To plan or not to plan: if and when business plans help entrepreneurial ventures grows?

Abstract

This study investigated the relationships between business planning and venture growth while also exploring the moderating variables of entrepreneurial pre-entry knowledge and industry dynamism. Scales that allowed for empirical testing were collected and collated from the broader business planning literature. Using a sample of 103 entrepreneurs from three industries, entrepreneurs were surveyed in an attempt to measure entrepreneurial business planning practices in a South African environment. The results of the study indicated that while planning is an important process of an entrepreneurial venture its effectiveness depends on planning combinations and contextual factors. Specifically, it provided evidence for planning’s positive impact on venture growth; when an entrepreneur engaged in prior business planning and then implemented the plan. Furthermore the extent of an entrepreneur’s pre-entry knowledge was shown to have a positive impact on venture growth. While a synergy effect was observed when entrepreneurs had both pre-entry knowledge and engaged in prior planning. In contrast, the findings suggest that when an entrepreneur launches a business and has pre-entry knowledge it is more valuable not to implement these plans. Lastly the results suggested that planning practices were more likely to positively impact venture growth in industries experiencing lower levels of dynamism. Copyright