The effect of geopolitical environment on the influence of crisis management in strategic planning process

Abstract

Strategic planning is considered a significant necessity for growth and efficiency in service sector firms. However, the principles of strategic planning for international development tend to be non-specific and intensive, and they rarely take into consideration the precise situations for each country especially in developing countries. Data from the Palestinian Bureau of Statistics shows that most of Palestinian service firms suffer from the lack of strategic planning and development growth. This sector has a special importance for the Palestinian economy as a source of employment opportunities for people. Not much is known in past research about the effectiveness and the role of crisis management in the strategic planning process. Yet, past literature suggested the moderating effect of geopolitical environment on strategic planning processes in firms and crisis management. Therefore, the motivation behind this study is to seek a deeper understanding of the role of crisis management in promoting strategic planning processes in the Palestinian service sector. Another objective of this study is to investigate the moderating effect of geopolitical environment on the relationship between crisis management and strategic planning. This study collected data from 120 managers in the Gaza Electricity Distribution Company GEDCO in Gaza Strip. Data normality tests, descriptive statistics, and partial least square structural equation modelling were used for data analysis. The purpose of using qualitative data is to strongly support the quantitative data in order to get accurate understanding of the geopolitical environment as an external effect and making strategies in times of crisis. Apart from that, the qualitative method is used by analysing the information from the semi structured-interviews with top managers. The findings of this study revealed a positive and significant relationship between the crisis management concept as a whole and strategic planning dimensions, except for SP comprehensiveness. On the other hand, this study found a significant positive relationship between strategic planning and geopolitical environment. As a result, the findings confirmed that geopolitical environment moderates the relationship between crisis management and strategic planning. The results also confirmed that firms by practising and integrating crisis management into strategic planning processes in all different levels of management will make those processes more effective and resilient in the time of crises. This study has contributed to the literature by introducing new empirical evidence in organisational studies on the role of crisis management in promoting strategic planning in all aspects, especially in developing countries such as Palestine. The findings of this study have several theoretical, practical, and managerial implications in the fields of crisis management, strategic planning and geopolitical environment. Therefore, this study suggests that it is advisable for service sector firms to invest in crisis management and encourage several strategic processes for providing firms with a defensive capability in order to prevent crisis developments or diminish their impacts.