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

Abstract

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 how 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.