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Institutional forces and the written business plan

Benson Honig

Graduate School of Business, and International Affiliate, University of Haifa, Mount Carmel, 31905 Haifa, Israelbenson{at}research.haifa.ac.il

Tomas Karlsson

Jönköping International Business School, Box 1026 SE-55111, Jönköping, Swedentomas.karlsson{at}ihh.hj.se

In this study, we examined factors that led nascent organizations to write business plans, following 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 predictors 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.

Journal of Management, Vol. 30, No. 1, 29-48 (2004)
DOI: 10.1016/j.jm.2002.11.002
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