Abstract

Does planning lead to more successful new ventures? Delmar and Shane (2003) found a positive correlation whereas Karlsson and Honig (2004) found no correlation. We consider how each of these studies could be tapping into valid explanations; provided that is, that they take into account the business model that is actually implemented.

We view a discovery as an initial insight about the existence of a possible opportunity that fits with an entrepreneur’s prior, specific knowledge (Fiet, 2008). In contrast, a business model describes a company’s logic for creating value (Ghaziani & Ventresca, 2005). It spells out how a company makes money by specifying where it is positioned on a value chain.

We question in this research, which has a greater influence on a venture’s profitability, its initial discovery or its business model? Whether a business plan was based on a discovery or an actual, in-use business model could be a key predictor of whether a venture will be profitable and survive.

Share

COinS