The importance of gestation process dynamics

Principal Topic In this paper we seek to highlight the important intermediate role that the gestation process plays in entrepreneurship by examining its key antecedents and its consequences for new venture emergence. In doing so we take a behavioural perspective and argue that it is not only what a nascent venture is, but what it does (Katz & Gartner, 1988; Shane & Delmar, 2004; Reynolds, 2007) and when it does it during start-up (Reynolds & Miller, 1992; Lichtenstein, Carter, Dooley & Gartner, 2007) that is important. To extend an analogy from biological development, what we suggest is that the way a new venture is nurtured is just as fundamental as its nature. Much prior research has focused on the nature of new ventures and attempted to attribute variations in outcomes directly to the impact resource endowments and investments have. While there is little doubt that venture resource attributes such as human capital, and specifically prior entrepreneurial experience (Alsos & Kolvereid, 1998), access to social (Davidsson & Honig, 2003) and financial capital have an influence. Resource attributes themselves are distal from successful start-up endeavours and remain inanimate if not for the actions of the nascent venture. The key contribution we make is to shift focus from whether or not actions are taken, but when these actions happen and how that is situated in the overall gestation process. Thus, we suggest that it is gestation process dynamics, or when gestation actions occur, that is more proximal to venture outcomes and we focus on this. Recently scholars have highlighted the complexity that exists in the start-up or gestation process, be it temporal or contextual (Liao, Welsch & Tan, 2005; Lichtenstein et al. 2007). There is great variation in how long a start-up process might take (Reynolds & Miller, 1992), some processes require less action than others (Carter, Gartner & Reynolds, 1996), and the overall intensity of the start-up effort is also deemed important (Reynolds, 2007). And, despite some evidence that particular activities are more influential than others (Delmar & Shane, 2003), the order in which events may happen is, until now, largely indeterminate as regard its influence on success (Liao & Welsch, 2008). We suggest that it is this complexity of the intervening gestation process that attenuates the effect of resource endowment and has resulted in mixed findings in previous research. Thus, in order to reduce complexity we shall take a holistic view of the gestation process and argue that it is its’ dynamic properties that determine nascent venture attempt outcomes. Importantly, we acknowledge that particular gestation processes of themselves would not guarantee successful start-up, but it is more correctly the fit between the process dynamics and the ventures attributes (Davidsson, 2005) that is influential. So we aim to examine process dynamics by comparing sub-groups of venture types by resource attributes. Thus, as an initial step toward unpacking the complexity of the gestation process, this paper aims to establish the importance of its role as an intermediary between attributes of the nascent venture and the emergence of that venture. Here, we make a contribution by empirically examining gestation process dynamics and their fit with venture attributes. We do this by firstly, examining that nature of the influence that venture attributes such as human and social capital have on the dynamics of the gestation process, and secondly by investigating the effect that gestation process dynamics have on venture creation outcomes. Methodology and Propositions In order to explore the importance that gestation processes dynamics have in nascent entrepreneurship we conduct an empirical study of ventures start-ups. Data is drawn from a screened random sample of 625 Australian nascent business ventures prior to them achieving consistent outcomes in the market. This data was collected during 2007/8 and 2008/9 as part of the Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE) project (Davidsson et al., 2008). CAUSEE is a longitudinal panel study conducted over four years, sourcing information from annually administered telephone surveys. Importantly for our study, this methodology allows for the capture and tracking of active nascent venture creation as it happens, thus reducing hindsight and selection biases. In addition, improved tests of causality may be made given that outcome measures are temporally removed from preceding events. The data analysed in this paper represents the first two of these four years, and for the first time has access to follow-up outcome measures for these venture attempts: where 260 were successful, 126 were abandoned, and 191 are still in progress. With regards to venture attributes as gestation process antecedents, we examine specific human capital measured as successful prior experience in entrepreneurship, and direct social capital of the venture as ‘team start-ups’. In assessing gestation process dynamics we follow Lichtenstein et al. (2007) to suggest that the rate, concentration and timing of gestation activities may be used to summarise the complexity dynamics of that process. In addition, we extend this set of measures to include the interaction of discovery and exploitation by way of changes made to the venture idea. Those ventures with successful prior experience or those who conduct symbiotic parallel start-up attempts may be able to, or be forced to, leave their gestation action until later and still derive a successful outcome. In addition access to direct social capital may provide the support upon which the venture may draw in order to persevere in the face of adversity, turning a seemingly futile start-up attempt into a success. On the other hand prior experience may engender the foresight to terminate a venture attempt early should it be seen to be going nowhere. The temporal nature of these conjectures highlight the importance that process dynamics play and will be examined in this research Statistical models are developed to examine gestation process dynamics. We use multivariate general linear modelling to analyse how human and social capital factors influence gestation process dynamics. In turn, we use event history models and stratified Cox regression to assess the influence that gestation process dynamics have on venture outcomes. Results and Implications What entrepreneurs do is of interest to both scholars and practitioners’ alike. Thus the results of this research are important since they focus on nascent behaviour and its outcomes. While venture attributes themselves may be influential this is of little actionable assistance to practitioners. For example it is unhelpful to say to the prospective first time entrepreneur “you’ll be more successful if you have lots of prior experience in firm start-ups”. This research attempts to close this relevance gap by addressing what gestation behaviours might be appropriate, when actions best be focused, and most importantly in what circumstances. Further, we make a contribution to the entrepreneurship literature, examining the role that gestation process dynamics play in outcomes, by specifically attributing these to the nature of the venture itself. This extension is to the best of our knowledge new to the research field.

The roles and importance of formal and informal sources of business support in young firms : evidence from the UK’s 2008 Federation of Small Business Survey

Objectives This research explores the relationship between young firms, their growth orientation-intention and a range of relationships which can be seen to provide business support. Prior-work Research indicates that networks impact the firm’s ability to secure resources (Sirmon and Hitt 2003; Liao and Welsch. 2004; Hanlon and Saunders 2007). Networks have been evaluated in a number of ways ranging from simple counts to characteristics of their composition (Davidsson and Honig 2003), strength of relationships (Granovetter 1973) and network diversity (Carter et al 2003). By providing access to resources and knowledge (from start-up assistance and raising capital, (e.g. Smallbone et al, 2003), networks may assist in enabling continued persistence during those times where firms may experience resource constraints owing to firm growth (Baker and Nelson 2005). Approach The data used in this research was generated in the 2008 UK Federation of Small Businesses (FSB) survey. Over 1,000 of the firms responding were found to fall into the category of “young”, ((defined as firms under 4 years old). Firms were considered the unit of analysis with the entrepreneur being the chief spokesperson for the firm. Preliminary data analysis considered key demographic characteristics and industry classifications, comparing the FSB data with that of the UK government’s own (BERR) Small Business Surveys of 2007 and 2008, to establish some degree of representativeness of the respondents. The analysis then examined networks with varying potential ability to provide support for young firms, the networks measured in terms of number, diversity, characteristic and strength in its relationship to young firm growth orientation. The diversity of business-support-related relationships ranged from friends and family, through professional services, customers and suppliers, and government business services, to trade associations and informal business networks. The characteristics of these formal and informal sources of support for new businesses are examined across a range of business support-type activities for new firms. The number of relationships and types of business support are also explored. Finally, the strength of these relationships is examined by analysis of the source of business support, type of business support, and links to the growth orientation-intention of the firm, after controlling for a number of key variables related to firm and industry status and owner characteristics. Results Preliminary analysis of the data by means of univariate analysis showed that average number of sources of advice was around 2.5 (from a potential total of 6). In terms of the diversity of relationships, universities had by far the smallest percentage of firms receiving beneficial advice from them. Government business services were beneficially used by 40% of young firms, the other relationship types being around the 50-55% mark. In terms of characteristics of the advice, the average number of areas in which benefit was achieved was around 5.5 of a maximum of 15. Start-up advice has by far the highest percentage of firms obtaining beneficial advice, with increasing sales, improving contacts and improving confidence being the other categories at or around the 50% mark. Other market-focused areas where benefits were also received were in the areas of new markets, existing product improvements and new product improvements, where around 40% of the young responding firms obtained benefit. Regression techniques evaluating the strength of these relationships in terms of the links between business support (by source of support, type of support, and range of support) and firm growth orientation-intention focus highlighted a number of significant relationships, even after controlling for a range of other explanatory variables identified in the literature. Specifically, there was found to be a positive relationship between receiving business advice generally (regardless of type or source) and growth orientation. This relationship was seen to be stronger, however, when looking at the number of types of beneficial advice received, and stronger again for the number of sources of this advice. In terms of individual sources of advice, customers and suppliers had the strongest relationship with growth, with Government business services also found to be significant. Combining these two sources was also seen to increase the strength of the relationship between these two sources of advice and growth orientation. In considering areas of support, growth was most strongly positively related to advice that benefited the development of new products and services, and also business confidence, but was negatively related to advice linked to business recovery. Finally, amalgamating the 4 key types and sources of advice to examine the impact of combinations of these types and sources of advice also improved the strength of the relationship. Implications The findings will assist in the understanding of young firms in general and growth more specifically, particularly the role and importance of specific sources, types and combinations of business support used more extensively by new young growth-oriented firms. Value This research may assist in processes designed to allow entrepreneurs to make better decisions; educators and support organizations to develop better advice and assistance, and Governments design better conditions for the creation of new growth-oriented businesses.

Do strategy choices matter for nascent firms? A study on effectuation and causation impacts on new ventures outcomes

Principal Topic : Nascent entrepreneurship has drawn the attention of scholars in the last few years (Davidsson, 2006, Wagner, 2004). However, most studies have asked why firms are created focussing on questions such as what are the characteristics (Delmar and Davidsson, 2000) and motivations (Carter, Gartner, Shaver & Reynolds, 2004) of nascent entrepreneurs, or what are the success factors in venture creation (Davidsson & Honig; 2003; Delmar and Shane, 2004). In contrast, the question of how companies emerge is still in its infancy. On a theoretical side, effectuation, developed by Sarasvathy (2001) offers one view of the strategies that may be at work during the venture creation process. Causation, the theorized inverse to effectuation, may be described as a rational reasoning method to create a company. After a comprehensive market analysis to discover opportunities, the entrepreneur will select the alternative with the higher expected return and implement it through the use of a business plan. In contrast, effectuation suggests that the future entrepreneur will develop her new venture in a more iterative way by selecting possibilities through flexibility and interaction with the market, affordability of loss of resources and time invested, development of pre-commitments and alliances from stakeholders. Another contrasting point is that causation is ''goal driven'' while an effectual approach is ''mean driven'' (Sarasvathy, 2001) One of the predictions of effectuation theory is effectuation is more likely to be used by entrepreneurs early in the venture creation process (Sarasvathy, 2001). However, this temporal aspect and the impact of the effectuation strategy on the venture outcomes has so far not been systematically and empirically tested on large samples. The reason behind this research gap is twofold. Firstly, few studies collect longitudinal data on emerging ventures at an early enough stage of development to avoid severe survivor bias. Second, the studies that collect such data have not included validated measures of effectuation. The research we are conducting attempts to partially fill this gap by combining an empirical investigation on a large sample of nascent and young firms with the effectuation/causation continuum as a basis (Sarasvathy, 2001). The objectives are to understand the strategies used by the firms during the creation process and measure their impacts on the firm outcomes. Methodology/Key Propositions : This study draws its data from the first wave of the CAUSEE project where 28,383 Australian households were randomly contacted by phone using a specific methodology to capture emerging firms (Davidsson, Steffens, Gordon, Reynolds, 2008). This screening led to the identification of 594 nascent ventures (i.e., firms that are not operating yet) and 514 young firms (i.e., firms that have started operating from 2004) that were willing to participate in the study. Comprehensive phone interviews were conducted with these 1108 ventures. In a likewise comprehensive follow-up 12 months later, 80% of the eligible cases completed the interview. The questionnaire contains specific sections designed to distinguish effectual and causal processes, innovation, gestation activities, business idea changes and ventures outcomes. The effectuation questions are based on the components of effectuation strategy as described by Sarasvathy (2001) namely: flexibility, affordable loss and pre-commitment from stakeholders. Results from two rounds of pre-testing informed the design of the instrument included in the main survey. The first two waves of data have will be used to test and compare the use of effectuation in the venture creation process. To increase the robustness of the results, temporal use of effectuation will be tested both directly and indirectly. 1. By comparing the use of effectuation in nascent and young firms from wave 1 to 2, we will be able to find out how effectuation is affected by time over a 12-month duration and if the stage of venture development has an impact on its use. 2. By comparing nascent ventures early in the creation process versus nascent ventures late in the creation process. Early versus late can be determined with the help of time-stamped gestation activity questions included in the survey. This will help us to determine the change on a small time scale during the creation phase of the venture. 3. By comparing nascent firms to young (already operational) firms. 4. By comparing young firms becoming operational in 2006 with those first becoming operational in 2004. Results and Implications : Wave 1 and 2 data have been completed and wave 2 is currently being checked and 'cleaned'. Analysis work will commence in September, 2009. This paper is expected to contribute to the body of knowledge on effectuation by measuring quantitatively its use and impact on nascent and young firms activities at different stages of their development. In addition, this study will also increase the understanding of the venture creation process by comparing over time nascent and young firms from a large sample of randomly selected ventures. We acknowledge the results from this study will be preliminary and will have to be interpreted with caution as the changes identified may be due to several factors and may not only be attributed to the use/not use of effectuation. Meanwhile, we believe that this study is important to the field of entrepreneurship as it provides some much needed insights on the processes used by nascent and young firms during their creation and early operating stages.

A closer look at business planning : early stage outcome effects of how it is prepared and used

The widespread use of business planning in combination with the mixed theoretical and empirical support for its effect suggest research is needed that takes a deeper into the quality of plans and how they are used. In this study we longitudinally examine use vs. non-use; degree of formalizations; revision of plans, and moderation of planning effects by product novelty,among nascent firms. We relate these to attainment of profitability after 12 months. We find that business planning is negatively related to profitability, but that revising plans is positively related to profitability. Both these effects are stronger under conditions of high product novelty.

Learning or legitimacy? an exploration of business planning amongst Australian social enterprises

In recent years, the value of business planning for new business ventures and small firms has been the subject of debate amongst entrepreneurship researchers (Brinckmann et al 2010: 24). Drawing on institutional theory, a number of writers suggest that business planning is primarily used to confer symbolic legitimacy on businesses seeking investment and engagement from external stakeholders ( Karlsson & Honig 2009; Zimmerman & Zeitz 2002; Delmar & Shane 2004). In this sense, business planning may not have any significant effects on firm learning, but may be used as evidence of good business operations in order to attract external resources. Meta-evaluation of the available empirical literature contests this proposition, finding that both the symbolic and organisational learning effects of business planning influence small firm performance (Brinckmann et al 2010: 36) While social enterprise – which we define as organisations that exist for a public or community benefit and trade to fulfill their mission - the study of social enterprise is a nascent and pre-paradigmatic area of inquiry (Nicholls 2010). As a consequence, there has been relatively little empirical analysis of the nature or effects of business planning amongst social enterprises (for two exceptions, see exploratory studies by Hynes 2009 and Bull & Crompton 2006). In this paper, we examine business planning practices amongst Australian social enterprises. Drawing on a survey of 365 social enterprises conducted in 2010 and in-depth interviews with 11 social entrepreneurs and managers from eight social enterprises, we find that social enterprises report being more actively engaged in business planning activities than their mainstream business counterparts. Our exploratory research suggests that both legitimacy and learning drive business planning amongst social enterprises, although legitimacy is the stronger driver. Our results also suggest that, as multi-stakeholder businesses led by mission, business planning can serve unique communicative and relational functions for this business type.

The role of social and human capital among nascent entrepreneurs

This study examines nascent entrepreneurship by comparing individuals engaged in nascent activities (n=380) with a control group (n=608), after screening a sample from the general population (n=30,427). The study then follows the developmental process of nascent entrepreneurs for 18 months. Bridging and bonding social capital, consisting of both strong and weak ties, was a robust predictor for nascent entrepreneurs, as well as for advancing through the start-up process. With regard to outcomes like first sale or showing a profit, only one aspect of social capital, viz. being a member of a business network, had a statistically significant positive effect. The study supports human capital in predicting entry into nascent entrepreneurship, but only weakly for carrying the start-up process towards successful completion.

Business planning in emerging firms : do nascent and young firms use business planning differently

Previous research suggested that due to the uncertainties surrounding the venture creation process, planning activities may be more valuable for already operating firms than for emerging ventures (McGrath and MacMillan, 1995). Business planning may serve different purposes during the early stages of the venture development process. Early planning during the nascent stage may be used to marshal the resources toward the achievement of preliminary goals (Locke and Latham, 2000), to gain external legitimization and funding (Karlssson & Honig, 2009; Stinchcombe, 1965). Planning may reduce the risk of future failure by facilitating the decision making process of launching -or not- the venture (Chwolka & Raith, 2011) by analysing the opportunity and its market potential (Boyd, 1991; Delmar & Shane, 2003). In later stages, planning may have a more internal role and may act as a strategic implementation tool (Brews & Hunt, 1999). However, if the reasons why ventures should engage (Frese, 2009) –or not- (Honig, 2004) in business planning have been investigated quite extensively (Brinckmann et al., 2010), how business plans are actually used over time by new ventures at different stages of their development and how these uses impact the performance of the firms are still unclear.

Engagement, persistence, progress and success as theoretically distinct aspects of business creation processes

Starting from the vantage point that explaining success at creating a venture should be the unique contribution—or at least one unique contribution—of entrepreneurship research, we argue that this success construct has not yet been adequately defined an operationalized. We thus offer suggestions for more precise conceptualization and measurement of this central construct. Rather than regarding various success proxies used in prior research as poor operationalizations of success we argue that they represent other important aspects of the venture creation process: engagement, persistence and progress. We hold that in order to attain a better understanding of venture creation these constructs also need to be theoretically defined. Further, their respective drivers need to be theorized and tested separately. We suggest theoretical definitions of each. We then develop and test hypotheses concerning how human capital, venture idea novelty and business planning has different impact on the different assessments of the process represented by engagement, persistence, progress and success. The results largely confirm the stated hypotheses, suggesting that the conceptual and empirical approach we are suggesting is a path towards improved understanding of the central entrepreneurship phenomenon of new venture creation.

Business planning, idea change, flexibility and performance: the best of both worlds?

The relationships between business planning and performance have divided the entrepreneurship research community for decades (Brinckmann et al, 2010). One side of this debate is the assumption that business plans may lock the firm in a specific direction early on, impede the firm to adapt to the changing market conditions (Dencker et al., 2009) and eventually, cause escalation of commitments by introducing rigidity (Vesper, 1993). Conversely, feedback received from the production and presentation of business plans may also lead the firm to take corrective actions. However, the mechanisms underlying the relationships between changes in business ideas, business plans and the performance of nascent firms are still largely unknown. While too many business idea changes may confuse stakeholders, exhaust the firm’s resources and hinder the undergoing legitimization process, some flexibility during the early stages of the venture may be beneficial to cope with the uncertainties surrounding new venture creation (Knight, 1921; March, 1982; Stinchcombe, 1965; Weick, 1979). Previous research has emphasized adaptability and flexibility as key success factors through effectual logic and interaction with the market (Sarasvathy, 2001; 2007) or improvisation and trial-and-error (Miner et al, 2001). However, those studies did not specifically investigate the role of business planning. Our objective is to reconcile those seemingly opposing views (flexibility versus rigidity) by undertaking a more fine-grained analysis at the relationships between business planning and changes in business ideas on a large longitudinal sample of nascent firms.

The underlying rationale for planning: do nascent and young firms do what they say they do?

Previous studies investigating the relationships between business planning and performance have led to inconclusive results (Brinckmann et al., 2010; Delmar & Shane, 2003; Frese, 2009; Gruber, 2007; Honig & Karlsson, 2004). Institutional theory argues that firms develop business plans as an answer to external and internal pressures to gain legitimization (Delmar & Shane, 2004) and funding from different stakeholders (Karlsson & Honig, 2009). Action theory suggests that planning will pave the new venture creation journey by providing milestones and a program to implement (Frese, 2009). However, studies with an institutional perspective imply that nascent firms are either conforming to or looking for the benefits of these external or internal pressures (Karlsson & Honig, 2009) while action theory assumes that the plans will be implemented (Frese, 2009). This paper attempts to (i) investigate if the intended uses of the business plans provided by nascent and young firms match their actual uses during their venture creation process and (ii) to examine how the types of uses of business plans impact the firms’ outcomes over three years.

The moderating role of learning on competitive advantage : longitudinal evidence from young firms

The question of how young firms reconcile the absence of well-established learning routines arising from the “liabilities of newness” with the “learning advantages of newness” has received scant attention in entrepreneurship. While older firms follow established learning routines and sometimes face problems in overcoming inertia, young firms with lower levels of inertia are better poised to explore, search and test unique avenues for their products and services. The process of learning and capability development as well as establishing uniqueness in their product offerings is an important part not only in the early stages of firm growth, but also in firm survival. Given their inexperience, for young firms, these learning processes are iterative and include contrasting learning loops that sometimes progress and at other times digress from initially perceived unique ideas. Such processes are embedded within capabilities that the firm develops and nurtures. Based on this premise and adopting a capabilities-based view, we examine how strategic networks and environmental knowledge affects uniqueness- mediated performance in young firms. We identify firms with digressive learning strategies based on their self-assessment of learning and compare them with other firms to demonstrate a differential effect on performance.

Client adaptiveness in entrepreneurship and its effect on sustained competitive advantage in project-orientated service firms

Important differences exist in how service firms operate in comparison with manufacturing firms (c.f. Johne & Storey, 1998; Tether, 2002). Despite these significant differences, not much is known whether these differences extrapolate to entrepreneurship in the services industry. This study seeks to address this gap by investigating how value creation occurs when project-oriented firms1 adopt client adaptiveness as part of their entrepreneurial posture. Specifically, we examine the effect of client adaptiveness on sustained competitive advantage. Client adaptiveness is conceptualized as the extent to which an organization engages in identifying and responding to perceived client needs and wants which reflects the service firm’s propensity to dynamically synchronize with the project/client requirements.

Business planning, innovation and performance in nascent firms

Debate about the relationships between business planning and performance has been active for decades (Bhidé, 2000; Mintzberg, 1994). While results have been inconclusive, this topic still strongly divides the research community (Brinckmann et al., 2010; Chwolka & Raith, 2011; Delmar & Shane, 2004; Frese, 2009; Gruber, 2007; Honig & Karlsson, 2004). Previous research explored the relationships between innovation and the venture creation process (Amason et al., 2006, Dewar & Dutton, 1986; Jennings et al., 2009). However, the relationships between business planning and innovation have mostly been invoked indirectly in the strategy and entrepreneurship literatures through the notion of uncertainty surrounding the development of innovation. Some posited that planning may be irrelevant due to the iterative process, the numerous changes innovation development entails and the need to be flexible (Brews & Hunt, 1999). Others suggested that planning may facilitate the achievement of goals and overcoming of obstacles (Locke and Latham, 2000), guide the venture in its allocation of resources (Delmar and Shane, 2003) and help to foster the communication about the innovation being developed (Liao & Welsh, 2008). However, the nature and extents of the relationships between business planning, innovation and performance are still largely unknown. Moreover, if the reasons why ventures should engage (Frese, 2009) –or not- (Honig, 2004) in business planning have been investigated quite extensively (Brinckmann et al., 2010), the specific value of business planning for nascent firms developing innovation is still unclear. The objective of this paper is to shed some light on these important aspects by investigating the two following questions on a large sample of random nascent firms: 1) how is business planning use over time by new ventures developing different types and degrees of innovation? 2) how do business planning and innovation impact the performance of the nascent firms? Methods & Key propositions This PSED-type study draws its data from the first three waves of the CAUSEE project where 30,105 Australian households were randomly contacted by phone using a methodology to capture emerging firms (Davidsson, Steffens, Gordon, Reynolds, 2008). This screening led to the identification of 594 nascent ventures (i.e., firms that were not operating yet at the time of the identification) that were willing to participate in the study. Comprehensive phone interviews were conducted with these 594 ventures. Likewise, two comprehensive follow-ups were organised 12 months and 24 months later where 80% of the eligible cases of the previous wave completed the interview. The questionnaire contains specific sections investigating business plans such as: presence or absence, degree of formality and updates of the plan. Four types of innovation are measured along three degrees of intensity to produce a comprehensive continuous measure ranging from 0 to 12 (Dahlqvist & Wiklund, 2011). Other sections informing on the gestation activities, industry and different types of experiences will be used as controls to measure the relationships and the impacts of business planning and innovation on the performance of nascent firms overtime. Results from two rounds of pre-testing informed the design of the instrument included in the main survey. The three waves of data are used to first test and compare the use of planning amongst nascent firms by their degrees of innovation and then to examine their impact on performance overtime through regression analyses. Results and Implications Three waves of data collection have been completed. Preliminary results show that on average, innovative firms are more likely to have a business plans than their low innovative counterpart. They are also most likely to update their plan suggesting a more continuous use of the plan over time than previously thought. Further analyses regarding the relationships between business planning, innovation and performance are undergoing. This paper is expected to contribute to the literature on business planning and innovation by measuring quantitatively their impact on nascent firms activities and performance at different stages of their development. In addition, this study will shed a new light on the business planning-performance relationship by disentangling plans, types of nascent firms regarding their innovation degres and their performance over time. Finally, we expect to increase the understanding of the venture creation process by analysing those questions on nascent firms from a large longitudinal sample of randomly selected ventures. We acknowledge the results from this study will be preliminary and will have to be interpreted with caution as the business planning-performance is not a straightforward relationship (Brinckmann et al., 2010). Meanwhile, we believe that this study is important to the field of entrepreneurship as it provides some much needed insights on the processes used by nascent firms during their creation and early operating stages.

The Role of Social and Human Capital Among Nascent Entrepreneurs

This study examines nascent entrepreneurship by comparing individuals engaged in nascent activities (n=380) with a control group (n=608), after screening a sample from the general population (n=30,427). The study then follows the developmental process of nascent entrepreneurs for 18 months. Bridging and bonding social capital, consisting of both strong and weak ties, was a robust predictor for nascent entrepreneurs, as well as for advancing through the start-up process. With regard to outcomes like first sale or showing a profit, only one aspect of social capital, viz. being a member of a business network, had a statistically significant positive effect. The study supports human capital in predicting entry into nascent entrepreneurship, but only weakly for carrying the start-up process towards successful completion.

Stimulating organizational ingenuity with design methods

Organizations invest in ways to stimulate new ideas for new products and services for the benefit of the organization, engaging in tournaments and competitions to generate new ideas or to combine existing ideas in new ways for new products and services (Terweisch and Uhlrich, 2009). Specifically, some large companies have developed platforms for posting intractable problems to tap into the ideas and problem solving abilities of a broader range of people (Huston and Sakkab, 2006; Morgan and Wang, 2010), and to develop new and elegant solutions often in an open innovation approach (Chesbrough, 2003). The notion of ingenuity is often applied to individuals who create innovative solutions in situations of constraint, where ingenuity in the form of elegant solutions can be understood as one form of resourcefulness (Young, 2011). However, the notion of organizational ingenuity locates ingenuity more centrally to an organization's strategic decision making and implementation, embedding ingenuity into the company's culture. Studies of organizations displaying ingenuity indicate a range of possibilities from extreme ingenuity (Baker and Nelson, 2005) to less dramatic but substantial changes (Thomke, 2003), sometimes in an experimental phase or as part of a move towards a new and distinct identity for ongoing innovation.