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The factors leading nascent entrepreneurs to expend effort writing business plans are examined and the effect such planning has on new organizations is considered. This is part of a larger consideration within institutional theory about whether or not conformity leads to profitability or survival. There were 396 nascent Swedish entrepreneurs investigated over a four consecutive six-month periods. Both the production of the plan and the outcomes were examined. New organizations are subject to institutional pressure to produce written business plans - they are expected to plan, they imitate other successful organizations, or they are told to plan. The findings show that institutional variables (such as coercion and imitation) predict the likelihood for new organizations to write business plans. The study's results are more in line with institutional predictions and are contrary to rationalist predictions of planning-performance. Conclusions indicate that writing a business plan has no significant effect on the survival or profitability of the new organization. (TNM)
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Journal of Management 2004 30(1) 29–48
Institutional forces and the written business plan
Benson Honig
Graduate School of Business, and International Affiliate, University of Haifa,
Mount Carmel, 31905 Haifa, Israel
Tomas Karlsson
Jönköping International Business School, Box 1026 SE-55111, Jönköping, Sweden
Received 1 March 2002; received in revised form 9 October 2002; accepted 19 November 2002
In this study, we examined factors that led nascent organizations to write business plans, fol-
lowing 396 nascent entrepreneurs during a two-year period. We examined both the production
and the outcomes of written business plans produced in nascent organizations. Our findings
show that institutional variables, such as coercion and mimetic forces, are important pre-
dictors influencing the propensity of new organizations to write business plans. Our results
are contrary to rationalist predictions of planning-performance, and are more in line with
institutional predictions. Interestingly there was no evidence to support positive outcomes,
in terms of profitability, for those nascent organizations that produced business plans during
a two-year initial period. We discuss the implications for institutional theory and studies of
nascent businesses, as well as for the literature on business planning.
© 2003 Elsevier Inc. All rights reserved.
The writing of a business plan is an activity extensively endorsed by recent litera-
ture, venture capital firms, governmental support agencies, and universities (Ames, 1989;
Hindle, 1997; Kahrs, 1995; Maitland, 1996). In fact, business planning can be considered
to be one of the most widely regarded aspects of pre-startup planning. We define a business
plan as a written document that describes the current state and the presupposed future of an
organization. Despite their ubiquity, a serious research gap exists regarding why new orga-
nizations write business plans, and what consequences result from them (Castrogiovanni,
1996). The value and positive effects of business plans have been taken for granted rather
than critically studied. In this research, we examine a number of factors influencing why
individuals expend effort writing business plans, as well as exploring outcomes to assess
what, if any, effect the planning process has on new organizations.
Corresponding author. Tel.: +972-4-8249582; fax: +972-4-8249194.
E-mail addresses: benson@research.haifa.ac.il (B. Honig), tomas.karlsson@ihh.hj.se (T. Karlsson).
0149-2063/$ – see front matter © 2003 Elsevier Inc. All rights reserved.
doi:10.1016/j.jm.2002.11.002
30 B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48
Scholars in a variety of disciplines have been interested in identifying conditions that
facilitate the spread of common practices. Research examining the diffusion of planning
frequentlyemphasizestherationalaspectsofplanning(Rhyne,1986).Fromthisperspective,
business plans should yield more efficient and economically viable new firms. Plans are
claimed to provide practical benefits to new organizations, such as greater profits and other
competitive advantages that may lead to a higher probability of long-term survivability.
In the rational view, more successful firms will have been planning firms, and so they will
signalto the market the positiveattributestobegainedthrough effectiveplanning.Empirical
research on the economic outcomes of business planning has been inconclusive, with some
maintaining that planning assists with the growth and success of new firms (Bracker, Keats
& Pearson, 1998;Schwenk & Shraeder, 1993), and others failing to find any association
(Boyd, 1991; Robinson & Pearce, 1983).
Onealternativetoastrictly rational economic perspectiveistheinstitutionalview(Mezias,
1990; Mezias & Scarselletta, 1994). A key interest in institutional theory is how social re-
lationships and actions become taken for granted, and how our cognitive set of shared
meanings and possible actions are constructed (Dacin, 1997). Benefits claimed to accrue to
pre-startup planning include both symbolic and legitimating forces that may generate in-
direct effects on survival (Castrogiovanni, 1996). In this research, we examine antecedents
to, and outcomes of, writing business plans. We use the results to reflect upon institutional
perspectives as well as that of economic rationality.
Testing the Impact of Institutional Sources
Institutional theory suggests that institutionalization is a social process by which struc-
tures, policies, and programs acquire “taken for granted” status (Meyer & Rowan, 1977).
Many studies with an institutional perspective focus on the issue of why organizations
seem not only to take things for granted, but also why assumptions spread and make
organizations more similar. Institutional forces drive organizations to become similar in
the ways in which they act and in how they develop. Firms homogenize. The concept
that best captures the process of homogenization is isomorphism (DiMaggio &
Powell, 1983). Outside actors assume new organizational managers have written/should
write a business plan. This leads us to believe that institutional pressures play an important
role in the homogenization of nascent organizations with respect to the written business
plan.
Althoughourknowledgeregardingthe institutional pressures in large/oldorganizationsis
extensive,informationabout the institutionalforces on neworganizationsis scarce. Nascent
organizations are commonly assumed to be strongly subject to market forces. Greenwood
and Hinings (1996) argue that new organizations and new institutional fields are less con-
strained than their larger and older counterparts. Using a similar argument, institutional
pressures are said to be more salient in mature institutional fields (Baron, Dobbin &
Jennings, 1986). In contrast, Stinchcombe (1970), and later Aldrich and Fiol (1994), argue
thatneworganizationsin new institutional fieldsare strongly subjectedto institutional rules.
They point out that new organizations do not yet have access to social networks, and so have
a greater need to prove themselves in order to gain legitimacy. Thus, these two competing
B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48 31
Figure 1. Institutional sources, institutional pressures, and business planning behavior.
institutional views of newness vis-à-vis institutional forces represent an issue that remains
largely unresolved, and provide an interesting and important issue for empirical study.
Drawing upon an institutional framework, we suggest that business planning behavior in
nascent organizations is best explained as a result of isomorphism, which is created by insti-
tutional agents. While many studies of institutional processes focus on the self-reinforcing
process of institutionalization, we study who and how institutionalization is reinforced. In
Figure 1, the relationship between institutional agents, institutional pressure and behavior
is depicted.
32 B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48
Institutional pressures are of three kinds: coercive, mimetic, and normative (DiMaggio &
Powell, 1983). We view these primary pressures as upheld by specific institutional sources.
Coercive pressures are upheld by government agencies, normative by the educational sys-
tem and mimetic by other organizations within the institutional field (Karnoe, 1995). We
hypothesize two outcomes of such conformity: That it leads to improved possibilities for
survival, and second, that it leads to improved possibilities for creating a profitable busi-
ness. While Karnoe tests this analytical framework in a qualitative comparative study of the
wind turbine industry in Denmark and the USA, we utilize this analytical framework in a
quantitative study on new organizations in Sweden.
Governmental Agencies
Coercive isomorphism is the result of formal pressures on organizations by exogenous
forces(Meyer& Rowan, 1977; Oliver,1991).In the caseof business planning, to ourknowl-
edgethere is no legislativeframeworkthat coerces organizationsto write businessplans, but
there are other formalized pressures that influence new organizations into doing so. Nascent
firms frequently have contact with assistance agencies at both national and regional levels.
Examples include the SBA (Small Business Association) in the USA, employment offices,
regional development facilities and incubators, worldwide. These organizations often place
constraints on nascent entrepreneurs, mandating that specific resources or various forms of
assistanceare contingent on theirparticipation in other unrelatedactivities(Honig, 1998). In
Sweden, public agency offices provide potential entrepreneurs with technical and financial
support on condition that they complete an approved business plan. As one respondent in
our pilot study stated:
“it (writing a business plan) was really about getting access to the government subsidies
for starting up your own business, ’cause they wanted a business plan from everyone who
tried to start up their own company.”
This leads to our first hypothesis:
Hypothesis 1: Nascent organizations whose founders contact public support agencies
have a greater propensity to produce business plans than those without such contact.
Industrial Field
Mimetic isomorphism is often a result of organizations attempting to limit uncertainty
by modeling their behavior after similar successful organizations in their field (DiMaggio
& Powell, 1983; Haunschild, 1994; Haverman, 1993). An entrepreneur familiar with the
business plan written by a known successful entrepreneur may endeavor to write one him
or herself. From a procedural point of view, TQM, SWOT analyses, and business plans
all represent diffusion based on mimetic opportunities that appear in particular sectors. For
example,ina recent study ofmanufacturing firms, all 29cases were found toutilize business
plans, reviewed either annually or at 18-month intervals (Brown, 1998).
Mimeticbehavior may also be the resultof attempts togain legitimacy in the eyes of other
members of the organization. Actors may provide what seems to be a rational approach to
planning, one that appears to have succeeded elsewhere. We theoretically and empirically
B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48 33
distinguish mimetic isomorphism from coercive and normative forces. Thus, we attempt to
empirically isolate the individual effects of these forces. Very few studies explicitly control
for coercive and normative influences, a critical factor when attempting to isolate mimetic
isomorphism (Mizruchi & Fein, 1999).
Institutionalization is frequently determined by industry location, where mimetic pro-
cesses are easily observed. Mature industries provide the opportunity for mimetic isomor-
phism because new entrants have an opportunity to observe and learn from the established
competitors (Castrogiovanni, 1996). The emergence and diffusion of the Hollywood studio
system is one such example (Lampel & Shamsie, 2000). Jones (2001) demonstrated the
liability of new industries by showing how legitimating forces redefined the development
of the film industry, as it migrated from regulatory to cultural legitimacy. In the emerging
film industry, institutional rules changed for both technological entrepreneurs and content
(cultural) entrepreneurs, so altering the mimetic approaches taken by competitors as the
environment matured. Only once the “rules of the game” were well entrenched, were a
common set of strategic mimetic approaches possible and/or desirable.
New organizations imitate existing organizations within their industry, particularly in
aspects deeply embedded into the industrial sector’s cultural norms. This method of mea-
suring mimetic isomorphism has been used by several researchers. Mezias, for example,
examined the accounting practices of the largest 200 nonfinancial corporations in the USA
for generally accepted accounting principles, and Burdos examined the adoption of early
retirement programs in Canadian Universities (Burdos, 2001; Mezias, 1990).
Manufacturing firms are subjected to similar physical and structural constraints, as well
as engaging in more precise, unforgiving, mature and developed processes. They require
highlyspecializedplantswithsimilarhumancapital,technical,andinfrastructuralresources.
They have been observed to engage in mimetic processes irrespective of economic or effi-
ciency gains. For example, in a study examining 39 automotive assembly plants worldwide,
high-involvement work practices similar to those practiced by Japanese manufacturers dif-
fused irrespective of efficiency gains, such as reduced defects. Further, the rate of adoption
of the practices was found to be independent of complementary practices and technologies
or factory productivity (Pil & Macduffie, 1996). We maintain that manufacturing firms are
more likely to undertake similar mimetic planning activities than other sectors, such as
sales, marketing, and services, whose fundamental processes are more amenable toward
new modes of operation, and are more flexible in their structure.
Hypothesis 2: Nascent organizations in industries where business planning is deeply
rooted have a greater propensity to produce business plans than those in other industrial
fields.
Normative
Normativeisomorphicforces influence customary and professional procedures andactiv-
ities deemed socially expected and responsible (Meyer, Ramirez & Soysal, 1992). Writing a
business plan provides legitimacy, signals professionalism and indicates that the person(s)
involved are “serious” to the outside world. For those individuals who do not otherwise
obtain any particular benefits from the activity, we suspect normative forces to be central.
34 B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48
The entrepreneurship field “abounds with normative literature setting out prescriptions
for the creation of a venture’s entrepreneurial business plan” (Hindle, 1997: 2). The world-
wide growth of the business school at both the undergraduate and MBA level, along with
the increasing professionalization and diffusion of management education, are normative
processes in their own right. The interests of such stakeholders converge on a number of
relevant points. Courses that typically instruct students in the art of writing a business
plan support academic scholarship, appointments, journals, conferences, and doctoral pro-
grams. Consequently, the publication of business plan literature that escalated beginning in
the 1980s yielded several influential texts (e.g., Ames, 1989; Fry & Stoner, 1985; Hisrich &
Peters, 1989;McDermott, Vecchi & McKenna, 1986;McKenna & Oritt, 1981; Timmons,
1980). Common to these books and articles are a focus on new or small firms, arguments
for and against business plans, and a structure of anywhere from 13 to 200 bullet points that
entrepreneurs should cover, when he/she writes a business plan. As one of our respondents,
a graduate in business studies at the university level, stated in our pilot study:
“In school it was very important. A business plan is definitely the first thing that you
should think of (when you start a new firm).”
We thus include the importance of business education in our third hypothesis:
Hypothesis 3: Nascent organizations whose founders have a business education have
a greater propensity to produce business plans than those whose founders do not have a
business education.
Outcomes of Institutional Conformity
We test two outcomes of writing a business plan, the first that institutional conformity
leadsto survival,and the second thatit leads to increasedprofitability.Asindicatedin Figure
1, we test survival and profitability separately, for two different reasons. First, we wish to
add to the debate within institutional theory regarding whether or not conformity leads to
profitability or survival (Greenwood & Hinings, 1996;Scott, 2000). Second, we use these
outcomes to evaluate the economic rational explanation regarding why business plans are
written. If the argument is valid, writing a plan should result in beneficial outcomes such as
survival or profitability.
Survival
The relationship between business planning and survival of the nascent organization has
implications for arguments based both on economic rationality and institutional theory.
From an economic point of view, survival represents the success of the organization. From
an institutional perspective, completing a business plan yields the nascent entrepreneur
increased legitimacy, even in the event of sustained economic losses. Legitimating can be
a particularly difficult factor either constraining or supporting growth of the new venture
(Aldrich & Fiol, 1994). It can be a matter of life and death for the new organization, as
audiences are more likely to supply resources to organizations that appear desirable, proper,
or appropriate (Parsons, 1956) and less likely to do so if they are not (Suchman, 1995).
B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48 35
Institutional theorists often use survival as a dependent variable that, when correlated with
conformity, indicates that conformity legitimates (Meyer & Rowan, 1977;Oliver, 1991;
Parsons, 1956). Further, survival is a variable commonly used as a dependent variable when
measuring performance in nascent organizations.
Hypothesis 4: Producing business plans will increase the probability of a nascent organi-
zation’s survival.
Profitability
Business plans are based on the premise of the rational economic actor. From this
perspective, the business plan is a rational activity that assists the owners of new firms
(entrepreneurs) to earn larger profits through efficiency gains and/or increased sales. The
apparent success of the business plan paradigm is seen as proof that most firms receive
considerable value from producing business plans. Testing this variable relates our study to
previous studies conducted about business planning and performance (Boyd, 1991; Bracker
et al., 1998; Rhyne, 1986; Schwenk & Shraeder, 1993).
From an institutional perspective, there are two ways of looking at the antecedents of iso-
morphism; institutional isomorphism and competitive isomorphism (DiMaggio & Powell,
1983). Institutional theory holds that organizational conformity to institutional pressures
is a result of a willingness to conform to institutionally prescribed expectations (Meyer &
Rowan, 1977). Non-conformity is unwanted, and seen as an awkward or deviant behavior.
Such behavior may be shunned, and damages the organization’s legitimacy and long-term
possibilities for survival. However, institutional isomorphism occurs even though the actual
behavior is not competitive and profitable. Believers in competitive isomorphism argue that
isomorphism occurs because competitive forces weed out non-competitive forms, or that
certain environments have different sets of technologies that must be dealt with in specific
ways (Slack & Hinings, 1994). Thus, arguments from a competitive isomorphic standpoint
resemble those from an economic rationality standpoint.
Hypothesis 5: Producing business plans is positively correlated with the probability of
a nascent organizations’s reaching profitability.
Methods
In this research, we examine the role of business planning for 396 nascent entrepreneurs
during four consecutive six-month periods. The study was preceded by interviews with four
nascententrepreneurs.Someanecdotalsupportforourfirstthreehypotheseswasdrawnfrom
these interviews.
Sample
The study of emerging organizations is important, but is currently in its infancy (Carter,
Gartner & Reynolds, 1996;Katz & Gartner, 1988). A major reason is that nascent organiza-
tions are inherently difficult to study. Most of them do not show up in firm databases, as they
36 B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48
have not yet registered their firms. Neither are they captured in databases because of tax
payments or the like. Consequently, data about them are not are not readily obtainable from
traditional sources. This research was therefore uniquely designed to provide population
estimates for business start-up efforts, and to follow a random sample of nascent activities
leading to the possible start of new businesses by studying so called gestation activities. As
such, it is one of the first of its kind, studying a representative sample of genuinely new
organizations.
Data are based on two samples of randomly selected individuals living in Sweden, indi-
viduals aged between 16 and 70 years and individuals aged between 25 and 44 years. The
purposeof the firstsample was toget a representativesampleof the adult population in Swe-
den, and the second to increase the yield of nascent entrepreneurs, as indicated by previous
research (Reynolds, 1997). An enriched 25- to 44-year-old cohort biases our population.
Thisoversamplingwasdonetoincreasetheyieldofnascents.Becausenascententrepreneurs
constitute a small group in society, every respondent went through a screening interview
with the objective of selecting out the nascent entrepreneurs. We randomly selected 35,971
individuals for telephone interviews. Of those contacted by telephone, 30,427 individuals
(84.6%) agreed to participate. Only a few of them were currently starting a business. A final
sample of 396 verified and accessible nascent entrepreneurs were identified, who form the
basis for our analyses.
We believed that six-month periods would provide adequate time for changes in the ges-
tation or formulation of the firm to take place, as well as a useful balance between research
resource constraints and respondent cooperation. Successive surveys were conducted on
the nascent entrepreneurs after 6, 12, 18 and 24 months. A range of supplemental longitu-
dinal questions were asked, including changes in the profitability or survival of the nascent
venture. We were thus able to identify nascent entrepreneurs that failed to survive, or expe-
rienced at least one period of profitability, by periodically sampling a 24-month period of
nascent activity.
Variables
Dependent variables. We examined two outcomes of writing a business plan to test
Hypotheses 4 and 5.Survival was defined as continuance of a project throughout the time
horizon of the study. A dummy variable was coded as 1 if the project survived throughout
the time horizon and zero if it was abandoned at any point during that time horizon. This
was done to better understand the relationship between business planning and longevity
during the nascent stage. Those firms, whose owners indicated that they were profitable at
any of the survey interviews, during the 6-, 12-, 18-, or 24-month intervals, were identified
as profitable. As profitability is both nominally essential and a primary goal of SME’s, we
consider this to be a particularly good indicator of successful nascent activity.
We examine those that indicated they wrote a formal business plan for external use.
Confirmationofwritingabusinessplanwasinresponsetothefollowingtwoquestions:First,
nascents were asked “Have you prepared a business plan?” We found that some individuals
who provided an affirmative response were referring to non-written plans they held in their
minds. We thus followed affirmative replies to the following question: “What is the current
formofyourplan? Is it unwritten (inyourhead),informally written for internal use, formally
B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48 37
prepared for external use, or something else?” Because we were unable to verify measures
of quality or completeness of the written business plans (e.g., something scribbled on a
napkin), we analyzed only those who identified they had formally written plans for external
use as having completed a business plan. We used this as the dependent variable in the first
three hypotheses, and as an independent variable to test Hypotheses 4 and 5.
Independentvariables. AsindependentvariablesforEquations1 and 2, we used thevari-
ables deducted from institutional theory. Contact with a business support agency indicated
coercive pressure. Interviews with both agencies and respondents showed that completing
a business plan was frequently a required conditional activity in order to obtain further fi-
nancial and/or training assistance. A dummy variable was created identifying those nascent
entrepreneurs who indicated they had contact with a business support agency. Our indicator
of normative pressure measured if a nascent entrepreneur had completed a business class.
During our interviews, individuals who experienced business education cited this experi-
ence in support of the importance of writing a business plan, whether or not they themselves
did so. Business education is well known to follow particular trends and fads (Abrahamson,
1991), and we predicted that nascents who experienced business education would demon-
strate their exposure to normative planning forces. A dummy variable indicated those who
completed a business class. We used industry measures to identify mimetic isomorphism by
identifying the completion rates of nascents by industrial sector. We initially coded dummy
variables for industry by service, trading, manufacturing, and undeclared, examining the
outcomes. Manufacturing firms represented the highest percentage of firms that completed
business plans. As the previous research and theory discussed earlier supported this finding,
weusednascententrepreneursinthemanufacturingsectortoindicatemimeticisomorphism.
Control Variables
We use the same control variables in all equations. Human capital, such as University
education, work experience, and non-formal education, such as adult education, are in-
vestments that may produce labor productivity increases (Becker, 1964; Schultz, 1959). In
theory, human capital should provide the entrepreneur with the ability to be more effective
intheir organizational activities, administrative systems and routines(Preisendorfer & Voss,
1990; Svelby, 1997). Previous research has demonstrated a range of results regarding the
relationship between education, entrepreneurship and success, with education frequently
producing non-linear effects in supporting the probability of becoming an entrepreneur, or
in achieving success (Evans & Leighton, 1989; Honig, 2001; Reynolds, 1997).
We controlled for human capital in several ways. Owners indicated the highest level of
education they had completed, and this was coded into number of years. Respondents were
also asked their total years of full time paid work experience in any field, with an additional
variable for years of supervisory or managerial experience. Individuals who had previously
attempted a start-up were also noted, indicated by a dummy variable.
Social capital refers to the ability of actors to extract benefits from their social structures,
networks, and memberships (Lin, Ensel & Vaughn, 1981;Portes, 1998). Social networks
provided by extended family, community-based, or organizational relationships may en-
hance the effects of education, experience, and financial capital (Bourdieu, 1983; Coleman,
38 B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48
1988, 1990; Loury, 1987). Social networks may assist entrepreneurs in creating firms, as
theyoftenstartbusinessesrelatedtotheir former occupations (Cooper & Dunkelberg, 1986).
Most of our social capital control variables were designed to examine individual networks.
Parental networks were coded from if either parent had ever owned a business before. A
variable was also constructed for those individuals who indicated that their family, relatives,
and close friends were encouraging of their starting a business. We included two factors that
control for family structure in our analyses: whether or not the entrepreneur is living with
a spouse or partner, and if they have children living in their home. An additional personal
network variable controlled for if and when the nascent entrepreneurs indicated they were
a member of a start-up team. We asked respondents if they had received very strong or
strong encouragement from family or friends to start a business, and an additional variable
coded those with many close friends or neighbors who owned their own businesses. We also
measured the extended social capital of individuals in the business community by asking if
they had gotten involved in any business networks, such as trade associations, chambers of
commerce, or service clubs such as the Lions or Rotary. Affirmative responses were coded
in a dummy variable. Note that there may be some level of institutional forces manifesting
themselves in our measures of social capital. Thus, threat of social censure (coercion) has
been cited as one factor that enhances the role of trust exhibited in environments of high
social capital (Coleman, 1990). However, because our unit of analysis is the individual
entrepreneur, and not one specific group or community of associated entrepreneurs, we
believe the role of community coercion is a limited factor in our population.
In many countries, gender has been found to be a significant factor in the probability
of establishing a business (Bates, 1995; Brush & Hisrich, 1991). Age has also been an
associated factor—as individuals approach retirement age, they are less likely to invest in
the activities necessary to start a new enterprise (Bates, 1995; Evans & Leighton, 1989).
Otherstudieshaveshownageto be positivelyrelated to success and start-uprate, although in
a non-linear way (Preisendorfer & Voss, 1990). Human capital consists not only of formal
education, but tacit experience accumulated as life-experience. Older entrepreneurs, by
virtue of their age, will have a higher probability of exposure to institutional phenomenon
than younger entrepreneurs. Thus, demographic variables such as age and gender, as well
as initial educational attainment, are important factors when considering lifelong learning
(Tuijnman & Bostrom, 2002). We thus included gender and age as controls.
We used hierarchical multiple logistic regressions to determine the influence of predic-
tor and control variables on the dichotomous outcomes specified by our hypotheses. This
gave two equations testing the first three hypotheses (Equations 1 and 2 in Table 2), and
an additional two to test the remaining two hypothesis (Equations 3 and 4 in Table 3). We
followed the method developed by Hosmer and Lemeshow (1989) using maximum likeli-
hood estimators to give logistic probabilities, where the computed matrix of covariates and
dependent variables are assigned logistic probabilities.
Results
Table 1 provides descriptive statistics for all variables. The correlation between those
nascents who took a business class and those who wrote a formal plan was .16, not as strong
B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48 39
Table 1
Means, standard deviations, and correlations of all variables
MeanS.D.1234567891011121314151617181920
1. Years education 12.640 2.634
2. Years
management
experience
5.412 6.988 .010
3. Years work
experience 14.261 10.178 .138∗∗ .655∗∗
4. Previous
start-up
experience
.412 .982 .077 .254∗∗ .105
5. Parent in
business .485 .500 .020 .085 .008 .152∗∗
6. Encouragement .760 .428 .030 .007 .007 .027 .006
7. Friends in
business .324 .468 .095 .074 .083 .094 .115.131∗∗
8. Team start-up .574 .495 .020 .020 .075 .311∗∗ .024 .037 .035
9. Business
network .275 .447 .040 .071 .026 .005 .051 .066 .068 .091
10. Known
customer .400 .490 .037 .020 .017 .001 .029 .010 .088 .086 .171∗∗
11. Age 37.897 9.839 .107.621∗∗ .841∗∗ .130∗∗ .026 .072 .074 .089 .019 .050
12. Gender .289 .454 .048 .082 .110.157∗∗ .003 .021 .014 .084 .080 .035 .030
13. Married .748 .435 .033 .106 .123.013 .016 .011 .003 .094 .063 .056 .112.059
14. Children .567 .496 .137∗∗ .007 .091 .036 .006 .019 .072 .056 .079 .023 .033 .078 .318∗∗
15. Contact with
agency .404 .491 .078 .031 .021 .071 .021 .042 .007 .077 .120.050 .087 .102.002 .017
16. Manufacturing .120 .325 .019 .048 .013 .096 .058 .021 .024 .113.027 .020 .006 .074 .025 .013 .066
17. Business class .446 .498 .032 .063 .013 .166∗∗ .013 .031 .043 .173∗∗ .199∗∗ .083 .045 .134∗∗ .019 .075 .366∗∗ .102
18. Profit .571 .496 .062 .041 .056 .096 .079 .000 .155∗∗ .004 .278∗∗ .575∗∗ .084 .072 .094 .042 .028 .049 .100
19. Survival .375 .485 .048 .077 .077 .052 .104.033 .081 .018 .272∗∗ .270∗∗ .118.008 .091 .034 .063 .162∗∗ .084 .413∗∗
20. Formal plan .225 .418 .043 .128∗∗ .137∗∗ .043 .075 .097.010 .038 .141∗∗ .039 .195∗∗ .008 .078 .060 .237∗∗ .145∗∗ .165∗∗ .112.139∗∗
Correlation is significant at the .05 level (2-tailed).
∗∗ Correlation is significant at the .01 level (2-tailed).
40 B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48
Table 2
Hierarchical logistic regression, nascent entrepreneurs: most likely to plan
Dependent variable Equation 1 Equation 2
Written formal business
plan (controls only) Written formal
business plan
Years education .002 (.05) .002 (.05)
Years experience as manager .001 (.02) .007 (.02)
Years work experience .02 (.02) .01 (.02)
Previous start-up experience .01 (.14) .01 (.15)
Parents in business .34 (.26) .36 (.27)
Encouraged by friends or family 1.07∗∗ (.36) 1.06∗∗ (.37)
Close friends or neighbors in business .33 (.28) .40 (.29)
Member of a start-up team .32 (.28) .39 (.29)
Member of a business network .79∗∗ (.28) .60 (.29)
Knew customer before starting .05 (.26) .16 (.27)
Age .07∗∗ (.02) .06∗∗ (.02)
Gender (f=1) .20 (.30) .25 (.31)
Married .34 (.34) .33 (.36)
Children .27 (.28) .37 (.29)
Contact with assistance agency .99∗∗∗ (.29)
Manufacturing .82(.38)
Business classes taken .43 (.30)
2 log likelihood 380.1 354.4
Model X236.8∗∗∗ 62.5∗∗∗
df 14 17
Overall hit rate (%) 79.3 80.1
CoxR2.08 .14
N396 396
Standard errors are in parentheses.
p<.05.
∗∗ p<.01.
∗∗∗ p<.001.
as we anticipated. We also found those individuals who had contact with an assistance
agency were more likely to have completed a business class, with a correlation of .36.
Table 2 shows a hierarchical logistic regression, examining who wrote a formal plan as
the dependent variable.
Equation1examinescontrolvariablespredictingtheprobabilityofanascent entrepreneur
writing a formal written business plan. The goodness of fit chi-square of 36.8 tests the null
hypothesis that the coefficients for all of the terms in this model, except the constant, are
zero (like an “ftest” in regression).
Encouragement by friends and family produced the strongest statistically significant co-
efficient, 1.07. The logistic regression uses maximum likelihood estimators to calculate the
logit, or log odds of an event occurring. For example, the logit probability (log odds) of
people who have encouragement from friends and family writing a formal business plan is
1.07, and is statistically significant, indicating that generally, individuals with encourage-
ment are more likely to produce plans than those who are not, controlling for the remaining
B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48 41
variables in the equation. Computing from log odds to probability, more commonly referred
to as “odds,” is simply a matter of taking the coefficient to the ex, and these probabilities
are calculated and discussed for the reader’s benefit when relevant, in this section (Hosmer
& Lemeshow, 1989). For the encouragement variable, this means that those individuals
with encouragement were almost three times more likely to have produced a business plan,
than those who did not (1.07ex=2.91). Our supplemental analysis showed that the Wald
statistic(coefficient/standarderror,squared)wasquite strong (Hosmer & Lemeshow,1989).
Those nascents that were members of a business network had increased odds of complet-
ing a business plan by twice. Each additional year of the entrepreneur’s age increased the
probability of writing a business plan very slightly (1.07).
The first three hypotheses were tested in Equation 2, where contact with agencies, man-
ufacturing firms, and business classes were added to the model. Hypothesis 1 indicated that
nascentshavingcontactwith a public assistanceagencywouldbemore likely to write abusi-
nessplan.Hypothesis2maintainedthatmanufacturingfirmswouldhaveagreaterpropensity
to produce a written formal plan than the referent groups, and Hypothesis 3 predicted that a
business education would exert normative pressure on writing a business plan. The results
show that Hypotheses 1 and 2 were upheld, while 3 was rejected. The model chi-squared
was statistically significant, and the percentage explained (80.1%) slightly greater than the
former model. Because of the additional degree of freedom, the Cox R2has increased, sug-
gesting that this model is improved. Agency contact was even more influential in producing
a written formal business plan than encouragement from family and friends, increasing the
odds of doing a plan by a factor of 2.69. Thus, Hypothesis 1 was strongly upheld. Manu-
facturing firms were more likely to produce a written formal business plan than the referent
groups (service, trading, and not stated). The coefficient was significant at the .05 level, in-
creasing the probability of completing a formal written plan by 2.2, upholding Hypothesis
2. Nascents who had a business class did not appear to statistically influence the probability
of writing a formal business plan, although the coefficients are in the anticipated directions.
Hypothesis 3 was thus rejected.
Table 3 shows two logistic regressions for each of the two dependent variables—i.e.,
survival and profitable, respectively.
Equation3 tested Hypothesis4, stating that firms with businessplans would have a higher
probability of survival, by examining those firms that survived during the 24-month period
of study, as well as those that wrote a formal plan. The model chi-square is statistically
significant, and the CoxR2shows .19 of explained variance. Writing a formal business
plan had a moderate coefficient increasing survival by 1.8, but failed to pass the p<.05
significance level. Thus, Hypothesis 4 was not supported. Being a member of a business
network was shown to be the strongest control variable in predicting survival, increasing the
probability by a factor of 4.4 (1.50ex). Knowing the customer before starting the business
wasalso a goodindicator of survival, increasing the probability by 2.7.Manufacturing firms
increased survival by a factor of 4.0, but this may be on account of the longer development
cycles necessary for manufacturing firms.
Equation 4 tested Hypothesis 5, stating those firms writing business plans would be more
likely to reach profitability, by examining firms reporting profits at any time during the
24-month period of study. The model chi-square is statistically significant, and the variables
have an important influence on profitability, with a CoxR2explaining .37 of the variance.
42 B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48
Table 3
Hierarchical logistic regression, nascent entrepreneurs: planning and performance
Dependent variable Equation 3 Equation 4
Survival Profitable
Years education .01 (.05) .01 (.05)
Years experience as manager .02 (.02) .02 (.02)
Years work experience .01 (.02) .02 (.02)
Previous start-up experience .007 (.13) .28(.16)
Parents in business .34 (.23) .29 (.27)
Encouraged by friends or family .11 (.28) .008 (.32)
Close friends or neighbors in business .25 (.26) .64(.29)
Member of a start-up team .18 (.25) .26 (.30)
Member of a business network 1.50∗∗∗ (.32) 1.16∗∗∗ (.33)
Knew customer before starting 1.0∗∗∗ (.25) 3.24∗∗∗ (.34)
Age .04(.02) .008 (.02)
Gender (f=1) .09 (.26) .64(.30)
Married .38 (.28) .35 (.33)
Children .49(.26) .05 (.29)
Contact with assistance agency .69∗∗ (.27) .17 (.30)
Manufacturing 1.41∗∗ (.50) .24 (.45)
Business classes taken .19 (.26) .06 (.31)
Formal Business Plan .59(.32) .19 (.35)
2 log likelihood 436.15 352.1
Model X286.2∗∗∗ 88∗∗∗
df 18 18
Overall hit rate (%) 71.5 80.6
CoxR2.19 .37
N396 396
Standard errors are in parentheses.
p<.10.
p<.05.
∗∗ p<.01.
∗∗∗ p<.001.
Writing a formal business plan has no statistically significant effects in the equation. Thus,
Hypothesis 5 is rejected. Knowing the customer before starting the business provided the
strongest coefficient in the model, increasing the probability of profitable by 25 (3.24ex).
This was followed by being in a business network increasing the probability by 3.1, close
friends or neighbors increasing by 1.8.
Discussion
In this research we examined the commonly accepted practice of writing business plans
from an institutional perspective. Our study shows that new organizations are subject to in-
stitutional isomorphic pressures to produce written business plans. We empirically verified
that they conformed to coercive and mimetic isomorphic pressures. Contact with assistance
agencies, where plans were a conditional factor in obtaining governmental monetary assis-
B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48 43
tance, was used to demonstrate coercive pressures. To demonstrate mimetic processes, we
adoptedmeasures examining specificpractices embedded in a particular industry,following
a tradition used in other empirical studies (Burdos, 2001; Mezias, 1990).
We also examined normative force, as studied by Mezias (1990), represented in this
study as having a business education. Our normative measure was not found to significantly
influence the new organization’s propensity to write business plans. Contrary to our ex-
pectations, nascent entrepreneurs seem to disregard the normative advice provided them
in business classes. Perhaps this is because many business schools are preoccupied with
management in large organizations, and that business educated entrepreneurs recognize that
new organizations require different practices. Alternatively, this may be an artifact of the
type of business education provided in Sweden, or due to the relative newness of Swedish
business education compared to the USA. It may also reflect the market conditions and type
of nascent entrepreneurship existing in Sweden. Future research, using business education
as a proxy for normative pressure, may benefit by devoting more attention to the actual
content of business education.
Surprisingly,ourresultsindicate that performance is not necessarily an outcome of organi-
zational isomorphism. We suspect that new organizations conform to institutional pressures
independentlyofcompetitiveselectionmechanisms.Thus,fromaneconomicefficiencyper-
spective, the writing of business plans in new organizations can be questioned. Our study
also examines isomorphism regarding the survival of nascent activity. We found that those
who wrote business plans were no more likely to persist in nascent activity as compared to
non-planners. This study’s failure to find support for Hypothesis 4 at p<.05 is consistent
with Castrogiovanni’s (1996) contention that planning does not directly effect survival, but
instead influences survival only indirectly through its (direct) symbolism, learning, and ef-
ficiency outcomes. Our study suggests that conformity to the business-planning paradigm
is not the result of competitive processes weeding out companies who do not write plans.
Rather, survival seems to be unrelated to business planning.
Previousresearchexaminingbusinessplansinneworganizationshasprimarilyfocused on
the empirical relationship between plans and performance (e.g., Barrow, Barrow & Brown,
1998) and has largely avoided proposing theoretical foundations for such a relationship.
Perhaps as a result, this stream of research has been largely unsuccessful, unable to find
any consistent relationships (Lumpkin, Schrader & Hills, 1998;Rhyne, 1986; Schwenk &
Shraeder, 1993). We found that writing a business plan has no statistically significant effect
on the profitability of the nascent organization, and rejected Hypothesis 5. Because we uti-
lized a theoretical perspective based on institutional theory, we believe we are better able to
explain our findings regarding organizational conformity. It appears that new organizations
do not write business plans to improve performance, rather, they do so in order to conform
to institutionalized rules and to mimic the behavior of others.
In sum, we propose that new organizations plan because they are reacting to how they
are expected to plan, because they imitate other successful organizations in their fields
that plan, or because they are told to plan. This research shares conclusions with several
previous studies examining the spread of management tools and management education,
suchas the adoption of the multi-divisionalform (Fliegstein, 1985), TQM (Westphal,Gulati
& Shortell, 1997), financial reporting (Mezias, 1990), high-involvement work practices (Pil
& Macduffie, 1996) and entrepreneurship education (Alvarez, 1993).
44 B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48
Of course, this study is not without limitations. Firstly, although we suspect that our
findings might also hold for other environments, we have no way to ascertain this. The
phenomenon of pre-startup business planning is only about a decade old in Sweden, and
many organizations do not formally write business plans. There are reasons to suspect that
the business planning phenomena may be more institutionalized elsewhere, for example
in the USA, where business planning as a concept is older (approximately 50 years cf.
Drucker, 1959). Secondly, while Haverman (1993) suggests that mimetic isomorphism
occurs between successful firms in a similar industry or field, Haunschild (1994) points
out that mimetic isomorphism is moderated by uncertainty. This study was not designed
to capture the role of success for the imitated organization, nor to examine the levels of
uncertainty in the firm’s environment.
From a cross-cultural perspective, planning may be seen as a way of taming uncertainty,
as well as providing meaning (Brunsson & Olsen, 1993). The need to reduce uncertainty
has been shown to vary culturally (Hofstede, 1980). In terms of Hofstede’s (1980) well
known measures of uncertainty avoidance, both Sweden and the USA rate scores well
below the mean (29 in the former, 46 for the latter, mean of 65). Thus, both cultures
appear to have a higher tolerance for unplanned behavior. We suspect that similar out-
comes regarding pre-startup planning may be found in the USA and other cultures with
similarly low uncertainty avoidance, despite variations in the diffusion of the paradigm.
Cultures high in uncertainty avoidance, however, may demand more attention to detail,
less flexibility, and so reward the producers of more exacting plans (Andreas, Frese &
Sonnentag, 2000).
This study raises several questions for further study. Future research might devote more
attention to the possible implications of writing a business plan on the actual behavior of the
new organization. For instance, the activity of writing plans may hamper the organization’s
ability to act on new opportunities, something often seen as crucial for the success of new
organizations. In general, our findings regarding business plans and performance suggest
that if any relationships exist, they are either weak or more complicated than the business
planning literature implies (e.g., Boyd, 1991;Robinson, Logan & Salem, 1986). Economic
outcomes may be contingent upon the level of uncertainty the nascent organization expe-
riences (McGrath & MacMillan, 1995), or perhaps the complexity involved in the market
or product technology employed. We encourage further study to test other explanations
regarding the relationship between planning and profitability and survivability of nascent
organizations.
Lastly,weremainparticularlyinterested in therole of assistance agencies.In our analyses
wefound that contactwith assistance agencieswas positivelycorrelated with writingformal
plans, while unrelated to profitability, suggesting that assistance may be influencing nascent
organizations in non-helpful ways. The relationship between planning and survival may be
another fruitful subject for future research. Note, that survival is not necessarily a socially
positive outcome. If the idea to start a business does not have sufficient merit, it may
be a more beneficial outcome for the economy, the community, and for the entrepreneur to
terminate at an earlier date. While this study examines the antecedents and effects of writing
a business plan, we encourage future research that addresses more fine-grained definitions
of plans and planning. Do certain types of planning activities outperform others? What role
do related topics play, such as financial planning, unwritten, or informal plans, in nascent
B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48 45
organizational development and performance? Is there an optimum time in the life-cycle of
a firm to write a business plan? Careful longitudinal research is necessary to answer these
questions, critical to a range of actors, including scholars, teachers, and agents attempting
to promote entrepreneurship.
Acknowledgments
We are indebted to The Entrepreneurial Research Consortium (ERC), a temporary asso-
ciation of 30+university centers and 100+scholars who are carrying out the U.S. Panel
Study of Entrepreneurial Dynamics (PSED). This Swedish study has been made possible
through financing from the Swedish Foundation for Small Business Research, the Knut
and Alice Wallenberg’s Foundation, and the Swedish National Board for Industrial and
Technical Development (NUTEK). We also thank our three anonymous reviewers for the
extensive and unprecedented assistance in developing this manuscript.
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BensonHonig:Graduate School of Business, University of Haifa. Ph.D. (Stanford Univer-
sity). Benson Honig has studied microenterprise and entrepreneurship worldwide. Current
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journals in the entrepreneurship field.
48 B. Honig, T. Karlsson/ Journal of Management 2004 30(1) 29–48
TomasKarlsson:Ph.D. candidate, Jönköping International Business School (JIBS). Tomas
Karlsson finished his master’s degree in business and administration 1998. During 1999 he
was involved in the Program on Entrepreneurship and Growth (PEG), mainly responsible
for qualitative data gathering. Currently a doctoral student at JIBS, his primary interests
include research methodology, business planning in new organizations and opportunity
development processes in high growth ventures.
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... Communicating concepts, themes, principles, and methods in a story or stories involving a complex set of actors and plots, structure that moves from beginning to climax to resolution. A wide range of genres (light vs. heavy text), emphasis on using "camera angle" to tell a powerful story Foundational theories Self-efficacy (Bandura, 1997); social identity theory (Tajfel et al., 2004); expectancy-value theory of motivation (Wigfield & Eccles, 2000) Experiential learning (Kolb & Kolb, 2005); social embeddedness (Granovetter, 1985); place-based theory (Gruenewald, 2003) Competitive strategy and five forces analysis (Porter, 2008); resource-advantage theory (Hunt & Madhavaram, 2006); business plan (Honig & Karlsson, 2004) Media richness theory (Eisner, 1985(Eisner, , 1996; cool media theory (McLuhan, 1964); narrative persuasion theory (Busselle & Bilandzic, 2008); cognitive theory of multimedia learning (Mayer, 2005) above. Readings help learners to develop a clear vision regarding the nature of SE and the social category to which it belongs. ...
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Social entrepreneurship (SE) is gaining increasing legitimacy as a form of ethical business practice and a solution to various societal challenges. Despite the burgeoning interest in SE in the realms of ethical business scholarship and business ethics education, new pedagogical developments have been limited. To advance SE pedagogy, we produced a new multimedia-based tool consisting of two SE-focused comics and evaluated their efficacy in “winning the hearts and shaping the minds” of learners in an experimental setting. We tested the effects of the two comics individually. Comic #1, a story of a gambling addict who transforms into a social entrepreneur, was used to examine the effects of using a comic on learners’ engagement and cognitive enhancement, while comic #2, a story of a teenage academic misfit who finds her passion in crafting objects and establishes a social enterprise, was used to interrogate the effects of using a comic on the relationship among SE self-efficacy, SE intent, and entrepreneurial passion. We also collected qualitative feedback in the form of learners’ comments about the second comic. Our results supported the two proposed models and suggested that comics show promise in enhancing SE teaching and learning. Our new contribution consists of the theoretical relationships examined in the models, our insights into why comics can be beneficial to learners, the scholarly artistic contribution of the comics, and the use of an experimental approach. We end the article with suggestions for designing, implementing, and evaluating future multimedia-based pedagogy in SE and ethical business teaching and learning.
... To theorise on business model classification, it is necessary to understand the business model as a management tool. Basing our definition of the business model on the essence of Stachowiak's model theory (Stachowiak, 1973), it illustrates the components of the value system (product, need, etc.) (George and Bock, 2011), reduces the complexity of the reality to a small number of components (Sahlman, 1997;Osterwalder et al., 2010), and pragmatically supports certain tasks such as creative processes (business model canvas (Osterwalder et al., 2010) or to convince investors evaluating a business opportunity (Honig and Karlsson, 2004). ...
... Moreover, traditional models and frameworks in entrepreneurship literature have often assumed fairly stable and fixed boundaries of new entrepreneurial processes, where startups' success depended mainly on how well an entrepreneur recognizes a business opportunity, executes specific activities and defines his/ her business plan (e.g. Brinckmann et al., 2010;Honig and Karlsson, 2004). Regrettably, these studies provide limited insights and explanations about entrepreneurial behaviors and actions in the digitalized world (Nambisan, 2017). ...
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Purpose This paper aims to conceptualize the digital behavior of startups and investigate the emerging behaviors about digital strategies of the Italian startup firms enrolled in the Startup Act policy initiative. Digital technologies were divided into intra- and inter-organizational digital infrastructures, and this categorization offers startups the opportunity to identify a set of enabling technologies that could be used to improve their digital strategies. Design/methodology/approach An empirical analysis has been conducted to investigate the degree of adoption of digital intra- and inter-organizational digital infrastructures in the entire population of 6,178 Italian firms listed in the Register of Innovative Startups. Findings The paper proposes a taxonomy bringing together four startup behaviors for adopting digital technologies: digital follower, technical influencer, social influencer and digital leader. From the perspective of policy makers, considering the financial efforts that public authorities are supporting in the last decade, implications are mainly concerned with policy measures aimed both to reinforce the overall adoption of digital technologies and to develop a balanced adoption of intra- and inter-organizational digital infrastructures. Originality/value Measures addressed to support female and foreign entrepreneurship could be useful to support a more dynamic and well-balanced cultural and racial contamination, thus improving the adoption of digital tools.
... As Pamela explained: "I am not going to any bank; nobody is going to give me any money anyway". Neither of the participants who eventually launched their businesses completed a business plan (Honig and Karlsson, 2004), or had much in the way of financial investment, but both increased their engagement in gestation activities towards the end of the process (Lichtenstein et al., 2007). During the nascent entrepreneurial process, the participants moved between recognising, evaluating and exploiting entrepreneurial opportunities, and this process was continuously affected by the enabling and constraining tensions stemming from the cross-cultural adaptation. ...
Purpose All entrepreneurs face challenges during their venture start-up process, but immigrant entrepreneurs face additional and distinctive challenges due to their contextual newness. This paper focuses on understanding the intertwined journeys of nascent entrepreneurship and cross-cultural adaptation of immigrants in a small Western European country where immigrant entrepreneurship is still a relatively new phenomenon. Design/methodology/approach The induction-driven, 18-month longitudinal empirical inquiry focused on six early-stage nascent entrepreneurs. Qualitative methods included participant observation during an enterprise program, qualitative interviews and ongoing informal communication. Findings The data uncovered the interplay between the nascent immigrant entrepreneurship and cross-cultural adaptation. This led to the development of a novel conceptual framework which highlights how the cross-cultural adaptation domain links with the process of recognition, evaluation and exploitation of entrepreneurial opportunities by immigrant entrepreneurs. While varying temporarily and contextually, cross-cultural adaptation was found to create both enabling and constraining tensions within the nascent entrepreneurial experiences of immigrants. Research limitations/implications It is recognized that undertaking just six cases may present a significant limitation of the research, but a close examination of even one individual's lived experience can yield valuable insights. It is hoped that future work will test the highlighted research propositions and other findings in different empirical contexts, and so add to the emerging conceptual framework on nascent immigrant entrepreneurship within the context of cross-cultural adaptation. Originality/value No previous qualitative studies have been undertaken seeking to understand how cross-cultural adaptation interacts with the early stages of nascent immigrant entrepreneurial activity. By integrating new venture creation and cross-cultural adaptation theories, this research contributes to the conceptualisation of early stages of nascent entrepreneurial activities of immigrants in a new host environment. The implications of the research are also relevant to enterprise support bodies, policymakers and practitioners who support immigrant entrepreneurship.
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The COVID-19 pandemic has been a profound shock to societies and economies, highlighting society's dependence on women at home and on the front line while revealing systemic disparities in every sector This situation is heightened in the context of women in the Global South, given the nuanced gender roles and patriarchal societies in the region. In times of crisis when resources are stretched and there is limited organisational capacity, women face inordinate impacts with far-reaching consequences. Therefore, responding to a crisis involves not only addressing long-standing inequalities but also creating a resilient environment for everyone. This research explored the narratives of women in Sub-Saharan Africa (SSA) entrepreneuring in a crisis, in a context of relativity and scarcity where the burden of care and support for the community falls on women. It aims to tell the stories of women that form a coherent sense of self-worth, allowing them to integrate recognisable changes to adapt to disruptions caused by the pandemic while remaining pillars of strength for their families and communities. This qualitative research adopts a narrative inquiry approach involving inquiry directed at accounts of human experiences. The study sample includes women entrepreneurs from seven SSA countries. The findings indicate that in the face of the pandemic, SSA women entrepreneurs were pillars not only to their families but also to their employees and extended families.
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We investigate the relationship between outside board members (OBMs) and short‐ versus long‐term strategic orientation of new ventures in the startup phase. Owing to their smallness and newness, a short‐term orientation may be more desirable. Using a dataset of 170 Belgian new ventures in the startup phase, we find a positive association between the proportion of OBMs and a short‐ rather than long‐term strategic orientation, attributed by our interviewees to concern for firm survival. This association is stronger in new ventures operating in highly competitive environments, and where the founding team performed few pre‐startup activities. Greater focus on the short‐term may be beneficial in the long run, as a positive association is found between a high relative short‐term orientation and ventures’ growth. New ventures in the startup phase should primarily focus on short‐term issues: get a better understanding of who are the customers and try to validate the business model. This article reveals that the board of directors plays a pivotal role in influencing the extent to which startups have a short‐term strategic orientation. Specifically, it explains how outside board members (OBMs) provides advice, monitor the startup’s progress, and guide entrepreneurs on key short‐term priorities. This strategic role of OBMs is more pronounced in new ventures where the entrepreneurial team is less prepared at founding and in firms operating in highly competitive environments. Importantly, our paper provides evidence that a short‐term orientation in the startup phase doesn’t jeopardize future venture growth in the scale‐up phase.
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Researchers have been examining the effects of formal strategic planning on small firm financial performance for more than twenty years. Reviewers of prior studies have drawn differing conclusions as to whether formal planning improves small firm performance. We have applied meta-analysis for the first time to the results of previous studies on formal strategic planning and small firm performance. The results suggest that even though the size of the effects for planning for individual studies Is not large, the overall relationship between formal planning and performance across studies Is positive and significant. Much of the variance in the size of the effects, however, Is not explained by sampling error, Indicating the potential for other variables to moderate the effects of planning on the performance of small firms. It is concluded, in general, that strategic planning is a beneficial activity for small firms.