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Organizational blueprints for success in high-tech start-ups: Lessons from the Stanford Project on emerging companies
Abstract
Over the last seven years, the Stanford Project on Emerging Companies has tracked a large sample of high-technology start-ups in California's Silicon Valley. The project has examined how the founders of those enterprises approached key organizational and human resource challenges in the early days of building their companies, and how it affected the evolution and performance of their ventures. This article summarizes the main findings of this research program. It describes five distinctive human resource "blueprints" that high-tech founders embraced in launching their new firms. Those initial blueprints have had important impacts on a wide range of organizational outcomes, including growth in administrative overhead, labor turnover, and bottom-line performance. Moreover, companies that changed their HR blueprint have paid a heavy price, in terms of higher turnover and diminished organizational performance. The results suggest that organization-building and high-commitment HRM "pay" and that changes in human resource models are extremely destabilizing, even in the turbulent "built to flip" environment of Silicon Valley.
... By highlighting the concept of company morale as an important cofactor, we contribute empirical evidence to the recently theorized importance of duality in the positive response and active engagement of organizational members during organizational change (Oreg, Bartunek, Lee, & Do, 2018). Furthermore, we hope to advance research on how organizational blueprints may change throughout the evolution of the entrepreneurial firm, which is typically regarded as a difficult and risky undertaking (e.g., Baron, Burton, & Hannan, 1996; Baron & Hannan, 2002). ...
... 2 | THEORETICAL BACKGROUND 2.1 | Early organizational design and the pressure to professionalize Organizational design refers to aspects of formal structures that shape and constrain the actions of organizational members, that is, hierarchical relations, the allocation of decision authority, functional specialization, and the formalization of processes and roles, paired with approaches to managing the human capital of the organization (e.g., Colombo & Grilli, 2013;Galbraith, 1977;Sine et al., 2006). Although prior research has shown that entrepreneurial ventures come with a range of alternative configurations (Baron & Hannan, 2002;Colombo et al., 2015), the commonly agreed upon narrative around newly founded organizations is one of a relative lack of structure. Organizational roles are typically informal and overlapping (Aldrich, 1999;Stinchcombe, 1965), and positions are often designed to cater to the preferences of founding members, which can lead to lasting constraints over the organization's lifetime (Burton & Beckman, 2007). ...
... Apart from structural inertia and unpreparedness for change, founders and the systems they create also play an important role. Founders profoundly imprint the values and culture of the entrepreneurial firm, reflecting their beliefs and organizational philosophy (e.g., Baron & Hannan, 2002;Hambrick, 2007). As the initial organizational architects, founders leave lasting legacies that can be difficult to overcome (Ogbonna & Harris, 2001): in particular, their organizational blueprints lock in decision-making structures and workforce compositions that limit the choices of future successors Nelson, 2003). ...
Research summary
The transition from a founder‐led start‐up to a professionally managed firm entails significant change in the firm's organizational design. This transition can constitute a critical juncture for the entrepreneurial firm, and there is a risk of losing key talent. We posit that limiting the disruptive effect of changing organizational structures requires organizational members to not only adopt new roles but also embrace new behavioral norms regarding how the firm operates. We use an inductive multicase study paired with exogenous data on company morale to explore outcome variation in such transitional processes and elicit managerial strategies that can guide successful founder‐CEO succession and the accompanying organizational change of the entrepreneurial firm.
Managerial summary
Adapting the organizational structures of an entrepreneurial firm to match the needs of its expanding operations represents a critical moment in a firm's life. During this phase, the founder‐CEO is often replaced by a professional CEO. This event coupled with reorganization can be highly unsettling for the venture's workforce and can lead to turnover with negative performance implications. To minimize disruption, we studied change strategies employed by incoming professional CEOs. We find that most effective CEOs jointly use three change levers—change readiness activation, shared pathway creation, and founder legacy fairness—to help team members adapt to the new situation and align their behaviors with how mature firms operate.
... From another longitudinal study conducted by Stanford Project on Emerging Companies ("SPEC") on 200 technology start-ups in the silicon valley in California, Baron and Hannan (2002) observed different HR models among the start-ups. These HR models are based on three broad dimensions, namely-staffing criterion, retention motivation, and means of control and coordination. ...
... Source: (Baron & Hannan, 2002) providing quality work. Employees are provided autonomy and independence and are expected to comply and perform well due to their professionalism. ...
Human resources are the driving force and source of the core competitive advantage of any business. The purpose of this chapter is to discuss how human resource management (HRM) practices and human resource (HR) strategies are formulated and utilized in the context of e-commerce firms. When discussing e-commerce, relatively less attention is paid to HRM-related issues. However, analyzing, carefully, both the successful start-ups (i.e., Dollar Shave Club and Warby Parker) and e-commerce giants (i.e., Amazon and Alibaba) treat HRM as a critical success factor. Because business success depends on the careful integration of HRM strategies with business requirements and strategies. In this chapter, the different HRM practices and strategies adopted by different e-commerce firms will be discussed.
... An alternative view suggests that the process of organization formation allows for more degrees of freedom in generating new types of organizations with greater variety of organizational practices (Aldrich 1999;Colombo, Rossi-Lamastra & Matassini 2015). Indeed, a series of studies on the initial founding phase of Silicon Valley tech companies demonstrate that clear differences existed in organizational structures and practices between companies in the same industry, agglomerated in the same region, and created by entrepreneurs who were tightly connected with each other (Baron and Hannan 2002). ...
... Consider the case of investors who may champion the adoption of the organizational practices they prefer from their prior experience, which are likely to be outside of the focal industry. While Baron and Hannan (2002) conclude that founders and venture capitalists sort on the basis of compatible expectations, investors have bargaining power to demand concessions in strategic and organizational practices. Another source of variation is due to founders launching ventures outside the domains of their prior organizational experience (Phillips 2005;Roberts et al. 2011;Ruef 2005), further contributing to the experimentation, improvisation and innovative practices introduced into the population of new startups. ...
The idea that new ventures are simple mimetic reflections of the organizational practices of existing organizations contradicts the recognized importance of organizational diversity for innovation. There is an inherent contradiction in the literature between the persistence implied by the inheritance of practices from prior employment, and the experimentation prevalent in the organizational practices contributed by new organizations. This paper first accounts for mechanisms that may drive heritage of practices from parent organizations to their spawns. It then sets out to explore mechanisms that may cause a lower degree of diversity in applied practices among established organizations, and lastly, the conditions that may cause a greater degree of diversity among practice combinations of startups. The reviewed mechanisms suggest that the distribution of organizational and strategic practices among established organizations and startups to be somewhat dissimilar, and that startups significantly contribute to the variation in organizational practices. Using a sample set of Danish organizations, we find evidence of greater diversity in organizational practices among newer organizations, while established organizations are more likely to converge on a set of similar practices. Our results further indicate that strategic disagreements between the entrepreneur and their prior employer are associated with greater differences in strategic orientation. A distinction between strategic and HRM practices provides additional insights.
... This author further states that operational plans ensure the execution of short-term goals (day-to-day, weekly-to-monthly activities). In line with Baron and Hannan (2002), Georgiev (2017) states that operational plans pronounce milestones, conditions for organisational success and explains how these milestones are put into action. This study relates operational level planning to municipalities as they provide more details on how tourism is planned and the role of stakeholders in the implementation of the operational plans. ...
The South African government introduced different policy initiatives to develop tourism in, the country and these tourism policies serve as guidelines for the development of the tourism sector. Municipalities are at the lowest level of Government, and it is where the actual implementation of tourism policies should be taking place. District municipalities and communities globally often face poorly planned development projects resulting from inefficient and ineffective policy and planning implementation. One of the reasons for this is that there is, at times, a lack of participation by key stakeholders. As a result, the study aims was to examine stakeholders' involvement in the development and implementation of tourism-related policies in the O.R Tambo District Municipality (ORTDM).
This study adopted a qualitative approach. The research population in this study included the individuals from the district municipality, regional and local tourism organisations, also known as tourism forums, tourism development agencies and the rural planning and economic development departments. Purposive sampling methods complemented by the snowball sampling method were two types of non-probability sampling techniques that were used in this study to identify the research sample from the research population. Consequently, fourteen (14) semi-structured interviews were conducted with key stakeholders. A thematic analysis technique was used to analyse the data. Since this study focussed on stakeholders' involvement in the development and implementation of tourism policies at the selected district municipality (ORTDM). The research findings reveal that there are challenges related to lack of stakeholder involvement, lack of political support, poor implementation, as well as underdeveloped infrastructure.
... This includes research which promotes and perpetuates the idea of a heroic, single (male) entrepreneur, to the neglect of others employed within the firm. There is limited research on first-hires, the expansion of the entrepreneurial team, or an appreciation of the dynamics of people management beyond exploring the founder's HR blueprint (Baron & Hannan, 2002). Also significant is what Nightingale and Coad (2014) refer to as the 'universalism composition fallacy' ascribing the merits and characteristics of entrepreneurial firms to all SMEs. ...
... Owner-managers, founders, top teams and/or familial ownership mean critical decisions reside with a small number of key individuals, or 'dominant coalition' . This can prove a long lasting 'imprint' informing the style and approach to managing people (Baron & Hannan, 2002;Harney & Alkhalaf, 2021). Concentrated control is frequently associated with an ideology of unitarism or claims of a family like atmosphere in SMEs. ...
A notable paradox of HRM research is that while small and medium-sized enterprises (SMEs) form the dominant private sector employer across the globe, they remain dramatically underrepresented in scholarship. This is significant as there are a number of SME specific characteristics that shape HRM in this context, raising questions around the relevance and applicability of dominant understanding of HRM. In this paper we outline six such SME characteristics captured by the acronym RECIPE and outline their implications for HRM. We then introduce seven special issue papers which serve to advance understanding of HRM in SMEs. Drawing together key insights, we conclude by proposing a number of routes for future research and deeper contextualisation of HRM in SMEs. These include broadening the theoretical palette, challenging conventional assumptions, moving beyond an exclusive HPWS focus, incorporating employee perspectives, coupled with the need to cast a wider methodological net.
... In one of the research conducted by Baum and Locke, (2004) they found out that entrepreneurs passion or effectuation for work does not directly influence the business growth though it is mediated via different pathways that are mainly associated with entrepreneurial behavior. In other research conducted by Baron and Hannan, (2002) is of the view that entrepreneurial passion work as a motivational force behind the employee commitment and venture success. Gross, (1998) noted that entrepreneur's passion affect the behavior of employees that engaged in the entrepreneurial journey in the same environment. ...
... Although performance-based rewards can motivate employees, sometimes employees perceive it as a control mechanism and reward plans have the counter effect [72,73]. Management can establish motivational tools influencing employees' behavior and motivation [5]. ...
Healthcare managers consider the rewards and performances of employees as central elements of their activities due to the challenges caused by the phenomenon of healthcare employees’ emigrating to higher-income countries, which has reduced patient satisfaction and led to a negative image of hospitals. In this context, this paper analyzes how employee rewards influence the employees’ self-perceived performances in the hospital units of the emergency medical system in Romania. Using structural equation modeling, we analyzed the relationships between the investigated variables, showing that financial motivation and the recognition of employees’ merits are central to employees’ self-perceived performances. Ensuring equity also has a positive impact on how the reward package is established and managed. While financial rewards are the most important incentives to increase efforts to exhibit higher performances, recognition has a long-term motivational effect.
... Existing research has documented the selection practices of companies in general (Risavy et al., 2019) and some research has been conducted on selection practices in specific industries (e.g., Racey's [2017] dissertation, which focused on the restaurant industry); however, knowledge of the selection practices within other specific industries (such as tech) is lacking. There has also been some research conducted on the HRM practices of tech companies (e.g., Baron & Hannan, 2002;Baron et al., 2001), but only one study that we could find examined the selection strategies of tech companies. This exception was the study of German Information Technology (IT) companies by zu Knyphausen-Aufseß and Vormann (2009); however, this study may not generalize outside of Germany, and the researchers used a policy-capturing study design, which suffers from a lack of ecological validity (Karren & Barringer, 2002). ...
Hiring the right people at the right time is essential for the successful growth of any organization. Although organizational researchers have identified the most reliable and valid methods for selecting employees, many companies are not following these recommendations and are missing out on top talent as a result. In the present research we focus on the selection methods of tech companies using a two-study, mixed-methods design. In Study 1 we surveyed 120 tech company representatives who were knowledgeable about their company’s hiring practices (e.g., HR professionals, CEOs, COOs). It was found that tech companies are far behind the science and tend to use selection practices known to be poor predictors of performance. In Study 2 we interviewed 18 tech company representatives (17 of which were from organizations that participated in Study 1) about the reasons their company uses their selection practices. We found that tech companies are not particularly concerned with reliability or validity and, instead, value efficiency and maintaining the status quo. Future research directions and practical advice to help tech companies better acquire talent are provided.
... Firms can weaken the influence of a collective reputation by highlighting their attributes that contradict the collective reputation's negative stereotype. For example, some Silicon Valley startups disassociated themselves from their organizational form by stressing how their commitmentbased employment models differed from Silicon Valley's stereotypical workforce models (Baron & Hannan, 2002). Conversely, during the emergence of the U.S. satellite radio market, satellite radio providers clarified their belonging to this organizational form by highlighting similarities in their product services (Navis & Glynn, 2010). ...
Markets value superior corporate sustainability performance in part because investors use a firm's environmental performance as a signal of desirable but difficult‐to‐observe attributes, such as the firm's integrity capacity. Yet a signaling conflict can arise when a firm belongs to an organizational form that has a collective reputation for being unethical. In such circumstances, the firm's environmental performance may no longer credibly signal its underlying integrity capacity, leading markets to adjust downward the value they would otherwise place on the firm's environmental performance. Using longitudinal data on South Korean firms, we find that improvements in firm environmental performance lead to smaller increases in market values for firms belonging to a poorly reputed organizational form. However, firms can partially recover lost value by adopting firm features that reduce the signaling conflict, thereby restoring the notion of corporate sustainability performance driving firm market values.
... Finally, our research adds to the literature on organizational culture. As competition for highly skilled knowledge workers increases, for example among high-technology start-up companies and other entrepreneurships, organizational practices increasingly attempt to create a culture that fosters identification and loyalty to the organization in hopes of increasing productivity and retention (Alvesson 2000; Baron and Hannan 2002;Horwitz et al. 2003). The present research adds to this literature by presenting some of the downsides of an organizational culture that emphasizes unity. ...
In the aftermath of shocking workplace scandals, people are often baffled when individuals within the organization were aware of clear-cut wrongdoing yet did not inform authorities. The current research suggests that moral concern for the suffering that a transgressor might face if a crime were reported is an under-recognized, powerful force that shapes whistleblowing in organizations, particularly when transgressors are fellow members of a highly entitative group (i.e., a group that is perceived as highly unified). Two experiments show that group entitativity heightens concern about possible consequences that the transgressor would face if a crime were to be reported, and that this concern reduces the likelihood of reporting wrongdoing in organizations to authorities. Further, the studies identify a mechanism through which concern about the transgressor is heightened in highly entitative groups: potential reporters perceive that the transgressor felt remorse for their crime. Thus, when fellow members of highly entitative organizations commit crimes, people are more likely to imagine that these transgressors felt anxiety or guilt about their actions, and this prompts greater concern for transgressors in ways that encourage people to let them “off the hook.” We discuss the implications of these findings for how reporting to authorities can be encouraged within highly entitative organizations.
... These include unconventional risk-taking, uncommon intensity of focus, and unwavering belief in a dream [35]. Further characteristics explored in this literature address: a personal belonging and identification with a company [36]; devotion and enthusiasm for a proposed business venture [37]; the desire to create something to make history and impact society [38]; an intense longing related to a work identity [39]; and the drive to overcome barriers [40]. These characteristics each have critical relevance in informing an understanding of the underlying nature or strategic DNA of the entrepreneurial firms. ...
Adaptability has emerged in management/entrepreneurship literature as a business strategy to innovate, perform, and respond in a flexible manner to ever-changing contexts. Contemporary culture blurs boundaries between physical, biological, and digital domains, accelerating what entrepreneurship in sectors such as agri-food contributes to societal-scale solutions to problems at the convergence of social and commercial activities. In this study, we build upon the adaptability of biological systems to propose an approach to innovation, anchored in a tight, dynamic alignment between the strategic DNA of small and medium enterprises (SMEs) and the contexts in which they evolve. Our model employs interviews and supporting archival research on the health-promoting innovation practices of 37 SMEs in the agri-food sector. A two-year, single firm analysis illustrates its relevance and operational feasibility. Evidence suggests that the strategic DNA of SMEs, seen through the entrepreneurs’ identity, informs behavior at various stages of the innovation process and the enterprise’s evolution. Shifting identity prioritization is a reality, and interaction between entrepreneurial organizations and the environment is best understood as an interaction between the DNA of the entrepreneur/enterprise and the environment. This is valuable and will help agri-food and other SMEs to improve their ability to make the internal and external strategic adjustments required in a rapidly changing landscapes to create viable health-promoting food products.
... By contrast, the information technology (IT) industry is likely to have a more tolerant attitude toward alcohol consumption because the culture is characterized by result orientation and informality (Baron & Hannan, 2002). Indeed, some IT companies have loose policies regarding alcohol consumption, even in the workplace, as long as employees are not intoxicated and alcohol does not affect work performance (Farnham, 2012;Finley, 2016). ...
Employers have used social network sites (SNSs) to screen job candidates. However, the mechanism by which SNS posts shape employers’ impressions of the candidates is unclear in previous research. Two studies were conducted to examine how employers develop impressions of job candidates by evaluating their SNS profile against perceived organizational and societal injunctive norms (POINs and PSINs respectively), through a 2 (SNS profile type: alcohol-free vs. alcohol-included) * 2 (industry: Catholic school vs. IT) * 2 (gender-role perceptions based on candidate’s sex: male vs. female) between-subjects experiment design. Findings contribute to the scholarship on impression formation via SNSs by showing that individuals develop their impressions by evaluating how much the target SNS profile aligns with POINs. Specifically, an alcohol-included Facebook profile violated POINs and PSINs more than an alcohol-free profile. Additionally, both studies found that the interaction effect between the profile and the industry on the extent to which the SNS profile aligned with POINs and PSINs was significantly different for the male and female candidate. This research offers practical implications about how to manage professional self-presentation on SNSs.
... The prevailing perspective seems to be that entrepreneurial ventures are only of interest when they grow larger and their internal organization evolves into worthy-of-study functional and divisional arrangements (Greiner 1972;Charan, Hofer, and Mahon, 1980). Moreover, there is a belief that this occurs uniformly through a process of professionalization (Hellman and Puri, 2002), despite twodecade old evidence of interesting variety among new ventures (Baron and Hannan, 2002), important deviations from a standard evolutionary path (Baron et al., 1996;Boeker and Wiltbank, 2005), opportunities for founders to make key choices that have consequences for a venture's future success (Wasserman 2003(Wasserman , 2012(Wasserman , 2017, and growing interest in new forms of organizing that are being pioneered by new ventures (Puranam et al., 2014). Second, there seems to be a romanticism about entrepreneurial ventures being nimble and responsive because they are unencumbered by burdensome structures, hierarchies, and formal processes. ...
Research Summary
Studying the organizational design of entrepreneurial ventures involves investigating how entrepreneurs design the (formal) structure of their ventures as well as the roles, rules, and procedures that those who are active within these ventures must obey. The topic lies at the intersection of entrepreneurship with multiple fields, including organization science, organizational economics, and strategic management. However, to date, it has attracted limited attention. This special issue includes six articles that develop novel theory and provide new empirical evidence on the antecedents and consequences of the organizational design of entrepreneurial ventures. Collectively they offer fresh perspectives on this neglected topic and open avenues for future work. In this article, we briefly describe the state of the field, introduce the articles, and suggest opportunities for further research.
Managerial Summary
There are countless how‐to guides for entrepreneurs describing start‐up legal structures, incubation and acceleration opportunities, and financing options. Conversely, there is relatively little guidance for how entrepreneurs should design their organizational structure, decision systems, and managerial practices. This special issue contains six articles addressing the organizational design of entrepreneurial ventures from multiple perspectives and with diverse methods. This introduction describes the state of the field prior to the special issue, introduces the special issue articles and identifies topics that still need further investigation. We distill the current state of knowledge and offer a roadmap for future scholarship.
... Въпреки значимостта на иновациите, тяхната подкрепа от страна на националните икономики и Европейския съюз, управлението и стимулирането им остава основна задача за решаване. Много учени и практици фокусират усилията и изследванията си в посока идентифициране и открояване на фактори, условия, способи, инструменти и характеристики, които биха довели до успех на иновативните проекти и иновативните организации (Watson, Scott & Wilson, 1998 ;Zimmerman & Zeitz, 2002 ;Barron & Hannan, 2002 ;Ensley, Pearce & Hmiellski, 2006;Brinchmann, Grichnik & Kapsa 2010. В настоящото изследване се анализира игровизацията като възможен инструмент и фактор, който би довел до засилване на иновационното представяне в бизнеса. ...
The report aims at analyzing the role and scope of Gamification as a tool for enhancing innovation management and innovation performance in business organizations. The analysis employs the innovation mix that encompasses innovation management as the activity and effort of organizations to manage and enhance their organizational innovation. Building on 32 selected elements of the innovation mix, a focus group of innovation experts is formed. The group has associated through brainstorming elements of the gamification concept that can be used to enhance innovation performance in business organizations for each of the selected innovation-related activities scoped in the research. The results of the study present the areas and scope of specific activities and tasks of business organizations as part of innovation performance, which could be positively influenced by the use of the principles of gamification.
... Self-interest put ahead of enterprise interest and this makes it difficult to separate them from the enterprise when it comes to a lot of issues. Based on previous research (Baron & Hanna, 2002;Baron, Hanna & Burton, 1999;Baron & Burton, 2001), the owners/managers philosophies are classified into three arms namely: In autocracy model, the owners/managers retain tight hands on enterprise and operate as sole visionary of the enterprise; the high-commitment model believes in building enterprise around family while professional model separate enterprise from themselves and share the interest of the enterprise beyond themselves. ...
Micro, small and medium enterprises has occupied the most critical aspect of any economy around the world today. This paper assessed the contribution of micro, small and medium enterprises (MSMEs) on employment generation in Kwara State, Nigeria. To gather information, survey research design method was used in this study. The population includes owners, managers and person in charge human resource/administration in the selected MSMEs which were deliberately chosen. A Total of 76 Questionnaires was distributed and 72 responses of them were usable for data analysis. Data were analyzed using descriptive form of tables while hypotheses were tested for with a parametric t-test with the aid of Statistical Package for Social Sciences (SPSS). The study found that the MSMEs in Kwara State are not well positioned to generate the required level of employment for the people due to poor level of MSMEs growth and inconsistent government policies. It was therefore recommended that there is the need for all the stakeholders (government, business owners/managers, individuals, etc.) in Kwara State to be committed to the need to reposition the MSMEs sector.
The study explores the impact of entrepreneurial passion on process innovation and firm performance, based on self-efficacy theory. Relevant hypotheses were proposed, and the promotion mechanism of entrepreneurial passion on process innovation and enterprise performance was analyzed. A survey of 150 Kenyan firm owners/managers was conducted, and the results showed that process innovation has a significant positive effect on performance. Entrepreneurial passion is a significant moderator of the relationship between process innovation and performance, with firms with higher levels of passion achieving greater performance from implementing process innovation. This suggests that entrepreneurial passion can guide entrepreneurial persistence and promote enterprise performance by stimulating positive emotions and creativity. The study suggests that effective management of process innovation can enhance performance and encourage more entrepreneurial behavior in competitive business environments.
Leadership has been a defining focus in organizational research, and yet critical questions remain about the specific mechanisms by which leaders affect strategy and performance. We argue that, in addition to factors such as their individual attributes and behaviours, leaders who create and maintain a strategically relevant organizational culture and establish consistency in strategic orientation among their management teams enable their organizations to perform well. We also suggest that the very status that enables leaders to shape their organization also subjects them to the biases that are associated with attaining power.
In the VUCA era, organizational resilience has become an important research topic in the management field. As the helmsman of an organization, the impact of leaders’ personal mentality on organizational resilience cannot be ignored. Based on the survey data from 163 enterprises in the Yangtze River Delta region of China, this paper constructs and tests the relationship between leadership mindsets and organizational resilience. The results show that there is a positive correlation between leadership mindsets and organizational resilience. Cultural norms play a mediating role; innovative cultural norms play a mediating role between leaders’ growth mindset and organizational resilience, and collaborative cultural norms play a mediating role between leaders’ specified mindset and organizational resilience. In addition, supportive human resource practice plays a moderating role in the relationship between leadership mindsets and cultural norms. The research extends the research of leadership mindsets to the improvement of organizational resilience, and enhances the understanding and application of cultural norms and supportive human resources practices, providing scientific suggestions for the sustainable development of organizations.
Within a research context dominated by an increasing interest in innovative learning methodologies in management education, an individual's capacity to establish links between existing and new knowledge, that is, absorptive capacity (AC), has been surprisingly neglected in management (higher) education inquiry. This study helps to close this gap by investigating the role of management students' AC on their academic performance. The study also examines the moderating effect on this relationship of using traditional learning methodologies (such as lectures), innovative learning methodologies (such as interacting with digital platforms), and having a cooperative climate in the classroom. Secondary and primary data are combined from samples of students enrolled in a strategic management course. Results show that students with higher AC achieve higher levels of academic performance. This relationship is moderated by the intensive use of traditional learning methodologies and by cooperative climates. Students who have higher AC benefit more from traditional learning methodologies and from a classroom with a cooperative climate than those with lower AC. Results will be useful to management education instructors, higher education administrators, and policymakers, when revising current educational programmes.
A defining characteristic of young ventures is that they are more likely to experience periods of change (of both a positive and negative nature) than are established organizations. This could result in a misalignment between employees’ expectations when hired and actual work experiences. Based on met expectations theory, we argue that employees’ experiences in young ventures result in greater turnover intent over time. We further theorize that the relationship between time and turnover intent is contingent on employees’ prior work experience at a start-up and venture growth rates. Using a unique longitudinal data set containing 1,151 survey responses from 458 employees of 67 ventures, we find that employees’ turnover intent increases over time and that this effect is particularly strong for employees with little prior start-up work experience and employees working in low-growth ventures. We discuss implications for the literature on employees in entrepreneurial firms.
We examine the effect of international new ventures’ (INVs) congenital knowledge inherited from their founding teams vs. their experiential knowledge gained through learning by doing on the initiation vs. continuation of their international growth. Data from 144 technology INVs show that the effect of congenital knowledge fades as experiential knowledge accrues over time and fuels sustained international growth. The relationships are moderated by whether founder teams’ work experience is in the same or a different industry as the INV as well as the level of external funding received by the INV. Our study and results contribute to the literature on INVs’ post-entry internationalization.
This review aims at synthesizing and assessing the literature on human resource management (HRM) in entrepreneurial firms. Our review over the time period 2004–2020 is relevant as entrepreneurial firms have a central role in the economy and are important for technological advancement and employment. Furthermore, managing entrepreneurial firms differs significantly from managing established firms. Using a systematic review method, we develop a framework of HRM in entrepreneurial firms, in which we present the current state of the literature, accounting for antecedents, outcomes, and the organizational context. Importantly, we also offer a compelling research agenda for future work on HRM in entrepreneurial firms.
Entrepreneurial innovation and its link to performance are attracting increasing attention among academics, entrepreneurs, and innovators alike. Our purpose is to prioritise and investigate the relative impact of distinct categories and types of innovation on multidimensional performance areas of new ventures. Accordingly, we relate the recently developed 10 Types of Innovation model to a comprehensive performance measurement framework specific to entrepreneurial new ventures and conduct empirical validation of the model for performance impacts. The 10 Types model shows reasonable psychometric properties and appears to effectively portray the innovation outcome conundrum. Our empirical evidence shows that the influence of innovation categories – configuration, offering, and experience – is substantively different across various performance criteria. Conversely, the effects of innovation types on different performance areas (financial, customer, process, and learning) do not present important variations, and thus do not seem to be contingent upon the nature of the performance measures considered.
Public funding agencies aim to fund novel breakthrough research to promote the radical scientific discoveries of tomorrow. Identifying the profiles of scientists being financed to pursue their research is therefore crucial. This paper shows that the funding process is not always awarding the most novel scientists. Exploiting rich data on all applications to a leading Swiss research funding program, we find that novel scientists have a higher probability of applying for funds than non-novel scientists, but they get on average lower ratings by grant evaluators and have fewer chances of being funded. We discuss the implications for the allocation of scientific research spending.
The definition of individual resilience remains ambiguous. This article responds to that ambiguity by first deriving a definition of individual resilience from conservation of resources (COR) theory. Accordingly, to the extent individuals have sufficient resources and behave according to two key principles of COR theory, they will exhibit resilience in response to significant adversity. A second development builds upon the COR distinction between resources deployed in response to adversity which are resource-preserving as distinct from resource-enhancing, which generate what are here labeled acceptance resilience and strategic resilience, respectively. It is proposed that behaviors associated with acceptance resilience support relative continuity of environments, relationships, and life goals, with strategic resilience behaviors often involving changing environments, relationships, or life goals. Acceptance resilience is related to earlier COR understandings of resilience and relevant resources, while strategic resilience requires distinct or additional resources. Individuals demonstrating the two types of resilience will diverge in terms of openness to new experiences, persistence, loss aversion, and the valuation of future resources. It is further proposed that acceptance resilience is more common than strategic resilience and that organizations which find resilience valuable will tend to support acceptance resilience, in part because strategic resilience may generate turnover in response to adversity. The analysis addresses related issues, including coping, career change, burnout, as well as teams and organizations. Implications for theory, practice, and future research conclude the work.
There has been an ongoing debate over whether start-ups should be “flat” with minimal hierarchical layers. To reconcile this debate, this paper distinguishes between creative and commercial success (i.e., novelty vs. profitability), and examines how these outcomes are variously influenced by a start-up's hierarchy. This study suggests that while a flatter hierarchy can improve ideation and creative success, it can result in haphazard execution and commercial failure by overwhelming managers with the burden of direction and causing subordinates to drift into power struggles and aimless idea explorations. I find empirical support for this trade-off using a large sample of game development start-ups. These findings offer one resolution to the debate by sorting out the conditions under which hierarchy can be conducive or detrimental to start-ups.
Owners of start-ups in the high-tech field face multiple challenges while scaling-up. The major challenge is to form a proper strategy that guides them to move from building products for point solutions to more industry-focused solutions, retaining skilled resources, efficient workforce management, and improving market reach. This case study is on Distronix, a start-up in the Industrial Internet of Things that could see steady revenue within 3 years of its operations. Distronix wanted to reach the next orbit fast. Distronix wanted to change the organizational blueprint with a proper strategy to scale-up. The young entrepreneurs owning Distronix brainstormed with their employees and the industry experts to strategize the next phase of growth. Market reach and coping with the changing demand of customers on Industrial Internet of Things were the two most important aspects of their strategy. After discussing with stakeholders and the mentors, the owners focused on alliances to increase their delivery and market reach capabilities. They could establish strong alliances, even with larger companies, with proper planning and sustained quality delivery. From the inception of Distronix, owners established alliance, but those were ad hoc and not as per the holistic plan, which provided them a better focus and guidance on alliancing. The alliance strategy seems successful from its revenue growth but needs regular review as the technology stack is getting refreshed fast. Regular monitoring of performance is also critical. The case study shows the importance of a well-thought and well-rounded alliance strategy for a start-up to scale-up confidently.
Early-stage science-based ventures require a wide range of intellectual resources and practical know-how to successfully commercialize their technologies. Often entrepreneurs actively gain this knowledge through advisory relationships providing commercial and technical guidance. We explore the effects of those dual advice domains – business and technology – and their overlaps and complementarities with the knowledge bases of entrepreneurs. To directly capture early science-based venture progress, we introduce the concept of application readiness to represent a technology's evolution from scientific discovery to commercial solution. Using hand-collected longitudinal data from 112 emerging science-based ventures, we find that business advice has a positive impact on application readiness; counter-intuitively, technology advice does not confer the same benefit. Moreover, advice shows the strongest effects when its domain is complementary to the entrepreneur’s experience. These insights help unpack the mechanisms through which advice – an often-used policy tool supporting entrepreneurship – is absorbed and implemented in emerging ventures.
While ample research has demonstrated that venture founders’ international experience affects their decision to internationalize, it is unclear how this experience affects the actual internationalization process of ventures that move abroad. We use a multiple case study approach to collect data on founders’ international experiences and cognitive beliefs about internationalization, the strategic decisions taken with respect to the internationalization process of their venture, and the relationship between them. We identify four types of international entrepreneurs that differ with respect to their international experiences and beliefs, and show how these differences affect the strategic decisions taken in the actual internationalization process.
The Creative Industries (CI) is a growth sector, yet understandings of CI practice remain limited. CI represent a heterodox sector with high variation levels between firms. Pressure has emerged on CI to adopt more orthodox business practices, maximising growth and contributing towards national economic objectives. Such practices however must be cognisant of a highly esoteric sector founded upon creative intensity and project-based systems. This question of business practice is explored through the Arts-based Creative Industries (ABCI). The article uses a novel SME diagnostic to explore practices, dependencies and exposures in an environment of reduced funding and pressure for commercialisation. It proposes ABCI supplement resource limitations and demands for creative intensity through networks; techniques used by ABCI could be of value more widely to SMEs in an increasingly network-based economy. Similarly, these networks risk locking firms into unrealistic dependence on external sources of knowledge and funding which exert significant influence on business development.
Studies show that founders’ industry-specific experience is beneficial to venture performance. However, we know little on the contingencies associated with such an effect. Using a panel dataset of 338 Italian high-tech ventures, we find that founders’ industry-specific experience positively affects venture performance. However, changes in the top management team (TMT) during the initial phases of the venture’s life weaken the positive relationship between founders’ industry-specific experience and venture performance, whereas founders’ functional heterogeneity does not. We further find evidence of substitution effects between founders’ human and social capital affecting venture performance, such that the effect of founders’ industry-specific experience on venture performance is attenuated when a subset of founders had common background prior to founding their venture.
In Kap. 5 begeben wir uns bei der Frage, wie das Humankapital bereitgestellt wird, auf die Ebene der einzelnen Personalinstrumente. Welche Instrumente setzen wir konkret ein, um unsere HR-Architektur mit Leben zu füllen? Bei dieser Frage werden wir uns zwei auf den ersten Blick grundsätzlich verschiedene Schulen anschauen. Auf der einen Seite befürwortet die Best-Practice-Schule den Einsatz bewährter Instrumente. Entweder einzelne Instrumente oder auch Gruppen von Instrumenten, die Best-Practice-Systeme ergeben. Auf der anderen Seite fordert die Best-Fit-Schule die Anpassung der Instrumente an eine Vielzahl von Faktoren wie Gesetzgebung, Kultur und Branche. Wir werden erfahren, dass diese auf den ersten Blick so gegensätzlichen Schulen sich durchaus ergänzen und als verschiedene Filter verstanden werden können, die uns bei der konkreten Auswahl der Instrumente unterstützen. Wenn das Humankapital des Unternehmens einen Wettbewerbsvorteil bieten soll, dann muss sogar die HR-Architektur mit ihren jeweiligen Instrumenten ein einzigartiges Gebilde sein. Der Weg dorthin ist lang, lohnt sich aber, weil hier ein nachhaltiger Wettbewerbsvorteil geschaffen werden kann.
Das strategische Personalmanagement als die Schnittstelle zwischen der Unternehmensstrategie und dem Personalmanagement gestaltet sich meist schwierig. Kap. 3 zeigt, dass eine saubere Definition der Schnittstelle möglich ist, wenn wir – unternehmensspezifisch – Antworten auf vier Fragen finden. Erstens eine Antwort auf die Frage, welches Humankapital zur Umsetzung der Unternehmensstrategie benötigt wird. Zweitens müssen wir die Frage beantworten, wie das Personalmanagement ausgerichtet werden soll, um das benötigte Humankapital möglichst effizient bereitstellen zu können. Drittens die Frage, wie sich die HR-Funktion organisiert, damit sie in der Lage ist, die Antwort aus Frage zwei umzusetzen. Viertens suchen wir eine Antwort auf die Frage, wie aktiv das Humankapital in die Strategieentwicklung eingebunden ist. Ein Blick in die Literatur zeigt, dass die verschiedensten Modelle existieren, um eine oder mehrere Fragen zu beantworten, es aber kein Modell gibt – und auch kaum geben kann –, das alle vier Fragen auf einmal beantwortet. Dafür ist die Schnittstelle zu komplex.
Dieses Kapitel beantwortet zusammen mit dem nächsten Kapitel die Frage, wie das benötigte Humankapital bereitgestellt werden kann. Dabei suchen wir Antworten auf der Ebene der HR-Architektur, denn diese dient als Strukturierungshilfe unserer einzelnen Personalinstrumente bzw. -maßnahmen. Es existieren verschiedene Vorschläge für Aufbau generischer HR-Architekturen, die aber jeweils an die konkrete Unternehmenssituation angepasst werden müssen. Die Wahl der HR-Architektur wird meist unbewusst schon bei Gründung des Unternehmens getroffen, hat aber große Auswirkungen auf den Erfolg des Unternehmens und ist darüber hinaus später nur mit hohem Aufwand zu ändern. Daher ist ein Verständnis der im Unternehmen vorhandenen HR-Architekturen sehr wichtig. Oft finden wir nicht nur eine, sondern mehrere HR-Architekturen im Unternehmen vor. Manchmal ist es sogar zweckmäßig bzw. notwendig, für unterschiedliche Gruppen von Mitarbeitenden unterschiedliche HR-Architekturen anzuwenden. Die Frage ist, welche Kriterien für eine Segmentierung des Humankapitals sinnvoll sind.
Despite the proliferation of HRM research, only a small fraction explores the context of small and medium‐sized enterprises (SMEs). Where HRM in SMEs has received attention, the literature base remains fragmented and variable, comprising a plurality of definitions, explanations, and methods. To advance understanding, this paper uses a quarter‐century systematic review drawing on an evidence base of 137 peer‐reviewed articles. A cumulative framework is presented capturing key developments and synthesizing existing areas of research focus. Analysis of limitations and knowledge‐gaps finds a failure to differentiate across various types of SMEs, limited appreciation of SME characteristics and contextual conditions, and a dominance of managerial perspectives. An agenda for future research on HRM in SMEs is outlined with respect to definitional parameters, HR practices, HRM–performance, key determinants, and presenting issues. The paper concludes that SMEs offer a unique, fruitful, and timely context for investigations of HRM.
Three studies examine how organizational mindset —whether a company is perceived to view talent as fixed or malleable—functions as a core belief that predicts organizational culture and employees’ trust and commitment. In Study 1, Fortune 500 company mission statements were coded for mindset language and paired with Glassdoor culture data. Workers perceived a more negative culture at fixed (vs. growth) mindset companies. Study 2 experimentally manipulated organizational mindset and found that people evaluated fixed (vs. growth) mindset companies as having more negative culture norms and forecasted that employees would experience less trust and commitment. Study 3 confirmed these findings from more than 500 employees of seven Fortune 1000 companies. Employees who perceived their organization to endorse a fixed (vs. growth) mindset reported that their company’s culture was characterized by less collaboration, innovation, and integrity, and they reported less organizational trust and commitment. These findings suggest that organizational mindset shapes organizational culture.
Deliberate practice, an iterative process that leads to expertise, is found to be positively associated with superior performance in domains such as sports, education, and entrepreneurship. At the same time, deliberate practice is also seen as being less than enjoyable and difficult to pursue consistently. As such, passion is considered to be a vital motivator of engagement in and maintenance of deliberate practice. Despite the evident importance of passion, the relationship between passion and deliberate practice in entrepreneurship has not been subject to sufficient empirical evaluation. Therefore, in this study, we consider the way in which passion moderates the relationship between deliberate practice and venture performance. We hypothesize that deliberate practice is positively related to venture performance and that passion positively moderates this relationship. We find support for our first hypothesis, in line with previous studies. However, contrary to our second hypothesis, we find that entrepreneurial passion negatively moderates the deliberate practice-venture performance relationship. In response to this finding, we provide possible explanations as to why this negative moderation effect was observed by drawing on Kolb’s experiential learning cycle.
In this paper we seek to understand the influence of founders on the design and use of management control systems (MCS) through a theoretical lens known as imprinting. The organizational literature shows that founders are a source of imprinting, since their unique background informs the blueprint for their organization, which can affect patterns of organizational design and development. We undertake a case study of an innovative early-stage growth-focused manufacturing firm established by founders who espoused a commitment blueprint (one of five possible blueprints). Founders who have a commitment blueprint aim to establish a workplace where employees feel an intense emotional attachment to each other and the firm and are passionate about the firm’s vision. We examine how founders’ commitment blueprint influences the design and use of MCS. We show that the imprint of a founder’s commitment blueprint is reflected in the design and use of cultural controls and employee selection to establish a workplace that fosters an intense emotional attachment and identification comparable to a family’s, with an organizational culture where employees are committed and passionate about the firm. While these controls have previously been shown to make up the central components of a commitment blueprint, our results reveal a reliance on cultural controls and employee selection is not exclusive, but supported and reinforced through managers’ design and use of personnel controls, results controls, action controls, penalties, and informal controls. We also find a reluctance to implement controls that are seen as bureaucratic, since it is felt they would negatively influence the organizational culture.
We survey 885 institutional venture capitalists (VCs) at 681 firms to learn how they make decisions. Using the framework in Kaplan and Strömberg (2001), we provide detailed information on VCs’ practices in pre-investment screening (sourcing evaluating and selecting investments), in structuring investments, and in post-investment monitoring and advising. In selecting investments, VCs see the management team as somewhat more important than business-related characteristics such as product or technology although there is meaningful cross-sectional variation across company stage and industry. VCs also attribute the ultimate investment success or failure more to the team than to the business. While deal sourcing, deal selection, and post-investment value-added all contribute to value creation, the VCs rate deal selection as the most important of the three. We compare our results to those for chief financial officers (Graham and Harvey, 2001) and private equity investors (Gompers et al., 2016a).
I apply context-emergent turnover (CET) theory to investigate how different organizational characteristics moderate the effect of executive turnover on firm performance. I suggest and investigate different organizational characteristics as contextual factors. I find that executive turnover reduces future sales and employment growth, and show that three organizational characteristics (the firm's age, top management tenure, and employee tenure) moderate this effect. These results contribute to our understanding of the role of context in moderating executive turnover. Previous studies that examined the performance effects of executive turnover have often struggled to prove the causality between this event and a firms' post-turnover performance conclusively. The problem is that executive turnover is often correlated with a firm's current performance and expected future challenges. I address this endogeneity problem by exploiting the exogenous variation in firms' performances following 516 top managers' unexpected deaths. I use a matched sample to investigate which organizational characteristics that mitigate the negative effect on the firms' subsequent performances resulting from these executive turnovers. I obtained this sample randomly from a comprehensive dataset containing yearly observations of all Danish firms from 1995 to 2007.
Why do some entrepreneurs thrive while others fail? We explore whether the advice entrepreneurs receive about managing their employees influences their startup’s performance. We conducted a randomized field experiment in India with 100 high‐growth technology firms whose founders received in‐person advice from other entrepreneurs who varied in their managerial style. We find that entrepreneurs who received advice from peers with a formal approach to managing people—instituting regular meetings, setting goals consistently, and providing frequent feedback to employees—grew 28% larger and were 10 percentage points less likely to fail than those who got advice from peers with an informal approach to managing people, two years after our intervention. Entrepreneurs with MBAs or accelerator experience did not respond to this intervention, suggesting that formal training can limit the spread of peer advice.
Considers the impact of founding conditions on the later administration and management of technology startups in Silicon Valley. Data were collected in 1994-1995 by survey and interviews with 173 technology firms that had at least 10 employees and were no more than 10 years old. This research draws on the Stanford Project on Emerging Companies. The interviews with firm founders identified three dimensions along which work and employment are organized. These are: attachment, basis of coordination and control, and selection. Within these three dimensions, founders created employment models related to their views about desired organizational culture, strategies for employee selection, or perceptions of employee motivation. These three organizational dimensions are used to explain the five basic employment models - engineering, star, commitment, bureaucracy, and autocracy. Results show that the bureaucratic model is the most administratively intense with autocracy in second place, then engineering, star, and commitment. Both the model that is chosen by the founder and the gender balance in these firms affected the level of managerial intensity that resulted in the firms. Firms with a higher proportion of women in the first year became less bureaucratized than other firms. Administrative intensity is found to increase drastically when a firm goes public. This likely results from the need for more financial reporting, regulatory compliance, and investor relations management. Overall, this analysis demonstrates the path-dependence in bureaucratization. (SRD)
Considers structural inertia in organizational populations as an outcome of an ecological-evolutionary process. Structural inertia is considered to be a consequence of selection as opposed to a precondition. The focus of this analysis is on the timing of organizational change. Structural inertia is defined to be a correspondence between a class of organizations and their environments. Reliably producing collective action and accounting rationally for their activities are identified as important organizational competencies. This reliability and accountability are achieved when the organization has the capacity to reproduce structure with high fidelity. Organizations are composed of various hierarchical layers that vary in their ability to respond and change. Organizational goals, forms of authority, core technology, and marketing strategy are the four organizational properties used to classify organizations in the proposed theory. Older organizations are found to have more inertia than younger ones. The effect of size on inertia is more difficult to determine. The variance in inertia with respect to the complexity of organizational arrangements is also explored. (SRD)
Factors impacting the organizational structure of firms have been analyzed often utilizing organizations theory. However, several other theories and perspectives have been proposed as potential alternative means of analyzing organizational structure and functioning. While previous studies regarding organizational structure have utilized such perspectives as adaptation and exchange theory, few studies have utilized population ecology theory, thus leading to the current study. Although population ecology theory is most often used in the biological sciences, many of its principles lend well to organizational analysis. Due to internal structural arrangements (e.g. information constraints, political constraints) and environmental pressures (e.g. legal and fiscal barriers, legitimacy) of an organization, the inflexibility of an organization limits the firm's organizational analysis utilizing an adaptation perspective. The challenges and discontinuities associated with utilizing an ecological perspective are identified, including issues related to the primary sources of change (selection and adaptive learning) and related to differentiating between selection and viability. Utilizing competition theory and niche theory, several models for analyzing organizational diversity are incorporated to address factors not encompassed by ecological theory. By compiling elements of several theories, a population ecology model applicable to business related organizational analyses is derived. (AKP)
[Excerpt] Organizational theories, especially ecological perspectives, emphasize the disruptive effects of change. However, the mechanisms producing these effects are seldom examined explicitly. This article ex-amines 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.
This paper examines the impact venture capital can have on the development of new firms. Using a hand-collected data set on Silicon Valley start-ups, we find that venture capital is related to a variety of professionalization measures, such as human resource policies, the adoption of stock option plans, and the hiring of a marketing VP. Venture-capital-backed companies are also more likely and faster to replace the founder with an outside CEO, both in situations that appear adversarial and those mutually agreed to. The evidence suggests that venture capitalists play roles over and beyond those of traditional financial intermediaries.