Walking the Talk: The Impact of High Commitment Values and Practices on Technology Start-ups

We examine the impact of high commitment work systems (HCWS) on high-technology start-ups. We differentiate two components of a HCWS: the human resource practices and the espoused values of the firm\u27s leadership and demonstrate that both are associated with an increased likelihood of IPO and a decreased likelihood of firm failure. Importantly, there are interactions between practices and values such that the benefit of one tends to amplify the other. Implications of these interactions for future research on high commitment work systems are discussed

Coming From Good Stock: Career Histories and New Venture Formation

We examine how the social structure of existing organizations influences entrepreneurship and suggest that resources accrue to entrepreneurs based on the structural position of their prior employers. We argue that information advantages allow individuals from entrepreneurially prominent prior firms to identify new opportunities. Entrepreneurial prominence also reduces the perceived uncertainty of a new venture. Using a sample of Silicon Valley start-ups, we demonstrate that entrepreneurial prominence is associated with initial strategy and the probability of attracting external financing. New ventures with high prominence are more likely to be innovators; furthermore, innovators with high prominence are more likely to obtain financing

The Company They Keep: Founders\u27 Models for Organizing New Firms

[Excerpt] This chapter examines the employment models founders use as they begin to construct new firms. The empirical setting is a sample of emerging technology firms in Silicon Valley. This chapter focuses on two questions: (1) Why are new firms founded under different conceptual models? and (2) What are the factors that lead a founding team to espouse a particular employment model

Do Start-Ups Pay Less?

The authors analyze Danish registry data from 1991 to 2006 to determine how firm age and firm size influence wages. Unadjusted statistics suggest that smaller firms paid less than larger firms paid, and that firm age had little or no bearing on wages. After adjusting for differences in the characteristics of employees hired by these firms, however, they observe both firm age and firm size effects. Larger firms paid more than did smaller firms for observationally equivalent individuals but, contrary to conventional wisdom, younger firms paid more than older firms. The size effect, however, dominates the age effect. Thus, although the typical start-up — being both young and small — paid less than a more established employer, the largest start-ups paid a wage premium

Connecting Labor Market Institutions, Corporate Demography, and Human Resource Management Practices

With the growing attention to entrepreneurship as an engine of job creation and economic development, it is important for social scientists who are broadly interested in labor market and employment topics to focus attention on new firms and the policies and practices that surround them. The authors argue that the next generation of scholarship should pay particular attention to labor market institutions, the ecosystem of existing employers, and the human resource management practices that provide the strategic context for entrepreneurs and shape the career opportunities for workers. Remarkable variation occurs across space and time in the prevalence and performance of entrepreneurs. There are also many open questions as to the antecedents and consequences of entrepreneurship, for entrepreneurs, their communities, and their employees. The availability of new administrative data across many countries will allow for comparative cross-national studies and will provide opportunities to bring qualitative and mixed-method approaches to entrepreneurial labor market studies. This introduction and the articles in this special issue offer a path forward

A Careers Perspective on Entrepreneurship

[Excerpt] What if being an entrepreneur were treated like any other occupation—teacher, nurse, manager? What if the decision to found a new venture were thought of as one of many options that individuals consider as they try to structure a meaningful and rewarding career? How would the field of entrepreneurship research be different? In our view, there is much to be learned by conceiving of entrepreneurship not solely as a final destination, but as a step along a career trajectory. Doing so opens the study of entrepreneurship to a wider range of scholarly insights, and promises important insights for entrepreneurial practice, training, and policy. This special issue takes an important step in this direction

Engineering Bureaucracy: The Genesis of Formal Policies, Positions, and Structures in High-Technology Firms

[Excerpt] This article examines the impact of organizational founding conditions on several facets of bureaucratization—managerial intensity, the proliferation of specialized managerial and administrative roles, and formalization of employment relations. Analyzing information on a sample of technology start-ups in California\u27s Silicon Valley, we characterize the organizational models or blueprints espoused by founders in creating new enterprises. We find that those models and the social composition of the labor force at the time of founding had enduring effects on growth in managerial intensity (i.e., reliance on managerial and administrative specialists) over time. Our analyses thus provide compelling evidence of path dependence in the evolution of bureaucracy—even in a context in which firms face intense selection pressures—and underscore the importance of the logics of organizing that founders bring to new enterprises. We find less evidence that founding models exert persistent effects on the formalization of employment relations or on the proliferation of specialized senior management titles. Rather, consistent with neo-institutional perspectives on organizations, those superficial facets of bureaucracy appear to be shaped by the need to satisfy external gatekeepers (venture capitalists and the constituents of public corporations), as well as by exigencies of organizational scale, growth, and aging. We discuss some implications of these results for efforts to understand the varieties, determinants, and consequences of bureaucracy

Inertia and Change in the Early Years: Employment Relations in Young, High Technology Firms

[Excerpt] This paper considers processes of organizational imprinting in a sample of 100 young, high technology companies. It examines the effects of a pair of initial conditions: the founders\u27 models of the employment relation and their business strategies. Our analyses indicate that these two features were well aligned when the firms were founded. However, the alignment has deteriorated over time, due to changes in the distribution of employment models. In particular, the \u27star\u27 model and \u27commitment\u27 model are less stable than the \u27engineering\u27 model and the \u27factory\u27 model. Despite their instability, these two blueprints for the employment relation have strong effects in shaping the early evolution of these firms. In particular, firms that embark with these models have significantly higher rates of replacing the founder chief executive with a non-founder as well as higher rates of completing an initial public stock offering. Some implications of these findings for future studies of imprinting and inertia in organizations are discussed

Determinants of Managerial Intensity in the Early Years of Organizations

This paper examines how founding conditions shape subsequent organizational evolution— specifically, the proliferation of management and administrative jobs. Analyzing quantitative and qualitative information on a sample of young technology start-ups in California’s Silicon Valley, we examine the enduring imprint of two aspects of firms’ founding conditions: the employment blueprints espoused by founders in creating new enterprises; and the social capital that existed among key early members of the firm—their social composition and social relations. We find that the initial gender mix in start-ups and the blueprint espoused by the founder influence the extent of managerial intensity that develops over time. In particular, firms whose founders espoused a bureaucratic model from the outset subsequently grew more administratively intense than otherwise-similar companies, particularly companies whose founders had initially championed a “commitment” model. Also, firms with a higher representation of women within the first year subsequently were slower to bureaucratize than otherwise-similar firms with a predominance of males. Our analyses thus provide compelling evidence of path-dependence in the evolution of organizational structures and underscore the importance of the “logics of organizing” that founders bring to new enterprises. Implications of these results for organizational theory and research are discussed

Ports and Ladders: The Nature and Relevance of Internal Labor Markets in a Changing World

[Excerpt] Many believe that the nature of careers has changed dramatically in the past twenty years. One scholar writes that internal labor markets have been \u27demolished\u27, while a human resources manager at Intel comments that, in contrast to the past, today, \u27You own your own employability. You are responsible\u27 (Knoke 2001: 31). The idea of the \u27boundaryless career\u27 seems increasingly popular (Arthur and Rousseau 1996). If it is in fact true that the old rules for organizing work have disappeared, this would represent a fundamental change for employees. It would also have major implications for how scholars think about the labor market. Not surprisingly, the reality is more complicated, with evidence of both change and stability in the nature of the employment relationship. In this chapter we discuss the nature of these developments and their implications for the internal labor market literature