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The Effects of Pre-venture Plan Timing and Perceived Environmental Uncertainty on the Persistence of Emerging Firms

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  • Jianwen Liao
  • William Gartner

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Abstract

This paper explores the effects of when pre-venture planning occurs (early or late) in the sequence of activities accomplished during the process of new business emergence, and the moderating effects of environmental context (the degree of perceived financial, competitive and operational uncertainty), on the persistence of emerging business startup efforts. Using data from the U.S. Panel Study of Entrepreneurial Dynamics (PSED), our analyses found a strong main effect for business planning: Nascent entrepreneurs who completed a business plan were 2.6 times more likely to persist in the process of business emergence than those who did not complete a plan. In addition, the likelihood of venture persistence increased when nascent entrepreneurs engaged in planning early in the sequence of start-up activities in perceived uncertain financial and competitive environments, while venture persistence increased when nascent entrepreneurs engaged in planning late in a sequence of activities in perceived certain financial and competitive environments. Copyright Springer 2006

Suggested Citation

  • Jianwen Liao & William Gartner, 2006. "The Effects of Pre-venture Plan Timing and Perceived Environmental Uncertainty on the Persistence of Emerging Firms," Small Business Economics, Springer, vol. 27(1), pages 23-40, August.
  • Handle: RePEc:kap:sbusec:v:27:y:2006:i:1:p:23-40 DOI: 10.1007/s11187-006-0020-0
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    References listed on IDEAS

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    1. Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 551-559, November.
    2. Bruderl, Josef & Preisendorfer, Peter, 1998. "Network Support and the Success of Newly Founded Businesses," Small Business Economics, Springer, vol. 10(3), pages 213-225, May.
    3. Parker,Simon C., 2006. "The Economics of Self-Employment and Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521030632, March.
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    Citations

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    Cited by:

    1. Michael Stuetzer & Martin Obschonka & Eva Schmitt-Rodermund, 2013. "Balanced skills among nascent entrepreneurs," Small Business Economics, Springer, vol. 41(1), pages 93-114, June.
    2. Per Davidsson & Scott Gordon, 2012. "Panel studies of new venture creation: a methods-focused review and suggestions for future research," Small Business Economics, Springer, vol. 39(4), pages 853-876, November.
    3. Oe, Akitsu & Mitsuhashi, Hitoshi, 2013. "Founders' experiences for startups' fast break-even," Journal of Business Research, Elsevier, vol. 66(11), pages 2193-2201.
    4. William Gartner & Kelly Shaver, 2012. "Nascent entrepreneurship panel studies: progress and challenges," Small Business Economics, Springer, vol. 39(3), pages 659-665, October.
    5. Dirk Oberschachtsiek, 2014. "Waiting to start a business venture. Empirical evidence on the determinants," Working Paper Series in Economics 293, University of Lüneburg, Institute of Economics.
    6. Diana Hechavarría & Charles Matthews & Paul Reynolds, 2016. "Does start-up financing influence start-up speed? Evidence from the panel study of entrepreneurial dynamics," Small Business Economics, Springer, vol. 46(1), pages 137-167, January.
    7. Chandler, Gaylen N. & DeTienne, Dawn R. & McKelvie, Alexander & Mumford, Troy V., 2011. "Causation and effectuation processes: A validation study," Journal of Business Venturing, Elsevier, vol. 26(3), pages 375-390, May.
    8. William Gartner & Jianwen Liao, 2012. "The effects of perceptions of risk, environmental uncertainty, and growth aspirations on new venture creation success," Small Business Economics, Springer, vol. 39(3), pages 703-712, October.
    9. Roper, Stephen & Tapinos, Efstathios, 2016. "Taking risks in the face of uncertainty: An exploratory analysis of green innovation," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 357-363.
    10. Scott Newbert & Erno Tornikoski, 2012. "Supporter networks and network growth: a contingency model of organizational emergence," Small Business Economics, Springer, vol. 39(1), pages 141-159, July.
    11. Daniel Hjorth & Bengt Johannisson, 2008. "Building new roads for entrepreneurship research to travel by: on the work of William B. Gartner," Small Business Economics, Springer, vol. 31(4), pages 341-350, December.
    12. Shirokova, G. V. & Bogatyreva, K. A. & Morris, M. H., 2014. "Expertise, university Infrastructure and cognitive logic: Assessing students who start ventures," Working Papers 6253, Graduate School of Management, St. Petersburg State University.
    13. Dimo Dimov, 2010. "Nascent Entrepreneurs and Venture Emergence: Opportunity Confidence, Human Capital, and Early Planning," Journal of Management Studies, Wiley Blackwell, vol. 47(6), pages 1123-1153, September.
    14. Casey J. Frid & David M. Wyman & Bentley Coffey, 2016. "Effects of wealth inequality on entrepreneurship," Small Business Economics, Springer, vol. 47(4), pages 895-920, December.
    15. Diana Hechavarria & Maija Renko & Charles Matthews, 2012. "The nascent entrepreneurship hub: goals, entrepreneurial self-efficacy and start-up outcomes," Small Business Economics, Springer, vol. 39(3), pages 685-701, October.
    16. Benson Honig & Tomas Karlsson, 2013. "An Institutional Perspective on Business Planning Activities for Nascent Entrepreneurs in Sweden and the US," Administrative Sciences, MDPI, Open Access Journal, vol. 3(4), pages 1-24, November.
    17. Kameliia Petrova, 2012. "Part-time entrepreneurship and financial constraints: evidence from the Panel Study of Entrepreneurial Dynamics," Small Business Economics, Springer, vol. 39(2), pages 473-493, September.
    18. M. Knockaert & M. Der Foo & T. Erikson, 2011. "Determinants of entrepreneurs’ growth intentions. A cognitive style perspective," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/720, Ghent University, Faculty of Economics and Business Administration.
    19. Chwolka, Anne & Raith, Matthias G., 2012. "The value of business planning before start-up — A decision-theoretical perspective," Journal of Business Venturing, Elsevier, vol. 27(3), pages 385-399.
    20. Diana M. Hechavarría & Charles H. Matthews & Paul D. Reynolds, 2016. "Does start-up financing influence start-up speed? Evidence from the panel study of entrepreneurial dynamics," Small Business Economics, Springer, vol. 46(1), pages 137-167, January.
    21. Andrew Burke & Stuart Fraser & Francis J. Greene, 2010. "The Multiple Effects of Business Planning on New Venture Performance," Journal of Management Studies, Wiley Blackwell, vol. 47(3), pages 391-415, May.

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