Founding the Future: Path Dependence in the Evolution of Top Management Teams from Founding to IPO
- 1 February 2008
- journal article
- Published by Institute for Operations Research and the Management Sciences (INFORMS) in Organization Science
- Vol. 19 (1), 3-24
- https://doi.org/10.1287/orsc.1070.0311
Abstract
We 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.This publication has 60 references indexed in Scilit:
- Upper Echelons Theory: An UpdateAcademy of Management Review, 2007
- Organizational identities and the hazard of changeIndustrial and Corporate Change, 2006
- Organizational Genealogies and the Persistence of Gender Inequality: The Case of Silicon Valley Law FirmsAdministrative Science Quarterly, 2005
- A Genealogical Approach to Organizational Life Chances: The Parent-Progeny Transfer among Silicon Valley Law Firms, 1946–1996Administrative Science Quarterly, 2002
- The interaction between product market and financing strategy: The role of venture capitalThe Review of Financial Studies, 2000
- Why Differences Make a Difference: A Field Study of Diversity, Conflict and Performance in WorkgroupsAdministrative Science Quarterly, 1999
- Top Management Team Demography and Process: The Role of Social Integration and CommunicationAdministrative Science Quarterly, 1994
- The Robust Inference for the Cox Proportional Hazards ModelJournal of the American Statistical Association, 1989
- Knee-deep in the big muddy: a study of escalating commitment to a chosen course of actionOrganizational Behavior and Human Performance, 1976
- Personnel Flows as Interorganizational RelationsAdministrative Science Quarterly, 1971