The Effects of Pre-venture Plan Timing and Perceived Environmental Uncertainty on the Persistence of Emerging Firms

This paper explores the effects of when pre-venture planning occurs (early or late) in the sequence of activities accomplished during the process of new business emergence, and the moderating effects of environmental context (the degree of perceived financial, competitive and operational uncertainty), on the persistence of emerging business startup efforts. Using data from the U.S. Panel Study of Entrepreneurial Dynamics (PSED), our analyses found a strong main effect for business planning: Nascent entrepreneurs who completed a business plan were 2.6 times more likely to persist in the process of business emergence than those who did not complete a plan. In addition, the likelihood of venture persistence increased when nascent entrepreneurs engaged in planning early in the sequence of start-up activities in perceived uncertain financial and competitive environments, while venture persistence increased when nascent entrepreneurs engaged in planning late in a sequence of activities in perceived certain financial and competitive environments.

[1]  J. Brüderl,et al.  Network Support and the Success of Newly Founded Business , 1998 .

[2]  Daniel A. Levinthal,et al.  ABSORPTIVE CAPACITY: A NEW PERSPECTIVE ON LEARNING AND INNOVATION , 1990 .

[3]  Kelly G. Shaver,et al.  Person, Process, Choice: The Psychology of New Venture Creation , 1992 .

[4]  T. Lechler.  Social Interaction: A Determinant of Entrepreneurial Team Venture Success , 2001 .

[5]  John W. Meyer,et al.  Institutionalized Organizations: Formal Structure as Myth and Ceremony , 1977, American Journal of Sociology.

[6]  B. Honig,et al.  Institutional forces and the written business plan , 2004 .

[7]  P. Reynolds,et al.  Knowledge and Use of Assistance , 2004 .

[8]  Lowell W. Busenitz,et al.  The entrepreneurship of resource-based theory , 2001 .

[9]  Paul D. Reynolds,et al.  New firm gestation: Conception, birth, and implications for research , 1992 .

[10]  S. Parker.  The Economics of Self-Employment and Entrepreneurship , 2004 .

[11]  Timothy Bates.  Entrepreneur Human Capital Inputs and Small Business Longevity , 1990 .

[12]  Jerome A. Katz,et al.  Properties of Emerging Organizations , 1988 .

[13]  Amar Bhidé,et al.  How entrepreneurs craft strategies that work , 1994 .

[14]  David B. Audretsch,et al.  Handbook of Entrepreneurship Research , 2005 .

[15]  Ceo,et al.  Strategic Management Journal 4 , 1994 .

[16]  S. Human,et al.  The Little Engine that Could: Uncertainty and Growth Expectations of Nascent Entrepreneurs , 2000 .

[17]  W. Gartner,et al.  Exploring Start-Up Event Sequences , 1996 .

[18]  G. Castrogiovanni.  Pre-Startup Planning and the Survival of New Small Businesses: Theoretical Linkages: , 1996 .

[19]  K. Eisenhardt,et al.  Strategic decision processes in high velocity environments: four cases in the microcomputer industry , 1988 .

[20]  K. Weick.  FROM SENSEMAKING IN ORGANIZATIONS , 2021, The New Economic Sociology.

[21]  Mark Fuller.  Strategic planning in an era of total competition , 1996 .

[22]  Jay R. Galbraith.  Designing Complex Organizations , 1973 .

[23]  Paul M. Swamidass,et al.  Manufacturing strategy, environmental uncertainty and performance: a path analytic model , 1987 .

[24]  Robert J. Hiebeler,et al.  Benchmarking: Knowledge management , 1996 .

[25]  H. Igor Ansoff,et al.  Implanting Strategic Management , 1984 .

[26]  P. H. Friesen,et al.  Strategy‐making and environment: The third link , 1983 .

[27]  J. Brüderl,et al.  Survival Chances of Newly Founded Business Organizations , 1992 .

[28]  S. Shane,et al.  Legitimating first: organizing activities and the survival of new ventures , 2004 .

[29]  T. Baker,et al.  Creating Something from Nothing: Resource Construction through Entrepreneurial Bricolage , 2005 .

[30]  K. Weick.  The social psychology of organizing , 1969 .

[31]  Idiosyncratic milieus of entrepreneurial research: The need for comprehensive theories☆ , 1992 .

[32]  Susanne G. Scott,et al.  Uncertainty and Planning in Small and Entrepreneurial Firms: An Empirical Assessment , 1995 .

[33]  William B. Gartner,et al.  A Conceptual Framework for Describing the Phenomenon of New Venture Creation , 1985 .

[34]  Paul D. Reynolds,et al.  Business Start-up Activities , 2004 .

[35]  Frances J. Milliken.  Three Types of Perceived Uncertainty About the Environment: State, Effect, and Response Uncertainty , 1987 .

[36]  S. Shane,et al.  Does business planning facilitate the development of new ventures , 2003 .

[37]  C. Matthews,et al.  The Economic and Community Context for Entrepreneurship: Perceived Environmental Uncertainty , 2004 .

[38]  A. Bhide.  The Origin and Evolution of New Businesses , 2000 .

[39]  M. Lerner,et al.  Frontiers of Entrepreneurship Research , 2003 .

[40]  Fred L. Fry,et al.  Business Plans: Two Major Types , 1985 .