W e contrast life-cycle and path-dependent views of entrepreneurial firms by examining the evolution of top management teams. We show how initial conditions constrain subsequent outcomes by demonstrating that the founding team's prior functional experiences and initial organizational functional structures predict subsequent top manager backgrounds and later functional structures. We find that narrowly experienced teams have trouble adding functional expertise not already embodied in the team. We also find that firms beginning with a limited range of functional positions are less likely to develop complete functional structures. Importantly, we do not find functional structure and functional experience to be interchangeable. We find that firms beginning with more complete functional structures are likely to go public faster, and firms beginning with broadly experienced team members obtain venture capital more quickly regardless of the experience and structural composition of the top management team in place at the time of these outcomes. Further, broadly experienced founding teams that build an early team with a full complement of functional positions achieve important milestones faster than firms that start with neither experience nor structure. This suggests that creating positions as "placeholders" in new ventures, where positions are created and filled with the intent of bringing individuals with more relevant experience onboard later, is not obviously a path by which to succeed. By examining the origins of top management team experience and functional structures, we illustrate the lasting imprint of founders on top management team composition and firm outcomes.
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.
This study investigates how top management team (TMT) demographic characteristics affect firm outcomes for young high technology firms in Silicon Valley. We study how team composition and turnover shape an entrepreneurial firm's ability to attract venture capital and its ability to successfully complete an initial public offering. We find that broad access to information by virtue of having top management team members that have worked for many different employers (diverse prior company affiliations) and have diverse prior experiences (functional diversity) tend to be associated with positive outcomes. In addition, entrants to and founder exits from the TMT increase the likelihood that a firm achieves an IPO. TMT exits, in turn, reduce the likelihood of achieving an IPO. Results also suggest that prior human capital experience is consistently associated with positive firm outcomes. These findings suggest that team experiences, composition and turnover are all important 0883-9026/$ -see front matter D
Abstract[Excerpt] Organizational theories, especially ecological perspectives, emphasize the disruptive effects of change. However, the mechanisms producing these effects are seldom examined explicitly. This article examines one such mechanism-employee turnover. Analyzing a sample of high-technology start-ups, we show that changes in the employment models or blueprints embraced by organizational leaders increase turnover, which in turn adversely affects subsequent organizational performance. Turnover associated with organizational change appears to be concentrated among the most senior employees, suggesting "old guard disenchantment" as the primary cause. The results are consistent with the claim of neoinstitutionalist scholars that founders impose cultural blueprints on nascent organizations and with the claim of organizational ecologists that altering such blueprints is disruptive and destabilizing. Organizational theories, especially ecological perspectives, emphasize the disruptive effects of change. However, the mechanisms producing these effects are seldom examined explicitly. This article examines one such mechanism-employee turnover. Analyzing a sample of high-technology start-ups, we show that changes in the employment models or blueprints embraced by organizational leaders increase turnover, which in turn adversely affects subsequent organizational performance. Turnover associated with organizational change appears to be concentrated among the most senior employees, suggesting "old guard disenchantment" as the primary cause. The results are consistent with the claim of neoinstitutionalist scholars that founders impose cultural blueprints on nascent organizations and with the claim of organizational ecologists that altering such blueprints is disruptive and destabilizing.
[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's employment model shaped the subsequent adoption and timing of various human resource policies and documents over these companies' 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.
W hat accounts for differences in job tenure? Turnover and mobility, by providing differential opportunities for advancement and individual attainment, are key mechanisms for understanding occupational segregation, social stratification, and internal labor markets that have long interested sociologists (Baron and Bielby 1980;Jacobs 1989;Osterman 1987;Reskin 1993). Over decades of inquiry, scholars have elucidated several factors that contribute to job durations, including both individual and structural characteristics (Rosenfeld 1992). While the traditional approach to job mobility highlights the match between individuals and jobs at a moment in time, more recent scholars have incorporated temporal dynamics and suggested that evolutionary patterns at the group level (Sørensen 2000) or across the industrial sector (Haveman and Cohen 1994) influence turnover propensities. This dynamic approach begins to highlight how the past impinges on the present. We expand on these insights and further emphasize the role that local histories play in shaping turnover propensities at the level of individual positions. The microlevel structures created when agents first establish organizational positions are important sources of internal constraint.This article considers how local firm histories influence individual turnover rates in organizations. We argue that position imprints-the legacies left by the first incumbents of particular functional positions-constrain subsequent position holders. We show that the functional experience of the person who creates a position influences the turnover rate of successors who later occupy that position. When the first position holder has an atypical background, all successors experience high turnover rates. Individuals who are both typical with respect to the normative environment and similar to the position imprint have the lowest turnover rates. Surprisingly, we find lower turnover rates among individuals who match the position imprint even if they violate normative expectations. Thus, contrary to institutional theory predictions, we find that local firm histories dominate. In revealing how social structures emerge within firms and affect individual outcomes, our research revisits core topics of bureaucratization and organizational stratification including idiosyncratic jobs, occupational segregation, and differential mobility. In addition, we integrate structuralist and interactionist perspectives on role theory by considering how roles are created. Finally, in demonstrating the effects of position imprints on successor mobility we add a temporal dimension to theories of turnover.
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