physical assets of the business.
The factor of staff motivation has no significant association with any of FM dimensions as presented in Table 9.All the coefficients are insignificant but show both positive and negative association with financial management practices.In addition, the factor of doing the appropriate level job is covered under BMSP4, showing significant but positive relationship with adequate staffing for financial staff and negatively significant association with turnover rate of accounting and financial personnel.It means the higher the level job, the more positive influence for more hiring in financial departments and the lower turnover rate by financial staff members.The factor of staff feeling for reward system in their relevant organization has shown insignificant relationship with all dimensions of FM practices.Meanwhile, working as a team in the organization (BMSP7) has demonstrated its significant and positive impact on financial staffing with the coefficient of .157and standard error .0831.In addition, development of financial budget is positively and significantly impacted by team work in selected firms.Metrics for strategic planning and focus on metrics for effective work have their insignificant impact on all the dimensions of financial management practices.It indicates that there exists no relationship between strategic planning through metrics and financial management behavior of the firm have their no significant relationship.The factor of customer service (BMSP10) predicts significant but positive effect of .221 on external financing for the business projects.For the turnover rate, higher customer service is leading towards low rate of turnover from employees.This relationship is presented through robust coefficient of -.178 with standard error of .0750.In the meantime, saving business operations from failure means better operational activities, which in return generate adverse results for staff turnover.The coefficient of -.240 accepts adverse relationships.
Higher level of achievements for profitability targets and its influence on financial management practices are also reviewed.The coefficient of .136indicates that increasing the level of financial performance through earnings is meaningful for the development of financial budgets in business organizations.This trend is similar for the safeguarding of both types of assets (physical and financial), showing the explanatory power of .244,significant at 1 percent.It clarifies that better financial results and their achievements in strategic planning can lead to more security for business assets.Focusing on the products for meeting all the needs of marketplace is found to be insignificantly associated with all dimensions of financial management.Although revisiting innovation plans has significant & positive association with the staffing of financial staff with the coefficient of .172,and for turnover of the employees, it has a significant but negative influence of -.0884 under full sample.If the business firm is providing better health care and safety facilities to their employees, there is very little chance for the employees to leave the business organization.This notion is accepted as coefficient for FM3 is -.151 through BMSP15.The rest of the indicators are found to be insignificant.Besides, overall value of robust R-square is .349for FM1, .313for FM2, .284for FM3, .125 for FM4 and highest for FM5;.424.All the models are found to be statistically significant.

Conclusion, Limitations and Future Research
Strategic planning is accepted as core business process to get long term success in the market.This study has been conducted to empirically evaluate the role of various components of strategic planning under the title of business management in determining financial practices from the context of Kuwait.Overall fifteen items have been identified from the present literature, covering the title of strategic planning.For financial practices, five dimensions have been added in the questionnaire.A sample of 276 respondents was finally accepted because of valid responses and further consideration for empirical facts.It is found that strategic planning factors like meaningfulness of business mission have had a significant but positive influence on external financing of the projects.Clarity of strategic planning to the mission has had a significant but positive impact on safeguarding many types of business assets.However, maximizing the business opportunities were negatively affecting the external financing for the business projects.Besides, working as a team in strategic planning has maintained a significant & positive influence on development of a financial budget for the business.Meanwhile, customer services were positively influencing external financing of the projects, but negatively affecting the turnover rate of employees.Similar negative & significant impact was recorded for turnover of personnel.Higher earnings in the business lead to more financial budget and their development along with proper safeguarding of both physical & financial assets.The factor of jobs accomplished with appropriate levels indicates significant positive impact on staffing financial staff, but negative impact on turnover rate of accounting and finance personnel.If the operational plans are safe from the failure, it indicates a significant but negative impact on turnover of staff members.Higher earnings can provide more opportunity for financial budgets and protection of physical and financial assets in selected business firms.
Findings under the present study contribute to present literature both theoretically and practically.Theoretical implications of the study imply an empirical association between strategic planning and its impact on financial practices in business organizations.These dimensions cover finance department, personnel, development of financial budget, protection of physical and financial assets, etc. Practical implication covers the point that managers and industry analysts responsible for development of strategic planning can consider the stated findings for upcoming tactical forecasting in their relevant firms.However, this study was based on several limitations which can provide some future direction.At first, strategic planning covers the one dimension of overall strategic management process, while ignoring the implementation & controlling phases which were accepted as significant contributors for success or failure of the business.Future studies can be conducted while adding these attributes of strategic management.Also, sample is limited to the manufacturing firms working in Kuwait.Future studies can be prolonged through addition of trading & financial sectors too.Financial practices have some other dimensions which can be integrated with strategic planning.For instance, Kudla (1980) highlighted the impact of strategic planning on the return factors of common stock, strategic planning and its interface with finance (Phillips, 2000), finance theory and their implication in strategic management (Bromiley, 1990), role of finance culture in strategic planning (Carr & Tomkins, 1998), financial coverage in strategic planning (David et al., 2016), and strategic planning in public finance (David et al., 2016;EmenikeKalu & Obasi, 2016) which can provide new dimensions for upcoming research.

Table 1
Descriptive Statistics

Table 4
Model Specification for external financing of business projects (FM1)

Table 5
Adequate staffing of financial staff (FM2)

Table 6
Turnover rate of accounting and Finance personnel (FM3)

Table 7
Development of financial budgets (FM4)

Table 8
Proper policies for safeguarding physical and financial assets in the business (FM5)

Table 9
Regression Results for Financial Management Practices FM1-FM5 through Strategic planning for Business Management