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

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

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

The Road Taken: Origins and Evolution of Employment Systems in Emerging Companies

[Excerpt] Drawing on a unique archive of qualitative and quantitative data describing 100 Bay Area high technology firms within their first decade, this paper examines the models of employment relations espoused by company founders and bow those models shaped the evolution of human resource management within their organizations. Information gleaned from interviews suggests that founders and others involved in designing and launching these companies had blueprints for the employment relation that varied along three key dimensions: the primary basis of employee attachment and motivation, the primary means for controlling and coordinating work, and the primary criterion emphasized in selection. Based on combinations of these three dimensions, firms in our sample cluster fall into one of four distinct types, which we label the star, factory, engineering, and commitment models. Multivariate statistical analyses document how the founder\u27s employment model shaped the subsequent adoption and timing of various human resource policies and documents over these companies\u27 early histories, as well as the speed with which the first full-time human resource manager was appointed The findings are strongly suggestive of complementarities and a tendency toward internal consistency among dimensions of human resource management, and of strong path dependence in the evolution of employment systems in organizations. Some implications of these findings for transactions cost perspectives on the employment relationship are discussed