An empirical investigation of the effect of strategic planning on the financial performance of United States local governments

The focus of the investigation is the impact of strategic planning on the financial performance of local governments in the United States. The research questions are: (1) Does Strategic Planning positively affect Financial Performance? (2) Does General Management (Organizational) Capability positively affect the likelihood that a local government will do Strategic Planning? (3) Does General Management (Organizational) Capability positively affect Financial Performance? (4) Does General Management (Organizational) Capability and Strategic Planning positively affect Financial Performance? and (5) Is the Financial Performance of local governments which use Strategic Planning superior to Financial Performance of local governments which use Comprehensive Planning or Capital Improvements Planning? A Final Strategic Planning-Financial Performance Model is proposed based on the study results.;Local governments are facing the need to adapt to rapidly increasing, dynamic environmental influences. Financial problems in local governments are caused by many circumstances. Three significant influences are: (1) eroding property tax bases, (2) rising expectations about local government services, and (3) dynamic changes in the American economy. Some local governments have been successful in using management tools such as strategic planning to deal with these circumstances. The particular focus of this research is the role of local government planning in financial outcomes.;Findings from this study further understanding of the relationship between local government strategic planning and financial performance. Several findings are noteworthy and useful for academics and local government managers. First Strategic Planning was found to have a statistically significant effect on financial performance when used in concert with Capital Improvements Planning.;Second, this study shows that General Management (Organizational) Capability does significantly influence the likelihood that a local government will do Strategic Planning (R2 = .63). This result is consistent with the expectation that local governments with General Management (Organizational) Capability are more likely to use strategic planning. While local government managers can expect that General Management (Organizational) Capability may provide the means to influence financial performance, they should be sensitive to the need to involve key stakeholders in the strategic planning development process. If local governments managers include key stakeholders up front in the planning process, they are more likely to have the support and buy-in of those agencies in critical community issues.;Third, General Management (Organizational) Capability affects Bond Rating. General Management (Organizational) Capability in concert with Capital Improvements Planning, also had a statistically significant influence on General Fund Balance Per Capita. (Abstract shortened by UMI.)...