The Impact of Organizational Goal Setting on the Industrial Munificence-goal Attainment Relationship for Smes

ACADEMIC ABSTRACT In seeking to exploit environmental resources and opportunities, small and medium sized enterprises (SMEs) can either set multiple goals or narrow their focus on a few. We investigate the moderating effects of goal setting (including the number of goals and the prioritization of these goals) on the relationship between industrial munificence and the satisfaction of goal attainment. By examining 227 SMEs in four countries, we find that SMEs need to stretch their goal list while keeping a clear priority order among these goals in order to capitalize on industrial munificence. Implications of our study are discussed. EXECUTIVE SUMMARY In this paper, we investigate organizational goal setting from two aspects. We define goal complexity as the number of goals set by CEOs for their organizations, and goal diversity as the prioritization structure of these goals, i.e., how organizations attach the importance ranking to each goal. We examine how goal complexity and diversity impact the extent to which small and medium sized enterprises (SMEs) capitalize on industrial munificence to better achieve their goals. We collected both primary and secondary data for our analyses. The primary data came from a large survey of a stratified random sample of SMEs in four countries: Australia, Sweden, Mexico, and the Netherlands. Surveys were sent to 2,523 organizations. The number of usable responses was 227. We used archival data to calculate industrial munificence. The hierarchical linear regression analysis showed that the more goals an organization emphasizes, the better it will be able to attain desired goals. Results also indicate that organizations are able to better utilize industrial resources in achieving organizational goals by prioritizing these goals. Our results suggest that while maintaining a long list of organizational goals may benefit SMEs, what is more important is keeping a clear priority among these goals. A long list of organizational goals would help firms to broadly screen the environment and be ready to grasp opportunities when they arise. An unambiguous prioritization of goals helps organizations maintain focus or core competitiveness when exploring alternative directions. An appropriate balance of the amount and the prioritization of organizational goals appear to be necessary for SMEs to attain optimal results; sacrificing either complexity or prioritization grants organizations only partial benefits. A multiple-goal system without prioritization may exhaust organizations through internal conflicts and friction while a short list of goals unnecessarily narrows the organizations' visions when they are looking outside for potential …