BUSINESS PLANNING AND SEARCH BEHAVIOR
In the last decade, a renewed interest in the relationship between business planning and new venture performance has bourgeoned (Brinckmann, Grichnik & Kapsa, 2010). Recent studies have explored more finer-grained aspects and boundary conditions of this relationship, (Greene & Hopp, 2017; Brinckmann & Kim, 2015), and continue to show an overall positive relation between planning and performance.
Yet, an ever-growing body of practitioner-oriented literature (e.g. Mullins & Komisar, 2009; Osterwalder & Pigneur, 2010; Ries, 2011) de-emphasizes the value of planning by arguing that there is little predictive value in any a-priori plan of an uncertain venture.
This later perspective is grounded on the benefits of search processes that promote low-cost experimentation and rapid adaptation over planning (e.g., Blank, 2013; Dew, Read, Sarasvathy, & Wiltbank, 2009; Eisenhardt, 1989; McGrath, 1999; Mosakowski, 1997; Mullins & Komisar, 2009; Ries, 2011; Brinckmann, Grichnik, & Kapsa, 2010).
We argue and test that a key and underexplored mechanism driving the positive effect of planning on new venture performance is information search, which is also a central pillar of the experimentation approach. We hypothesize and empirically test whether the effect of planning on new venture performance is mediated by information search.
We use data on PSED II to how information search mediates the effect of business planning on venture viability and sales, two key performance variables for nascent entrepreneurs.