Study Notes, Gruber Article: Uncovering the Value of Planning in New Venture Creation

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Gruber article 2007: Uncovering the value of planning in new venture creation: A process and contingency perspective The topic discussed in the article is whether business planning has positive impact on firm performances. The existing view on this topic is dichotomous. One group of scholars think planning is important for successful firm creation, another group disagrees strongly. Findings from strategy research conclude there are two dominant models of strategy formulation. One is a rational paradigm, and the other one is an incremental paradigm. However, the strategy research has been done only for established firms. Findings from entrepreneurship research point out that planning process and its efforts on performance differ between emerging firms and established firms. Emerging firms face high level of uncertainty, and thus planning is more based on assumption to knowledge, while established firms can base their plans on past performance and historical trends. Three problems with previous research have been identified by Gruber. First, contingent factors such as environmental uncertainty should be examined when evaluating the planning-performance relationship in start-ups. Second, process attributes such as entrepreneurial information search, time spent on planning, and efforts put into different activities should be studied as well. Third, functional areas should be planned differently depending on the importance to venture success. Marketing planning is the functional area Gruber focused on in the article. Gruber’s research indicates that the use of secondary information, the planning of customer relationship and marketing mix will have positive effect on venture performance without considering the founding environments. When taking the founding environments into consideration, the effect of time spent on marketing planning will be more positive in low dynamism environments than in high dynamism environments. The above results suggest that planning is...
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