Lack of information and vulnerability of young firms. The role of the business plan

Journal title MANAGEMENT CONTROL
Author/s Domenico Nicolò
Publishing Year 2018 Issue 2018/2 Suppl.
Language Italian Pages 16 P. 37-52 File size 219 KB
DOI 10.3280/MACO2018-SU2003
DOI is like a bar code for intellectual property: to have more infomation click here

Below, you can see the article first page

If you want to buy this article in PDF format, you can do it, following the instructions to buy download credits

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

Our previous research has highlighted that a very small number of Italian compa-nies failed planned their activities and carried out the management control through instruments such as budget, reporting, cost analysis, etc. (Nicolò, 2011). The lack of information has likely contributed to the crisis and failure of these companies. About 1/3 of these failed companies were very young, as they had been established for less than ten years. As is well known, young firms are very vulnerable because they do not have a corporate reputation and, consequently, the bonds of trust with the stakeholders are very fragile. Young firms do not have a history that can demonstrate that they are able to keep their commitments to lenders, investors, suppliers, customers, strategic partners. At the first difficulties, these fragile bonds of trust often break down and companies collapse on themselves because of the lack of resources they need to survive (Nicolò 2015, Nicolò and Ferrara 2015, Nicolò 2017). Drawing up a business plan can mitigate the high level of vulnerability of young firms because it helps to prevent wrong decisions. Moreover, the business plan is the only tool that can be used to build quickly a corporate reputation analytically demonstrating to stakeholders that the company will be able to survive over time and to meet their interests and expectations.

Keywords: Start-ups, Corporate Reputation, Business Plan, Survival of Young Firms, Management Control Systems

  1. Adner R., Kapoor R. (2010), Value Creation in Innovation Ecosystems: How the Structure of Technological Interdependence Affects Firm Performance in New Technology Generations, Strategic Management Journal, 31, pp. 306-333.
  2. Aldrich H.E. (2001), Who Wants to Be an Evolutionary Theorist: Remarks on the Occasion of the Year 2000 OMT Distinguished Scholarly Career Award Presentation, Journal of Management. Inquiry. 10, 2, pp. 115-127. DOI: 10.1177/1056492601102004
  3. Aldrich H.E., Martinez M.A. (2001), Many Are Called But Few Are Chosen: An Evolutionary Perspective for the Study of Entrepreneurship, Entrepreneurship Theory and Practice, 25, 4, pp. 41–56.
  4. Ansoff H.I., Avner J., Brandenburg R., Portner F. & Radosevich R. (1970), Does Planning Pay? The Effect of Planning on Success of Acquisition in American Firms, Long Range Planning, 3, 2, pp. 2-7.
  5. Åstebro T., Bernhardt I. (2003), Start-up Financing, Owner Characteristics and Survival, Journal of Economics and Business, 55, pp. 303-319. DOI: 10.1016/S0148-6195(03)00029-8
  6. Audretsch D. (1997), Technological Regimes, Industrial Demography and the Evolution of Industrial Structures, Industrial and Corporate Change, 6, pp. 49-82.
  7. Audretsch D.B., Mahmood T. (1995), New-Firm Survival: New Results Using a Hazard Function, Review of Economics and Statistics, 77, 1, pp. 97-103.
  8. Audretsch D.B., Houweling P., Thurik A.R. (2000), Firm Survival in the Netherlands, Review of Industrial Organization, 16, 1, pp. 1-11. DOI: 10.1023/A:1007824501527
  9. Bell J. (2010), Student Business Plan Competitions: Who Really Does Have Access?, Small Business Institute National Conference Proceedings, 34, 1, pp. 18-25.
  10. Biggadike R.C. (1976), Corporate Diversification: Entry, Strategy and Performance. Cambridge, MA: Harvard University Press.
  11. Bird B.J. (1993), Demographic Approaches to Entrepreneurship: The Role of Experience and Background, Advances in Entrepreneurship, Firm Emergence, and Growth, 1, pp. 11-48.
  12. Birley S. (1989), Female Entrepreneurs: Are They Really Different?, Journal of Small Business Management, 27, 1, pp. 32-37.
  13. Box M. (2008), The Death of Firms: Exploring the Effects of Environment and Birth Cohort on Firm Survival in Sweden, Small Business Economics, 31, pp. 379-393.
  14. Bracker J., Keats B., Pearson J. (1988), Planning and financial performance among small firms in a growth industry, Strategic Management Journal, 9, pp. 591-603.
  15. Bracker J., Pearson J. (1986), Planning and Financial Performance of Small, Mature Firms, Strategic Management Journal, 7, pp. 503-522.
  16. Brockhaus R.H. (1980), Risk Taking Propensity of Entrepreneurs, Academy of Management Journal, 23, 3, pp. 509-520. DOI: 10.2307/255515
  17. Brockhaus R.H., Horwitz P.S. (1986), The Psychology of the Entrepreneur. In D.L. Sexton and R.W. Smilor (Ed.), The Art and the Science of Entrepreneurship. Cambridge, MA: Ballinger, pp. 25-48.
  18. Brush C.G. (1992). Research of Women Business Owners: Past Trends, a New Perspective and Future Directions, Entrepreneurship: Theory and Practice, 16, 4, pp. 5-30.
  19. Buttà C. (1995), La Genesi dell'Impresa, Milano, FrancoAngeli.
  20. Buttà C. (2003), Elementi per una Concettualizzazione del Processo Genetico, Sinergie, 61/62, pp. 71-95.
  21. Bygrave W.D. (1989), The Entrepreneurship Paradigm (II): Chaos and Catastrophes Among Quantum Jump, Entrepreneurship: Theory and Practice, 14, 2, pp. 7-30.
  22. Cacciotti G., Hayton J.C. (2015), Fear and Entrepreneurship: A Review and Research Agenda, International Journal of Management Review, 17, 2, pp. 165-190.
  23. Cacciotti G., Hayton J.C., Mitchell J.R., Giazitzoglu A. (2016), A Reconceptualization of Fear of Failure in Entrepreneurship, Journal Business Venturing, 31, pp. 302-325.
  24. Cannice M.V. (2004), Getting in on the University Business Plan Competition Circuit, Entrepreneur.com, October 19, -- http://www.entrepreneur.com/article/73208.
  25. Carland James W., Hoy F., Boulton William R., Carland Jo Ann C. (1984). Differentiating Entrepreneurs from Small Business Owners: A Conceptualization, The Academy of Management Review, 9, 2, pp. 354-359. DOI: 10.4135/9781446263433
  26. Carter N., Gartner B., Reynolds P. (1996), Exploring Start-up Event Sequences, Journal of Business Venturing, 11, 3, pp. 151-166.
  27. Castrogiovanni G., Justis R., Julian S. (1993), Franchise failure rates: An assessment of magnitude and influencing factors, Journal of Business Management, 31, 2, pp. 104-105.
  28. Chandler G.N., Hanks S.H. (1994), Founder Competence, the Environment and Venture Performance, Entrepreneurship: Theory and Practice, 18, 3, pp. 77-90. DOI: 10.1177/104225879401800306
  29. Child J. (1972), Organization Structure, Environment and Performance: The Role of Strategic Choice, Sociology, 6, pp. 2-22. DOI: 10.1177/003803857200600101
  30. Coda V. (1988), L’Orientamento Strategico dell’Impresa, Torino, UTET.
  31. Coda V. (1991), Comunicazione e Immagine nella Strategia dell’Impresa, Torino, Giappichelli.
  32. Cooper A.C., G.E, Willard C.Y. Woo (1986), Strategies of High-performing New and Small Firms: A Re-Examination of the Niche Concept, Journal of Business Venturing, 1, 3, pp. 247-260.
  33. Cooper A.C. (1993), Challenges in Predicting New Firm Performance, Journal of Business Venturing, 8, 3, pp. 241-254.
  34. Cooper A., Woo C., Dunkelberg W. (1988), Entrepreneurs Perceived Chances for Success, Journal of Business Venturing, 3, pp. 97-108. DOI: 10.1016/0883-9026(88)90020-1
  35. Dagnino G. (2015), The Academic Incubator as a Fluid Mosaic: An Ecological Interpretative Framework, in Nicolò D. (Ed.) Startups and Start-up Ecosystems: Theories, Models and case Studies in the Mediterranean Area, ASERS Publishing, University of Craiova Printing House, Romania.
  36. Damodaran A. (2009), Valuing Young, Start-up and Growth Companies: Estimation Issues and Valuation Challenges, Stern School of Business, New York University, May.
  37. Davis A., Olson Eric M. (2008), Critical Competitive Strategy Issues Every Entrepreneur Should Consider Before Going into Business, Business Horizons, 51, pp. 211-221.
  38. Delmar F., Shane S. (2002), What Firm Founders Do: A Longitudinal Study of the Startup Process. In W. D. Bygrave, C. G. Brush, P. Davidsson, & J. Fiet (Eds), Frontier of Entrepreneurship Research Babson Park, MA, Babson College.
  39. Di Carlo A. (2009), Analisi Economico-Aziendale dei Concordati Preventivi, in M. Ferro, A. Ruggiero, A. Di Carlo (a cura di), Concordato Preventivo, Concordato Fallimentare e Accordi di Ristrutturazione dei Debiti. Analisi giuridica ed Aziendalistica sulla Composizione Giudiziaria della Crisi d’Impresa nella Prassi dei Tribunali Italiani dopo la Riforma: I Risultati di un’Indagine, Torino.
  40. Drucker P.F. (1985), Innovation and Entrepreneurship, New York, Harper & Row.
  41. Dubini P., Schillaci C.E. (1988), L’Influsso delle Variabili Ambientali nella Decisione di Avviare una Nuova Impresa, in G. Lorenzoni, A. Zenoni (a cura di), Gli Studi sull’Imprenditorialità in Italia, Bulzoni, Roma, pp. 80-110.
  42. Dun Bradstreet (1988), Business Failure Record: 1986 Final/1987 Preliminary, New York, Dun and Bradstreet Corporation.
  43. Dunne T., Roberts M.J., Samuelson L. (1988), Patterns of Firm Entry and Exit in US Manu-facturing Industries, RAND Journal of Economics, 19, pp. 495-515.
  44. Ebert T., Brenner T., Brixy U. (2015), New Firm Survival: The Interdipendence Beetween Regional Externalities and Innovativeness, Working Papers on Innovation and Space Philipps-Universität Marburg.
  45. Everett J.E., Watson J. (1998), Small Business Failure and External Risk Factors, Small Business Economics, 11, 4, pp. 371-390. DOI: 10.1023/A:100806552
  46. Ferro M. (2009), Accordi di Ristrutturazione dei Debiti, in M. Ferro, A. Ruggiero, A. Di Carlo (a cura di), Concordato Preventivo, Concordato Fallimentare e Accordi di Ristrutturazione dei Debiti. Analisi giuridica ed Aziendalistica sulla Composizione Giudiziaria della Crisi d’Impresa nella Prassi dei Tribunali Italiani dopo la Riforma: I Risultati di un’Indagine, Torino.
  47. Fontana R., Nesta L. (2010), Pre-Entry Experience, Post-Entry Learning and Firm Survival: Evidence from the Local Area Networking Switch Industry, Structural Change and Economic Dynamics, 21, pp. 41-49.
  48. Gartner W.B. (1985), A Conceptual Framework for Describing the Phenomenon of New Venture Creation, Academy of Management Review, 10, 4, pp. 696-706. DOI: 10.5465/AMR.1985.4279094
  49. Gartner W.B. (1988), "Who is an Entrepreneur?" is the Wrong Question, American Journal of Small Business, 12, 4, pp. 11-32. DOI: 10.1177/104225878801200401
  50. Gatewood J., Shaver K.S., Gartner W.B. (1995), A Longitudinal Cognitive Factors Influencing Start-up Behaviours and Success at Venture Creation, Journal of Business Venturing, 10, pp. 371-391
  51. Grinyer P., Al-Bazzaz S., Yasai-Ardekani M. (1986), Towards a Contingency Theory of Corporate Planning: Findings in 48 U.K. companies, Strategic Management Journal, 7, pp. 3-28.
  52. Gudmundsson S.V., Lechner C. (2013), Cognitive Biases, Organization, and Entrepreneurial Firm Survival, European Management Journal, 31, pp. 278-294.
  53. Haswell S., Holmes S. (1989), Estimating the Small Business Failure Rate: A reappraisal, Journal of Small Business Management, 27, pp. 68-74.
  54. Helmers C., Rogers M. (2010), Innovation and the Survival of New Firms in the UK, Review of Industrial Organization, 36, pp. 227-248.
  55. Herold D. (1972), Long Range Planning and Organizational Performance: A Cross-Validation Study, Academy of Management Journal, 15, pp. 91-102. DOI: 10.2307/254803
  56. Katz J.A., Gartner W.B. (1988), Properties of Emerging Organization. Academy of Management Review, 13, 3, pp. 429-441.
  57. Kirzner I.M. (1979), Perception Opportunity and Profit, Chicago, University of Chicago Press.
  58. Knaup A.E. (2005), Survival and Longevity in the Business Employment Dynamics Data, Monthly Labor Review, pp. 50-56.
  59. Knaup A.E., Piazza M.C. (2007), Business Employment Dynamics Data: Survival and Longevity, Monthly Labor Review, pp. 3-10.
  60. Kollmann T., Stöckmann C, Kensbock Julia M. (2017), Fear of Failure as a Mediator of the Relationship Between Obstacles and Nascent Entrepreneurial Activity-An Experimental Approach, Journal of Business Venturing, 32, pp. 280-300.
  61. Johnson D.D.P., Fowler J.H. (2011), The Evolution of Overconfidence, Nature, 477, pp. 317-320.
  62. Liao J., Welsch H., Wee-Liang Tan (2005), Venture Gestation Paths of Nascent Entrepreneurs: Exploring the Temporal Patterns, Journal of High Technology Management Re-search, 16, pp. 1-22.
  63. Longsworth E.K. (1991), The Anatomy of a Start-Up, Boston, Inc. Publishing.
  64. Masini C. (1988), Lavoro e risparmio, II rist., Torino, UTET.
  65. McDougall P., Robinson Jr. R., De Nisi A. (1992), Modeling New Venture Performance: An Analysis of New Venture Strategy, Industry Structure, and Venture Origin, Journal of Business Venturing, 7, pp. 267-289.
  66. Miles R.E., Snow C.C., Meyer A.D., Coleman H.Jr. (1988), Organizational Strategy, Structure and Process, in Quinn J.B., Mintzberg H., James R.M., The Strategy Process, Englewood Cliffs, N.J., Prentice-Hall Inc.
  67. Miller A., Camp B. (1985), Exploring Determinants of Success in Corporate Ventures, Journal of Business Venturing, 1, pp. 87-105. DOI: 10.1016/0883-9026(85)90009-6
  68. Mintzberg H. (1973), The Nature of Managerial Work, New York, Harper & Row.
  69. Moore J.F. (2006), Business Ecosystems and the View from the Firm, The Antitrust Bulletin, 51 (1), pp. 31-75.
  70. Moss Kanter R. (2012), Can America compete? Strategies for Economic Revival, September-October, Harvard Magazine.
  71. Nicolò D. (2009), Il Reporting per Segmenti e l’Informativa Settoriale Secondo l’IFRS 8, Milano, Giuffrè.
  72. Nicolò, D. (2011), Caratteristiche Generali delle Imprese e del Vertice Imprenditoriale, Grado di Evoluzione del Sistema Informativo e Dissesto: Evidenze di un'Indagine Empirica, in M. Ferro, P. Bastia e Giacomo M. Nonno (a cura di), L’accertamento del Passivo. Procedimento di Verifica dei Crediti, Giudizi di Impugnazione e Questioni Critiche: i Risultati di una Ricerca sui Fallimenti Italiani. Milano, IPSOA, Gruppo Wolters Kluvers, pp. 189-210.
  73. Nicolò D. (2013), Monitoraggio delle Sequenze e Risultati Aziendali, Management Control, 3, pp. 35-50
  74. Nicolò D. (2015), Towards a Theory on Corporate Reputation and Survival of Young Firms, 2nd International Conference “Economic Scientific Research – Theoretical, Empirical and Practical Approaches, ESPERA 2014, 13-14 November 2014, Bucharest, Romania, Procedia Economics and Finance, 2212-6671, Elsevier B.V, pp. 296-303.
  75. Nicolò D., Ferrara N. (2015), Corporate Reputation, Business Plan and Start-up Sustainability, in Nicolò D. (Ed.) Startups and Start-up Ecosystems: Theories, Models and case Studies in the Mediterranean Area, ASERS Publishing, University of Craiova Printing House, Romania, pp. 13-32.
  76. Nicolò D. (2017), Young Firms Sustainability and Corporate Reputation: A Comparison of the Survival Rates in the US and EU, in Vasile Andrei J., Nicolò D., eds., Sustainable Entrepreneurship and Investments in the Green Economy, IGI Global, Hershey Pa (USA), pp. 1-27.
  77. Nicolò D., Nania I. (2017), Risk, Capitalization and Survival of Young Firms: Empirical Survey on Italian Companies, Key Note Speech at the 3rd Dubrovnik International Economic Meeting DIEM 2017, Managing Business Growth in a Volatile Environment, Dubrovnik, pp. 3-23.
  78. Pfeffer J., Salancik G.R. (1978), The External Control of Organizations: A Resource Dependence Perspective, New York, Harper & Row.
  79. Poole M.S., Van de Ven A.H., Dooley K., Holmes M.E. (2000), Organizational Change and Innovation Process, Oxford, UK, Oxford Univ. Press
  80. Porter M.E. (2001), Strategy and the Internet, Harvard Business Review, March, pp. 62-78.
  81. Ramanujam V., Venkatraman N., Camillus J. (1986), Multi-Objective Assessment of Effectiveness of Strategic Planning: A Discriminant Analysis Approach, Academy of Management Journal. 29, pp. 347-372.
  82. Reynolds P., Miller B. (1992), New Firm Gestation: Conception, Birth, and Implications for Research, Journal of Business Venturing, 7, pp. 405-418. DOI: 10.1016/0883-9026(92)90016-K
  83. Robinson R. (1979), Forecasting and Small Business: A Study of the Strategic Planning Process, Journal of Small Business Management, 17, 3, pp. 19-27.
  84. Ross L.W., Byrd, K.A. (2011), Business Plan Competitions: Start-up “Idols” and Their Twenty-First Century Launch Pads, Journal of Higher Education Theory and Practice, 11, 4, pp. 53-64.
  85. Ruisi M. (2015), The Role of Business Competitions in the Processes of Defining and Launching a New Venture. Cases of Companies Involved in the “Start Cup” Palermo and Grown Inside the Academic Incubator ARCA, in Nicolò D. (Editor) Startups and Start-up Ecosystems: Theories, Models and case Studies in the Mediterranean Area, ASERS Publishing, University of Craiova Printing House, Romania.
  86. Russell R., Atchison M., Brooks R. (2008), Business Plan Competitions in Tertiary Institutions: Encouraging Entrepreneurship Education, Journal of Higher Education Policy and Management, 30, 2, pp. 123-138. DOI: 10.1080/13600800801938739
  87. Sandberg W.R. (1986), New Venture Performance: The Role of Strategy and Industry Structure. Lexington, MA, Lexington Books.
  88. Schwartz M. (2013), The Journal of Technological Transfer. A Control Group Study of Incubators’ Impact to Promote Firm Survival, Journal of Technological Transfer, 38, pp. 302-331.
  89. Shaver K., Scott L. (1991), Person, Process, Choice: The Psychology of New Venture Creation, Entrepreneurship: Theory and Practice, 16, 2, pp. 23-45. DOI: 10.1177/104225879201600204
  90. Smith J.A. (1998), Strategies for Start-Ups, Long Range Planning, 31, 6, pp. 857-872.
  91. Storer D.J. (1988), Entrepreneurship and New Firm, Routledge.
  92. Swaminathan A. (1996), Environmental Conditions at Founding and Organizational Mortality: A Trial-by-Fire Model, Academy of Management Journal, 39, 5, pp. 1350-1377.
  93. Thompson J.D. (1967), Organizations in Action, New York, McGraw Hill.
  94. Timmons, J. (1990). New Venture Creation, 3rd ed. Homewood, IL, R.D, Irwin.
  95. Van de Ven, A.H. (1992). Longitudinal Methods for Studying the Process of Entrepreneur-ship, in D.L. Sexton and J.D. Kasarda (Eds), The State of the Art of Entrepreneurship. Boston, PWS-Kent Publisher, pp. 214-242
  96. Van de Ven A.H., Poole M.S. (1995), Explaining Development and Change in Organizations, Academy of Management Review, 20, 3, pp. 510-540. DOI: 10.5465/AMR.1995.9508080329
  97. Van de Ven A.H., Engleman R.M. (2004), Event- and Outcome- Driven Explanations of Entrepreneurship, Journal of Business Venturing, 19, pp. 343-358. DOI: 10.1016/S0883-9026(03)00035-1
  98. Venkataraman S., Van de Ven A.H., Buckeye J., Hudson R. (19. Starting Up in Turbulent Environment: A Process Model of Failure Among Firms with High Customer Dependence, Journal of Business Venturing, 5, pp. 277-296. DOI: 10.1016/0883-9026(90)90006-F
  99. Vesper K.H. (1990), New Venture Strategies. 2nd ed. Englewood Cliffs, NJ, Prentice Hall.
  100. Weick K.E. (1972), The Social Psychology of Organizing, (2nd ed.), New York, Random House.
  101. Wen C.T., Chen Y.W. (2007), The Innovation Process of Entrepreneurial Teams in Dynamic Business Plan Competition: from Sense-Making Perspective, International Journal of Technology Management, 39, 3-4, pp. 346-363. DOI: 10.1504/IJTM.2007.013505
  102. Wennberg K., Lindqvist G. (2010), The Effects of the Clusters in the Survival and Performance of New Firms, Small Business Economics, 34, pp. 221-241.

  • Management accounting systems in venture capital-backed start-up companies Simone Aresu, Luigi Rombi, Andrea Cardia, in MANAGEMENT CONTROL 3/2019 pp.35
    DOI: 10.3280/MACO2019-003003
  • Managing uncertainty in the start-up environment. Is a business plan an incentive or a limitation? Giovanna Mariani, Davide Morelli, Leonardo Bartoloni, in MANAGEMENT CONTROL 1/2019 pp.73
    DOI: 10.3280/MACO2019-001004

Domenico Nicolò, Carenze informative e vulnerabilità delle imprese giovani: il ruolo del business plan in "MANAGEMENT CONTROL" 2 Suppl./2018, pp 37-52, DOI: 10.3280/MACO2018-SU2003