How are new business beings born?  A paper by Liliana Doganova, member of the PERFORMABUSINESS team, and Martin Giraudeau, lecturer in accounting at the London School of Economics, proposes to study the populating of markets by looking at the very place where new firms are formulated and formed: the business plan. Research on business planning has tended to focus on consequences, with conclusions indicating that while business plans certainly help entrepreneurs learn and gain legitimacy in the eyes of external parties, they have little impact on the performance of the future firm. Our paper, instead, chooses to open the plans, to analyze their contents and to describe their uses. This method allows us to observe directly what they do, both in terms of visual formulation of the new venture and of its actual formation as a new business active on its markets.

In January, we presented a first draft of this paper, entitled “Entrepreneurial formulas: business plans and the formation of new ventures”, at a seminar at Centre de Sociologie de l’Innovation. The paper identified different techniques through which the future firm is put together in a business plan, and proposed to call them “formulas”. The business plan, we suggested, acts as a literary, chemical, financial and magical formula as well: it tells a story, made up of a limited set of characters and plots; it lists and bonds the resources that constitute the future firm; it transforms them into a stream of future revenues; and, in doing so, it helps bring into existence that which it describes.

The discussion of the paper raised interesting questions and opened new research paths. Isn’t it misleading, some colleagues asked, to envisage the business plan as a magic formula? How to describe the business plan – a peculiar object which is made to make do, which is addressed to a valuating agency (the investor), which is both inventively playful and rigidly standardized? What is the singularity of the business plan, as compared with, say, a project proposal, a scientific article, or an annual report? And, finally, if the business plan is a site to observe new business beings in the making, what does it tell us about the theory of the firm? We are currently incorporating these comments — new version of the paper will be made available sometime soon.