STRATEGIC PLANNING INTENSITY, PLANNING PARALYSIS THRESHOLD, AND ENDOGENEITY: A DYNAMIC PANEL ANALYSIS OF RETURN ON ASSETS AMONG LISTED MANUFACTURING COMPANIES IN NIGERIA

Abstract

The study investigated the effect of strategic planning intensity on the return on assets of listed manufacturing companies in Nigeria by examining the planning paralysis threshold within a dynamic panel framework. Specifically, the study evaluated whether strategic planning intensity exhibited a non-linear relationship with return on assets while addressing the methodological limitations of endogeneity and linear model specification that have contributed to inconsistent findings in the Nigerian strategic management literature. Secoundary data were employed. Panel data covering ten listed manufacturing companies in Nigeria over the period 2004–2024 (247 firm-year observations) were analysed using pooled ordinary least squares (OLS), fixed effects, random effects, and the two-step system Generalized Method of Moments (GMM) estimator.Panel unit root tests, Pedroni and Kao cointegration tests, multicollinearity diagnostics, and comprehensive post-estimation tests were conducted to ensure the robustness of the estimated models.The results indicated that strategic planning intensity exerted a significant negative linear effect on return on assets (β = –2.104, p = 0.0004) under the preferred random effects model. However, the quadratic specification revealed a statistically significant inverted U-shaped relationship, confirming the existence of a planning paralysis threshold. The study concludes that strategic planning intensity does not consistently improve firm performance. Rather, its effect depends on the level of planning intensity, with moderate planning supporting performance while excessive planning may lead to planning paralysis and reduced organisational effectiveness. Strategic planning is therefore most beneficial when maintained at an optimal level that balances thoroughness with flexibility and timely decision-making. The study therefore recommends that firms maintain an optimal level of strategic planning, focusing on effective implementation and flexibility while avoiding excessive planning that may lead to rigidity, delays, and planning paralysis.