![]() ![]() In order for them to successfully come into existence, they have to get know their stakeholders, earn their respect and follow the norms and rules they pose. Related to these problems, nascent organizations have a relative lack of legitimacy. They must raise capital from sources skeptical of newcomers, recruit employees that are unaware of what the firm is doing, obtain new resources, and initiate their product and market, among other things. Nascent organizations face a different set of problems than their established counterparts. This study joins a small but growing number of entrepreneurship articles that utilize an institutional perspective to explain entrepreneurial behavior. Our focus is on written formal business plans, in two populations (Sweden and the US) of nascent entrepreneurs observed over a 24-month period. The concept of nascent organizations to indicate genuinely new activities that take place before individuals have actually started their firms (they have neither registered a firm, nor have they been able to pay salaries for 3 consecutive months), but have engaged in an activity indicating an attempt to start a firm, i.e., a gestation activity. We examine the institutional characteristics that influence the behavior of independent nascent organizations with respect to business plans, and how such characteristics may be moderated by cultural factors. In this study, we seek to understand the forces exerted on entrepreneurs to conform to business planning behavior, which persists in spite of a lack of conclusive evidence connecting planning with efficiency. It severely reduces the applied practical utility of business planning, in that anticipating future events is difficult, if at all possible, compounded by cognitive limitations on the range and number of alternatives that may be examined in any one plan. ![]() Further, bounded rationality constrains the ability to successfully evaluate and predict future events. However, not all entrepreneurs write plans, and many successful entrepreneurs avoid taking this “best practice” route altogether. Best practices frequently suggest that entrepreneurs write business plans before beginning the task of setting up an organization, delivering a product or service, and entering the marketplace. ![]()
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