Abstract

Business plans are important management tools for new ventures. One indication of their importance is that about 10 million business plans are written each year, world-wide (Gumpert, 2002). Others are that business plans quite frequently surface in entrepreneurship education, governmental promotion of entrepreneurship as well as in the external financing of new ventures. Universities conduct or endorse business plan competitions, including Harvard, Stanford, Wharton and MIT (Honig, 2004). Banks, venture capitalists, angel investors, incubator managers and assistance agencies are other potential promoters of business plans. There are a plethora of books dedicated to explaining how to write business plans, typically suggesting that business planning is valuable and important to the new firm (Poon, 1996; Stevenson, et al., 1999; Timmons, 1999; Lambing and Kuehl, 2000; Wickham, 2001; Kuratko and Hodgetts, 2001). It is fair to say that the entrepreneurship field abounds with advice about how to write business plans.

An assumption for much of the educational literature, and research in entrepreneurship is that plans enhance firm performance (Lumpkin, Shrader and Hills, 1998). However, overviews of the research literature on planning and performance show that the performance returns to new ventures that write plans are inconclusive. Reviews of business planning research made by Castrogiovanni (1996), Ford, Matthews, Baucus (2003) and Delmar and Shane (2004), all agree that research on the relationship between business plans and performance is open to doubt. Case based anecdotes indicate that many of the most successful start-up entrepreneurs did not begin with a written business plan. For example, Microsoft, Dell Computers, Rolling Stone Magazine and Calvin Klein all started without business plans (Bhide, 2000).

Because it is not clearly supported by empirical evidence, the plethora of normative advice regarding the benefits of business plans risks being misdirected. One consequence of the extensive advocacy of business planning, in conjunction with constraints and limitations of their utility, may be that entrepreneurs choose to write business plans without actually implementing them in the organization. If so, writing the business plan becomes “just”1 a symbolic exercise conducted to please stakeholders.

Much of previous research has been conducted with survey methodology. However, to differentiate committed planning activity from loosely coupled adoption without implementation of the plan, specific attention must be given to aspects of symbolic and superficial conformity in business planning endeavors. It is necessary to study both the content and quality of the business plans, as well as the organizational evolution under which the planning process takes place. The purpose of this study is to describe processes of institutionalization, and in particular, the case of written business plans. We investigate the process in which business plans are institutionalized in new ventures, that is: who influenced them to write business plans, how this influence was exerted, and how did they dealt with them (strategies).

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