Institutional forces and the written business plan

In this study, we examined factors that led nascent organizations to write business plans, following396 nascent entrepreneurs during a two-year period.We examined both the productionand the outcomes of written business plans produced in nascent organizations. Our findingsshow that institutional variables, such as coercion and mimetic forces, are important predictorsinfluencing the propensity of new organizations to write business plans. Our resultsare contrary to rationalist predictions of planning-performance, and are more in line withinstitutional predictions. Interestingly there was no evidence to support positive outcomes,in terms of profitability, for those nascent organizations that produced business plans duringa two-year initial period. We discuss the implications for institutional theory and studies ofnascent businesses, as well as for the literature on business planning