University of Twente Student Theses


Voice of the consumer, contextual factors and the impact of business planning on high tech startup firm survival

Reuver, Jeroen (2012) Voice of the consumer, contextual factors and the impact of business planning on high tech startup firm survival.

[img] PDF
Abstract:This research contributes to the ongoing debate about the value of business planning by focusing on one specific part of the business plan being Voice of the Consumer [VOC] and its effect on startup survival. In addition, it incorporates the impact of the potential moderators market maturity and entrepreneurs’ experience. The goal of this research is to investigate how and under which conditions VOC could increase the chances of firm survival and growth. This is important because research on business planning is fragmented, and research on VOC didn’t provide significant evidence on its influence on new firm survival. In addition to theoretical relevance, it will also be beneficial for future entrepreneurs to know how and under which conditions they could benefit from using VOC in their business plan, because there are also many other important time consuming tasks when creating a new business. Recently, an intense debate has emerged in entrepreneurship literature on the value of business planning. While results are fragmented, one thing both sides of the debate do agree upon is that business planning is a heterogeneous task (Englis et al., 2010). Therefore, the question shouldn’t be if planning is beneficial for new firm success, but rather a more specific approach is required considering that different areas of the business plan could be more or less important depending on contextual factors (Gruber, 2007). VOC was chosen because customers can be a great input for planning and it could provide information about what customers value in a particular product or service. Englis et al. (2011) argue that many entrepreneurial firms focus on their technological capabilities and develop products that are taken to the market using a “push” strategy (Englis et al., 2010). This is in line with other authors such as Vohora et al. (2004) who argue that too much emphasis was placed on developing the technology and too little on identifying, accessing and targeting key customers in the value chain. Listening to potential customers can help the entrepreneur evaluate his initial idea and help to understand the true value of its opportunity. Data was collected from one of the oldest incubation programs from the University of Twente. Founded in 1984, this program has incubated more than 350 firms. The program consists of space provision complemented with scientific and business coaching designed for high-tech knowledge intensive start-ups. Of the 350 firms in our full sample, 113 firms’ business plans have been fully analyzed. Of these business plans, 35 firms included the VOC. Data was collected from 2010-2012 using a standardized form. Analysis examined differences across the groups based on the propositions. In summary it can be concluded that market maturity is the most important moderating factor given the significant result of the propositions. Firm survival chances and growth are most likely to be increased when VOC is used by firms founded in an existing market. As expected, more information about customer preferences should be available in existing markets because potential customers are more easily identified and customers should be able to provide more detailed information about their needs and preferences. These results confirm our proposition that the effect of using VOC would be more positive for firms founded in existing markets than for firms founded in new markets. This could be explained by the quality of the information (Gruber, 2007). Another conclusion is that VOC is less valuable for firms entering a new market because there is a higher degree of uncertainty and entering a new market is often associated with novel technologies that may not be easily understood (Englis et al. 2010). This is important because the creation of university spin off firms represent a potentially important but yet under developed option to create wealth from the commercialization of research (Vohora et al., 2004). Together with the high failure rates of new firms, it is important for researchers to understand which approach to firm creation increases the chances of success (Gruber, 2007).
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:
Export this item as:BibTeX
HTML Citation
Reference Manager


Repository Staff Only: item control page