New ventures are an important driving source of wealth in societies. Small and especially young ventures have a fundamental impact on the whole economy. Activities of new ventures provide various positive effects, such as the creation of employment, contribution to technol-ogical advance, innovation and the overall competitiveness of a society’s economy (e.g. Brinckmann 2008, pp. 1).
It is a big challenge for founders to assure that their new ventures survive and prosper. Many aspects have to be considered and high uncertainty is faced. One question which entrepreneurial research frequently tries to answer is whether planning in new ventures is positively related with performance. Plenty of research has been done on this question with rather incomplete and inconsistent results.
Rather than trying to answer the question whether planning is beneficial in a strict yes or no manner, this thesis focuses on a contingent view on the stated problem. Several external factors, so called moderators that might have an impact on the success of planning, shall be examined in more detail.
The first part of the thesis provides conclusions for planning in new ventures in context of the corporate life cycle concept. Specific planning requirements and topics will be discussed in the context of early stages of the corporate life cycle. First of all, the question whether and under what condition planning in new ventures pays off will be dealt with. Related to the first two age states following Adizes (1998) the relevance of written business plans and market entry strategies will be discussed.
The contingent view on the problem will be completed in the second part of the thesis by looking at new ventures in different founding environments. The challenges of two types of new ventures with very specific environments will be discussed in this part. New internet ventures are acting in a completely different environment in terms of communication and therefore, have specific requirements for planning and e.g. marketing instruments. Also new ventures entering high technology markets are challenged by specific characters of their environment, especially because of the even higher uncertainty in comparison to other new ventures.
Finally implications for further research and concrete advice for practitioners will be given.
Table of Contents
1. Introduction
2. Definitions and Concepts
2.1 New Venture
2.2 Strategic Planning
2.3 The Corporate Life Cycle Concept
2.4 The Contingency Approach
3. New Venture Planning in the Early Phases of the Corporate Life Cycle
3.1 Basic Considerations
3.1.1 To Plan or Not to Plan?
3.1.2 The Importance of “Outsiders” in New Venture Planning
3.1.2.1 Involving Outsiders in the Planning Process
3.1.2.2 Outsiders as Addressee of the Outcome of Planning
3.2 The Courtship Phase
3.2.1 Do Founders of Successful New Ventures Write Business Plans?
3.2.2 The Impact of Written Business Plans
3.3 The Infancy Phase – A Framework to New Venture Market Entry Strategies
4. New Venture Planning by Market Context
4.1 New Ventures in the Internet Market
4.1.1 Specific Context for New Ventures in the Internet
4.1.1.1 New Forms of Communication
4.1.1.2 Critical Success Factors
4.1.2 Selected Online-Marketing Instruments
4.1.2.1 Search Engine Marketing
4.1.2.2 E-Branding
4.1.2.3 Direct Marketing
4.2 New Ventures in a High Technology Environment
4.2.1 Specific Challenges
4.2.1.1 Technological Uncertainty
4.2.1.2 Market Uncertainty
4.2.2 Strategic Planning for New Ventures in High Technology Markets
4.2.2.1 Definition of the Relevant Market
4.2.2.2 Implications for Strategic Planning
5. Conclusions
5.1 Implications for Management
5.2 Implications for Research
Objectives and Core Topics
This thesis examines the role of strategic planning in the success of new ventures, moving away from a binary "yes or no" view toward a contingent approach that considers environmental moderators. The research evaluates how factors like firm age, market context (Internet vs. High Technology), and uncertainty influence whether planning activities enhance performance.
- The contingency approach to strategic planning in start-ups
- Planning requirements in the early stages of the corporate life cycle
- The debate on the necessity and utility of formal business plans
- Specific challenges for internet-based and high-technology ventures
- Analysis of market entry strategies and online marketing instruments
Excerpt from the Book
3.2.2 The Impact of Written Business Plans
Reviewing the literature about written business plans does not lead to a consistent result. Some claim that written business plans increase performance, others that it decreases performance and again others that no correlation exists at all (e.g. Karlsson and Honig 2009).
Loose coupling describes a phenomenon that was often found when the impact of written business plans was examined. This means that a gap between the formal plan and the actual implementation in the daily operations exists. This discrepancy between the written plan and the actual behavior increases with time. This leads to the conclusion that formal business plans often are only a symbolic act to gain legitimacy from external stakeholders. The plans in the study haven’t been implemented and have never been updated. The founders only try to make their venture look “structured, well planned and established” (Karlsson and Honig 2009).
Karlsson and Honig (2009) found that rather by writing documents the founders learn the value of planning over the course of the new venture’s development. Written business plans could even have a negative impact if they are copied as part of a mimic strategy from other new ventures that successfully received outside funding. Receiving external funding is a primary reason to write business plans. But they state that also venture capital firms are becoming more skeptical in terms of business plans as they often do not provide useful information and are derived from very similar templates and consequently all look very similar.
Gumbert (2003, p.164) comes to the conclusion that “it is more essential to plan the business than to write a business plan”. This does not mean that written business plans should be abandoned in general. Edelman (2004) recommends supplementing the outcome of the very important planning process by newer communication techniques. Lange et al. (2007) gives further advice to do some basic financial planning, as long as no external capital is needed, and later on if the business grows and needs substantial external capital to write a formal written plan.
Summary of Chapters
1. Introduction: Outlines the importance of new ventures for the economy and introduces the research focus on a contingent view of strategic planning.
2. Definitions and Concepts: Provides foundational definitions for new ventures, strategic planning, the corporate life cycle, and the contingency theory.
3. New Venture Planning in the Early Phases of the Corporate Life Cycle: Analyzes the debate on whether to plan, the role of external consultants, and the effectiveness of business plans during the courtship and infancy phases.
4. New Venture Planning by Market Context: Investigates the unique planning requirements and marketing instruments for internet-based startups and high-technology firms.
5. Conclusions: Summarizes the findings, offering management advice on adopting combined planning and learning approaches and suggesting directions for future research.
Keywords
New Ventures, Strategic Planning, Corporate Life Cycle, Contingency Approach, Business Plan, Market Entry Strategy, Internet Market, High-Technology, Technological Uncertainty, Market Uncertainty, E-Branding, Search Engine Marketing, Direct Marketing, Entrepreneurship, Start-up Success
Frequently Asked Questions
What is the core focus of this research?
This work examines the impact of strategic planning on the performance of new ventures, arguing that the success of planning is contingent upon various external and internal factors rather than being universally beneficial.
What are the primary themes discussed?
The core themes include the corporate life cycle, the value of formal vs. informal planning, the role of outsiders in the planning process, and how different market contexts like the internet and high-tech sectors mandate specific planning strategies.
What is the main research objective?
The goal is to determine under which conditions planning improves a new venture's chances of survival and growth, challenging the dogmatic belief that formal business plans are mandatory for every startup.
Which scientific methodology is used?
The work relies on a comprehensive review and synthesis of existing entrepreneurial literature, meta-analyses, and organizational theories, specifically applying the contingency approach to evaluate research findings.
What topics are covered in the main body?
The main body is structured into two parts: first, planning during early life cycle stages like courtship and infancy, and second, planning within specific, highly dynamic environments such as the internet economy and high-technology markets.
Which keywords best characterize this work?
Key terms include New Ventures, Strategic Planning, Corporate Life Cycle, Contingency Approach, Business Plan, Market Uncertainty, and Entrepreneurial Success.
How do internet startups differ in their planning requirements?
Internet startups operate in an environment characterized by new forms of communication (marketspace) and demand dynamic marketing instruments like Search Engine Marketing and E-Branding instead of traditional push-marketing models.
What specific challenges do high-tech new ventures face?
High-tech firms deal with extreme levels of both market and technological uncertainty, making it difficult to predict demand or industry standards, which necessitates a focus on differentiation and strategic flexibility.
Does the author recommend writing a formal business plan?
The author concludes that while business plans are often necessary for external funding, they should not be viewed as a mandatory precondition for success, as they can sometimes become symbolic, time-consuming activities that lack practical implementation.
What is the recommended approach for founders?
Founders are advised to adopt a flexible, combined approach of planning and learning rather than excessive formal planning, especially in early stages where resources are scarce.
- Arbeit zitieren
- Simon Barth (Autor:in), 2009, Planning in new Ventures, München, GRIN Verlag, https://www.grin.com/document/164611
