Planning: The history, theory, and impact of of business planning in contemporary businesses and in business schools: A critical perspective Benson Honig Teresca Cascioli Chair in Entrepreneurial Leadership McMaster University, Hamilton, Ontario Canada [email protected]
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Planning: The history, theory, and impact
of of business planning in contemporary
businesses and in business schools:
A critical perspective
Benson Honig Teresca Cascioli Chair in Entrepreneurial Leadership
Humans are not the only species that can be accused of
planning, although we are certainly the most capable (squirrels are pretty good!)
For many of us, plans become the end objective, as opposed to the means of attaining particular goals
a set of objectives for determining potential activities in pursuit of future circumstances currently preferred by actors with resources, or seeking resources, in order to influence specific outcomes (Troub, 1982).
Planning assumes that the future is predictable, linear, and manageable
The pyramids, one of the wonders of the world, took many decades to build, and were obviously well planned activities. Planners would have required precise and elaborate consideration regarding a range of issues including labor, economics, materials, and organizational management.
Is planning an essential component of civilization, technological development, production, organization, and all achievements of any importance? Do we have ‘accidental’ achievements?
The Easter Island Moai construction project, the successful implementation of numerous carefully implemented plans, led to the virtual ecological collapse for the island and its’ people (Wright, 2004; Diamond, 2005)
In one study of nascent entrepreneurs, for example, while 72 percent claimed to have done a business plan before starting their business, only 22 percent had written plans they believed to be suitable for formal presentations (Honig and Karlsson, 2004)
many of those that literally wrote their plans on the back of an envelope considered themselves as having planned their activities.
Environmental Stability In a comparatively static environment, such as the
building of a house, or the re-establishment of a proven project (such as a franchise, or a mature industry) the degree of variability faced by the planner may be limited, and the advantages of using a plan significantly greater (Fredrickson and Mitchell, 1984)
When the environment is subject to rapid changes, such as the emergence of a new industry, paradigm shifts, and new types of competition, the planner faces considerably more challenges (Christensen, 1997; Kanter, 2001)
nascents who perceived their competitive environment to be more uncertain, and who asked financial institutions for loans, were more likely to plan than those who did not.
Thus: nascents who ask for funding, facing increasing competitive or operational uncertainty, are more likely to plan – while those facing increasing financial uncertainty and asking for funding, are less likely to plan.
Environmental Stability: Empirical Record we found that those nascent entrepreneurs who indicated
their environment had low financial uncertainty (e.g., was comparatively certain), and who also asked financial institutions for funding, were more likely to plan than those who did not (Honig and Liao, 08)
In more financially secure situations, entrepreneurs appear better able to resist coercive planning forces.
Entrepreneurs who ask for funding, in increasingly competitive circumstances, are more likely to plan than those asking for funding in less competitive circumstances.
entrepreneurs who asked for money and were exposed to increasing operational uncertainty were more likely to plan than those who were not so exposed.
entrepreneurs may appear more legitimate for having produced an “award winning” business plan,
this legitimacy may be a sufficient return on their psychological and resource investments.
, the b- plan is sufficiently imbedded in our cultural landscape as to be supported by actors and agents in a coercive manner.
Banks, lending institutions, venture capitalists, small business associations, and business assistance agencies all rely upon, and promote, the production and dissemination of the business plan
In the contingency model of business planning introduced here, there are no direct linear relationships between the different phases consisting of opportunity recognition and exploitation.
Rather than present a linear relationship based on information retrieval, analysis, and decision making,
this model is designed as an open system that can be started from virtually any point in the entrepreneurial cycle.