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10 May 2010 | Posted by Innova Institute

Business Models and Entrepreneurship

Nascent entrepreneurs are often urged to put in paper their ideas using a predefined instrument known as business plan. An entrepreneur writing a business plan would already have answered the basic, but key questions of its business model.  How is value created? Who do we create value for? How are we going to be competitive? (Osterwalder 2004; Magretta 2002; Morris et al. 2005). Institutions, investors and stakeholders requests for an instrument to assess the value of an entrepreneurial venture, collide with early-stage entrepreneur's constant re-evaluation of the value proposal (Vasquez & Miralles 2007; Miles et al. 2009) as the nascent venture muddles through uncertain markets. Current research literature has not generated consensus on the advantages of early planning vs post-venture planning activites. While some authors conclude that business plans fail to deliver in its communicative and ceremonial function (Kirsch et al. 2009), others support the idea that early planning improves the survival chances of a new venture (Delmar & Shane, 2004). Despite this lack of consensus, there have been recent significant research strides aiming to unfold the dynamics in early-stage entrepreneurial ventures, including the description of trial-and-error effectuation processes (Saravasthy 2001), application of bricolage methods (Baker and Nelson, 2005), and the shaping of lean startups models. In the Innova Institute  at La Salle, we are involved in a research project that studies the practices of nascent entrepreneurs; research outcomes aim to provide evidence on whether business modeling instruments are adequate to assess the value of early-stage entrepreneurial ventures. We are currently conducting our research fieldwork, interviewing entrepreneurs and collecting data about their venture. Please feel free to get in touch with us if you would like to participate in the study. Do you use any planning tools in early-stages of projects? which factors influence the decision to plan ahead of the action? Would you like to share any experience with us?   References:

  • Baker, T. & Nelson, R., 2005. Creating something from nothing: Resource construction through entrepreneurial bricolage. Administrative Science Quarterly, 50(3), 329–366.
  • Delmar, F. & Shane, S., 2004. Legitimating first: Organizing activities and the survival of new ventures. Journal of Business Venturing, 19(3), 385–410
  • Kirsch, D., Goldfarb, B. & Gera, A., 2009. Form or substance: the role of business plans in venture capital decision making. Strategic Management Journal, 30(5), 487-515.
  • Magretta, J., 2002. Why business models matter. Harvard Business Review, 80(May), 86–93.
  • Miles, R.E. et al., 2009. The I-Form Organization. California Management Review, 51(4), 61-77.
  • Morris, M., Schindehutte, M. & Allen, J., 2005. The entrepreneur's business model: toward a unified perspective. Journal of Business Research, 58(6), 726-735.
  • Osterwalder, A., 2004. The Business Model Ontology a proposition in a design science approach. Academic Dissertation, Universite de Lausanne, Ecole des Hautes Etudes Commerciales, 1-169.
  • Vasquez, S. & Miralles, F., 2007. Business Models in Open Source Software: do they exist? In Y. Pigneur Business Models & Strategy Alignment. Lausanne: 12th Conference of the Association Information and Management (AIM): Free and Open Source Software: Challenges & Opportunities.
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