Risk propensity, risk perception and business plan formalisation: a conceptual investigation

The objective of this research is to analyse the risk propensity and risk perception of the entrepreneur and determine if these affect the degree of formalisation in business plans. This was accomplished by in-depth interviews with 12 entrepreneurs in the business-to-business sector. Risk propensity was constructed as a multi-dimensional construct. Results showed partial support for increased formality of business plans where risk propensity was high and risk perception (controllability of uncertainty) was low. Further there is strong support for lower risk propensity of experienced entrepreneurs.