DO TOO MANY COOKS SPOIL THE STEW? EXAMINING THE ROLES OF BUSINESS PLAN FORMALITY AND TEAM SIZE ON NASCENT REVENUE EXPECTATIONS AND GESTATION ACTIVITY
Paper in proceedings, 2016
We examine the relationship between business planning formality and team size on nascent revenue expectations and gestation activities in a longitudinal panel study of 514 nascent ventures. Results reinforce previous findings suggesting that formal business planning and team size increase both revenue expectations and gestation activity. Investigating the interaction effect of planning and team size on revenue expectations reveals an inflationary influence on initial revenue expectations. Further, the interaction is responsible for a statistically significant downward revision of revenue expectations in the subsequent period. Taking together, these two results suggest that increasing business plan formality in large teams may lead to positive long-term revenue forecasts but also increases the likelihood of optimistically-biased long-term revenue expectations.