221 ENTREPRENEURSHIP AND INNOVATION Vol 11, No 3, 2010, pp 221–229 Strategic planning and small business performance An examination of the mediating role of exploration and exploitation behaviours Marko Kohtamäki, Teemu Kautonen and Sascha Kraus Abstract: This paper examines the mediating role of opportunity explora- tion and resource exploitation in the relationship between strategic planning and small business performance. The research model is exam- ined with a sample of 153 small Finnish firms. The results show that exploitation, but not exploration, carries the effect of strategic planning to the performance of a small firm. This implies that strategic plans as such are not sufficient to improve business performance unless they are care- fully integrated into the actual processes and behaviour of the firm. Keywords: strategic planning; performance; exploration; exploitation; small business Marko Kohtamäki is Research Director in the Department of Management, University of Vaasa, PO Box 700, FI-65101 Vaasa, Finland. E-mail: marko.kohtamaki@uwasa.fi. Teemu Kautonen is an Academy Research Fellow at the Turku School of Economics, University of Turku, Rehtorinpellonkatu 3, FI-20500 Turku, Finland. E-mail: teemu.kautonen@utu.fi. Sascha Kraus is a Professor at the Institute for Entrepreneurship, University of Liechtenstein, Fürst-Franz-Josef-Str, FL-9490 Vaduz, Liechtenstein. E-mail: sascha.kraus@wu-wien.ac.at. Given the pivotal role of small enterprises in Europe’s economies (Bauer, 2002), there is a clear need to investigate the factors that impact on the survival, success and performance of those companies. Previous research indicates that strategic planning may be one of these success factors (Miller and Cardinal, 1994). However, the extant research on strategic planning in small businesses is still rather limited. Even though a number of studies have already looked at the effect of strategic planning on small business performance (for example, Robinson and Pearce, 1984; Berry, 1998; Gibbons and O’Connor, 2005), a general agreement on the quantity and quality of this effect is yet to emerge. Other empirical studies show that the relationship between strategic planning and small business perform- ance is weak and possibly even indirect (for example, Gibson and Cassar, 2005). Therefore, scholars have begun to suspect that other factors may mediate the relationship between strategic planning and performance (Hutzschenreuter and Kleindienst, 2007). One of the more recent discussions on small-firm strategic behaviour explores the role of ambidexterity in explaining business performance. Ambidexterity includes the concepts of exploration and exploitation (see, for example, He and Wong, 2004; Gupta et al, 2006; Lubatkin et al, 2006; Raisch and Birkinshaw, 2008), referring to the exploration of new business opportunities and the exploitation of current resources