The Multiple Effects of Business Planning on New Venture Performance
Abstract
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The Erasmus - EIM - Panteia Entrepreneurship Lectures Series is co-organized by Erasmus Research Institute of Management (ERIM.nl) and EIM Business & Policy Research (EIM/Panteia), an independent and international research and consultancy organisation, specialised in SMEs and Entrepreneurship. EIM is part of the Panteia group. |
| We investigate the impact of business planning on new venture performance. Our analysis makes new contributions by providing a framework to examine the multiple effects of business planning. To disentangle these business planning impact effects are separated out from effects due to differences in venture/entrepreneur profiles. On the upside, we find that business planning results in the start-up of larger ventures (55% larger) and increases subsequent size (by 109%) but at the downside expense of an increased likelihood of first year financial problems (by 25 percentage points). These effects work through value added ‘impact’ effects rather than being due to the profile of business planners. We also find evidence that business plans enable banks to steer new ventures towards low risk/reward strategies, enabling banks to lend to new ventures but simultaneously constraining the ability of entrepreneurs to adopt high risk/reward strategies. |
| Biography: |
| Professor Andrew Burke is Director of the Bettany Centre for Entrepreneurial Performance and Economics at the Cranfield School of Management at Cranfield University, U.K. He is also Research Professor of the Max Planck Institute, Germany. Previously, he was Reader & Deputy Director at the Centre for SMEs, Warwick Business School as well as Academic Director of the Executive MBA. His previous academic posts include lectureships at the University of Edinburgh, Trinity College, Dublin and Balliol College, Oxford and a research fellowship at the University of St Andrews. He was a Visiting Associate Professor at the Anderson School of Business, UCLA in 2002. He is an editor of the International Journal of Entrepreneurship Education and has acted as a guest editor of the International Journal of Industrial Organization. He invests and is involved in a number of business ventures in advertising, business publishing, property and music. His specialist areas of research and publication are related to: economics, strategic and financial analysis of the determinants of new venture performance, venture capital, intellectual property rights, competition/antitrust law and media/cultural industries. He has acted as a consultant for organisations such as the European Commission, The UK Department of Trade and Industry, Business Links UK, GESAC (EU), Forbairt (formerly the Industrial Development Authority - IDA), Schlumberger, GCI UK, Bank of Ireland International Banking, and the Irish Music Rights Organisation. Andrew is on the editorial boards of the International Small Business Journal and the International Journal of Business Innovation and Research. |
| Contact information: |
| André van Stel |
