The Influence of Pre-Venture Planning on New Venture Creation (original) (raw)
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Journal of Small Business and Enterprise Development, 2007
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We studied 623 nascent entrepreneurs during a six-year period, examining how their planning decisions impact venture-level performance. Our study is unique in that we tracked nascent ventures, examining their planning behavior, including changes to plans. Relying on the theory of legitimacy, this paper adds to the scholarly debate over the merits of business planning by examining, longitudinally, the impact of planning during a six-year period, accounting for both pre-emergent nascent activity and post-emergent success factors. We found that neither formal planning nor changes in the business plan increased venture-level performance over the six-year study period.
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Many prior researchers have criticized business planning, arguing that it interferes with the efforts of firm founders to undertake more valuable actions to develop their fledgling enterprises. In this paper, we challenge this negative view of business planning, arguing that business planning is an important precursor to action in new ventures. By helping firm founders to make decisions, to balance resource supply and demand, and to turn abstract goals into concrete operational steps, business planning reduces the likelihood of venture disbanding and accelerates product development and venture organizing activity. Empirically, we examine 223 new ventures initiated in the first 9 months of 1998 by a random sample of Swedish firm founders and provide support for our hypotheses.
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Aims of this thesis This master thesis focuses on a very important topic, namely on the effects of Business Planning on entrepreneurial success. As presented in this thesis, entrepreneurs serve the economy in different ways and therefore it's of crucial interest, how the performance of new ventures can be increased. As Business Planning is popular and widely discussed, I present the planning approach theoretically and discuss articles that investigate the relation between entrepreneurial performance and Business Planning. Another important theory regarding entrepreneurial success, namely Effectuation Theory, is presented in order to get another view on determinants of entrepreneurial success. Therefore, I provide an overview of different articles that analyse the relation between Effectuation and entrepreneurial success. Furthermore, this thesis is aimed at investigating whether suggestions for undertaking Business Planning activities of different institutions can be validated. ...
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The convenience of writing a business plan for new firms is still an open debate among entrepreneurs. Actually, a good planning does not only give to entrepreneurs the possibility to make a deeper reflexion about the general business path, but also it can be used as firm legitimacy tool. In this paper, we define four different entrepreneurs' planning profiles influenced by some institutional pressures factors (education and public support) as well as the economic environment (start-up problems) in order to analyse their characteristics and their differential effect on new venture growth. Our analyses are performed on a representative sample of small new ventures in Navarra (Spain). Results indicate that education and experience play a key role in determining the entrepreneurs planning profile and that planning activities relate positively with new venture growth.
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Scholars have investigated the relationship between strategic planning and venture performance for more than three decades, yet the antecedents of planning remain relatively obscure. The research presented here considers the relationships between several antecedents and planning suggested by previous research. Specifically, we assess relationships among five key variables: decision making style, problem solving style, perception of environmental uncertainty, venture type (entrepreneurial versus small business venture), and planning formality. A post-hoc analysis of specific meta-cognitive variables is conducted to expand our understanding of these antecedental relationships. Our results indicate significant relationships between problem solving style, perception of environmental uncertainty, venture type and planning formality. Implications for future theory and research are discussed.
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This study focuses on the factors that lead individuals to create new ventures. It draws on the social psychology literature and applies the theory of planned behavior to understand and predict nascent entrepreneurship. To test the integrity of this theory in predicting entrepreneurial behavior, this study uses data from the Global Entrepreneurship Monitor (GEM) research program in Peru. The findings of the study provide partial support for the theory. Implications of these findings are discussed.
Venture gestation paths of nascent entrepreneurs: Exploring the temporal patterns
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The venture creation process is often depicted as a linear process composed of sequential steps. The prescriptive literature often refers to a sequence of events or activities that entrepreneurs would engage. There have been occasional acknowledgements in the literature that the process might be nonlinear as the linear depiction of gestation does not accord with anecdotal accounts from entrepreneurs. However, there has been little empirical research conducted on the venture creation process. This study took a grounded theorizing approach to explore the temporal patterns of venture creation process, and used data mining to analyze a data set of 668 nascent entrepreneurs. Our results suggest that firm gestation is a complex, nonlinear process, in which the developmental stages are hardly identifiable. We also found that firm gestation appears to be a time-based pacing process in which entrepreneurs exploring various possible paths and activities. Complexity theory is applied to explain our findings. Implications and future research directions are provided. D