Journal of Business Venturing 22 (2007) 782 – 807
Uncovering the value of planning in new venture
creation: A process and contingency perspective
Ecole Polytechnique Fédérale de Lausanne, College of Management of Technology, Chair of Entrepreneurship
and Technology Commercialization, Odyssea 2.02, Station 5, CH-1015 Lausanne, Switzerland
Received 1 July 2005; received inrevised form 1 July 2006; accepted 1 July 2006
Researchers are engaged in a major debate on the value of business planning in new venture
creation. This study suggests a potential resolution by applying a process and contingency perspective.
The results indicate that planning is beneficial, yet planning processes need to be governed by different
planning regimes depending on the type offounding environment. In highly dynamic environments,
entrepreneurs will get most value from planning when they focus on select planning activities, and
speed up the planning task. In less dynamic environments, they are better of pursuing a munificent
approach to planning. The analysis thus reveals a major component of theorization on business
planning that has been neglected in previousdiscussions. As for entrepreneurship teaching and
practice, the findings suggest the importance of an adaptive, “toolkit” approach to business planning.
Hypotheses were developed based on information-processing and decision-making theory and were
tested with an ordered probit analysis on a sample of 100 start-ups backed by venture capital.
© 2006 Elsevier Inc. All rights reserved.
Keywords:Business planning; Planning regimes; Opportunity exploitation; Venture creation process; Toolkit
1. Executive summary
The field of entrepreneurship is engaged in an important debate on the value of business
planning (Bhidé, 2000; Delmar and Shane, 2003). Whereas one group of researchers views
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M. Gruber / Journal of Business Venturing 22 (2007) 782–807
business planning as a key activity for successful venture creation, another group challenges this assertion quite strongly. However, empirical evidence that could substantiate the
arguments of either school of thought is scant.To investigate the relationship between planning and venture performance, this study
employed a research design that improves on the literature in three key ways. First, to get a
clearer view on the planning-performance link, the heterogeneity of the business planning
task was reduced by focusing on one core area—marketing planning. Second, to understand planning in detail, a processperspective was employed which allowed close
exploration of several planning activities such as the use of information sources and the
consideration of specific content. Because the level of effort which entrepreneurs devote to
such activities was studied, this research markedly improved on dichotomous conceptualizations that simply report whether or not a planning activity has been conducted. Third, toobtain a more realistic view of new venture planning, which often occurs in highly dynamic
and uncertain environments, my research design incorporated contingency effects related to
the type of founding environment.
Drawing on information-processing and decision-making theory (Cyert and March,
1963; Janis and Mann, 1977), three sets of hypotheses were developed that investigate the
planningprocess-performance relationship in detail. Hypotheses were tested in a multivariate setting (ordered probit estimation), using data on early-stage marketing planning of
100 VC-backed ventures located in Germany.
Overall, the analysis shows that planning can have a positive effect on venture performance, even in highly dynamic environments where its usefulness has been questioned
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