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BUILDING THE IRON CAGE: DETERMINANTS OF MANAGERIAL INTENSITY IN THE EARLY YEARS OF ORGANIZATIONS” James N. Baron ‘Stanford University Michael T. Hannan ‘Stanford University M. Diane Burton Harvard University We examine how founding conditions shape the proliferation of management ‘and administration in a sample of young technology start-up companies in California's Silicon Valley. Analyzing quantitative and qualitative informa- tion, we examine the enduring imprint of two aspects of founding conditions: (1) the initial gender mix in start-ups and (2) the founder's employment ‘model. Both factors influence the extent of managerial intensity that devel- ‘ops over time. In particular, firms with bureaucratic-model founders subse~ quently became more administratively intense than otherwise similar com- panies, particularly when compared with companies with “commitment. model” founders. Also, firms with proportionately more women during the first year subsequently bureaucratized less than otherwise similar firms. Our ‘analyses thus support notions of path-dependence in the evolution of organt- zational structures and underscore the importance of the “logics of organiz- ing” that founders bring to new enterprises. Re managerial downsizings and the increased emphasis on “ean” opera- tions and “empowerment” have rekindled in- terest in managerial and administrative over- head in organizations. The proliferation of administrative roles and personnel is fre- ‘quently assailed for its financial cost and for excessively centralizing decision-making, thereby reducing the capacity of orgeniza- tions to respond to environmental changes. * Direct correspondence to James N. Baron, Graduate School of Business, Stanford Univer. sity, Stanford, CA 94305-5015 (baron_james@ gsb.stanford.edu). An expanded version of this paper, with supplementary technical and sttisti- cal material, appears as “Determinants of Mana- {erial Intensity in the Early Years of Organiza- tions," Research Paper #1550, Graduate School ‘of Business, Stanford University. This research ‘was supported by the Stanford Graduate Schoo! of Business and the Alfred P. Sloan Foundation. Baron also received generous support from a Marvin Bower Fellowship at Harvard Business School while conducting this research, and Hannan was supported by the Stanford Graduate School of Business Faculty Trust. An early ver- ‘American Sociological Review, 1999, Vol. 64 (August'527-547) Yet, after having been the focus of several streams of research, the scholarly study of ‘managerial-administrative intensity in org: nizations has waned. Structuralists and con- tingency theorists adopted a technical ap- proach, relating administrative intensity to changes in organizational size and/or tech- nology that alter requirements for informa- tion, coordination, and control (Blau 1970; Blau and Schoenherr 1971; Pugh et al 1968). This approach was largely supplanted by a neoinstitutional perspective, which views the proliferation of administrative sion of this paper was presented at the annual meeting of the Academy of Management, Sen Di- €g0, CA, August 1998, and atthe annual meeting of the American Sociological Association, ‘Toronto, Canads, August 1997. We thank Jane Wei for research assistance. Glenn Carroll, Neil Fligstein, Robert Gibbons, Rakesh Khurana, David Kreps, Craig Olson, the ASR Editor and re- viewers, and participants in research seminars at the University of Chicago, Cornell University, Harvard University, MIT, and Northwestera Uni- versity furnished helpful ideas and comments on early drafis. ‘327 528 structures as a response to external demands for legitimacy and accountability (Dobbin et al, 1994; Edelman 1990; Meyer and Rowan 1977; Meyer and Scott 1992). ‘We argue for renewed attention to admin- istrative intensity and particularly for an ap- proach that incorporates what we have learned recently about the path-dependent character of organizational change. Although the technical and institutional accounts of bureaucratization differ in their relative em- phasis on internal and extemal factors, both approaches take an “adaptationist” stance— they link an organization's bureaucratization to its current contingencies. Without denying the importance of technical and institutional factors, we suggest that organizations’ founding conditions may be no less decisive, exerting an indelible and enduring influence ‘on how enterprises evolve (Barnett and Carroll 1995; Boeker 1988, 1989; Carroll and Harrison 1994; Tushman and Murrman 1998). Stated differently, differences in how ‘administrative structures evolve might be, to some degree, “programmed” in an organi- zation’s infancy (Stincheombe 1965). ‘We develop and illustrate this approach, drawing on a unique database—the Stanford Project on Emerging Companies (SPEC). ‘This data set records the founding conditions and early evolution of high-technology firms in the Silicon Valley. ABOUT THE STANFORD PROJECT ON EMERGING COMPANIES SPEC examines the evolution of employ- tment practices, organizational designs, and business strategies. By focusing on firms in a single region and economic sector, it holds constant relevant labor-market and envi mental conditions, as well as some institu- tional influences thought to shape structures. Within the Silicon Valley region, we sought industries in which sufficient numbers of ‘comparable firms exist to enable quantitative ‘comparisons. Accordingly, we concentrated ‘on firms engaged in computer hardware and! or software, telecommunications (including networking equipment), medical and biologi- cal technologies, and semiconductors. This project seeks to understand how structures are established. We assume that very small organizations do not need much AMERICAN SOCIOLOGICAL REVIEW formal structure; accordingly, we studied only firms that had at least 10 employees when sampled.' The project also explores how founding conditions and early decisions affect subsequent organizational evolution, a goal that requires information about the ear- liest days of the organization, Assuming that recall reliability declines with the passage of time, we sampled firms that were no more than 10 years old in 1994—1995 (the typical firm was roughly 6 years old.)* Data Collection Survey, interview, and archival methods ‘were used to gather information on each firm in the sample (Burton 1995). Trained MBA and doctoral students conducted semi-struc- tured interviews with the current chief ex- ecutive officer (CEO). We also asked the CEO to identify: (a) the founder (or a repre- sentative of the founding team) best equipped to provide information regarding in 1994, we selected 250 of 676 technology firms in Silicon Valley that were founded within ‘these industries during the previous 10 years and that had more than 10 employees according to ‘wo commercial databases on Silicon Valley tech nology companies: Rich's Everyday Sales Pros- ecting Guide (1994); and the Technology Re- source Guide to Greater Silicon Valley (1993 1994) distributed by CompTech. The 250 firms were selected according to a stratified sampling plan described in Baron, Burton, end Hannan (1996, fig. 1) Of the 250 firms to which we wrote (Some of which had gone out of business, lft the area, of been acquired by the time we contacted them), 109 agreed to participate. Using the same sampling frame, we contacted 94 additional com- panies in 1995 (of 168 that were added to the 1995 edition of the CorpTech directory); 42 ‘agroed to be studied. Finslly, we supplemented the sample by contacting 32 very young firms (not listed in CorpTech), that we identified by ‘racking the Silicon Valley business press; 22 of these firms participated. See Burton (1999) for details, About 10 percent of firms proved to be more than 10 years old. In some cases, for example, in- terviews revealed thatthe inception of the orga nization occurred somewhat earlier than the date Of legal incorporation used in constructing our sampling plan. Even employing the most liber definition of “founding,” however, only three Fiems in the sample analyzed here had existed for 12 or more years when sampled. DETERMINANTS OF MANAGERIAL INTENSITY the firm's origins; and (b) the best informant regarding human resource management prac- tices in the organization. We interviewed these informants about company history and human resource management practices (re- spectively) and asked them to complete and return surveys. The survey on company his tory solicited details about the firm's found- ing and subsequent milestones; the human resource management survey sought infor- mation about work force demographics and various employment policies end practices Founders? Organizational Models Nooinstitutional work on organizations fre- quently asserts that culturally based logics, blueprints scripts, or conceptions of control sold organizational structures, practices, and evolutionary trajectories (Fligstein 1987, 1990). Yet researchers seldom try to opera tionalize blueprints directly; instead, they in- fer blueprints from other information sources. Moreover, institutional scholarship hnas tended to adopt an adaptationist stance toward organizational evolution, positing that organizational blueprints or conceptions of control change with the prevailing eco- nomic, political, and normative order. Tn contrast, we build on analyses of path- dependent change, which provide support for Stinchcombe’s (1965) classic statement of how founding conditions become imprinted ‘on organizations and mold their subsequent development. We want to characterize the implicit organizational model or blueprint of entrepreneurs so that we can assess whether that framework has enduring effects on their enterprises. Toward that end, in our inter- views we asked each founder whether he o she had “an organizational model or blue- print in mind when [you] founded the com- pany.” (The CEO was asked a parallel ques- tion about the period corresponding to the date of the interview.) Our analyses of founders" responses to this question revealed three recurting dimensions along which their images varied regarding hhow work and employment should be orga- nized (for additional details, see Burton 1995, 1999), ‘Atfachment. Founders articulated three bases of employee attachment. Some envi- sioned creating a family-like feeling and an 529 emotional bond with the work force that ‘would inspire superior effort and retain em- ployees. What binds employees to the firm in this model is. simply put, love—a sense of, personal belonging and identification with the company. Many firms in the sample pur- sue cutting-edge technology, and their founders thought that employees would be attracted by the chance to work at the tech- nological frontier. Recognizing this, many founders anticipated providing opportunities for interesting and challenging work to at- tract, motivate, and (perhaps) retain employ- ces.’ Here, employees were not expected to be loyal to the firm, the boss, or even co- workers per se, but instead to the project. nally, other founders indicated that they re- garded the employment relationship as a simple exchange of labor for money. Basis of coordination and control. A sec- ‘ond dimension concerned the principal ‘means of controlling and coordinating work. ‘The most common blueprint involved reli- ‘ance on informal control through peers or the organizational culture. Other founders intended to rely on notions of professional control, even if they did not explicitly use this terminology. These founders" responses took for granted that workers they would hire ‘would be committed to excellence and would perform at high levels because they had been professionally socialized to do so. Profes- sional control emphasizes autonomy and in- dependence rather than enculturation. Still others held a more traditional view of con- trol as being embedded in formal procedures ‘and systems. Finally, some founders stated that they intended to control and coordinate ‘work personally, by direct oversight, remi- niscent of the “simple control” paradigm that Edwards (1979) identified as characteristic of small capitalist firms a century ago. Selection. The third dimension concerns the primary basis for selecting employees. Some founders seemed to conceive of the firm as a bundle of tasks and sought employ- ees to conduct particular tasks effectively. 7A few founders unrivaled “opportunity.” might be a distinct basi of attachment, it was Closely aligned with “challenging work.” Because there were few such eases in our sample, we treated them as instances of attachment based on “work 530 Table AMERICAN SOCIOLOGICAL REVIEW Five Basle Employment Model Types Based on Three Dimensions of Employment Relations Employment Model ‘Attachment Engineering ‘Work sur Work Commitment Love Bureaveraey Work Autocracy Money ‘Time and money tended to be the paramount concerns here, so the focus was on selecting employees who could contribute immedi ately. In these cases, founders wanted em- ployees with the skills and experience needed to accomplish some immediate ‘ask(s). Other founders focused on a series of projects (often not yet envisioned) through Which employees would move over time. Ac- cordingly, they focused on long-term poten- tial, Finally, other founders focused prima- rily on values or cultural fit. Like the previ- ous group, they were concerned about the long term, rather than specific short-term personnel needs, but they put heavy empha- sis on how prospective hires would connect with others in the organization. Relationships among the three dimen- sions. These blueprints can be classified into three types of attachment and selection and four types of control, yielding 3 x3 x 4 = 36 possible combinations. Burton (1999) shows that observations cluster in a few cells, cor- responding to what we term the “basic model types” shown in Table 1. The engineering model involves attach- ment through challenging work, peer-group control, and selection based on specific task abilities. Some observers (e.g., Saxenian 1994) claim thatthe engineering model isthe default blueprint for a high-tech Silicon Val- ley start-up; it is the modal employment model forthe SPEC firms (see Table 2). The star model refers to attachment based on challenging work, reliance on autonomy and professional control, and selection of elite personnel based on Iong-term potential. The commitment model entails reliance on “love,” selection based on cultural fit, and peer-group control. The bureaucracy model involves attachment based on providing chal- Jenging work and/or opportunites for devel- Skills Peericultural Formal Direct opment, selection of individuals based on their qualifications for a particular role, and formalized control.‘ Finally, the autocracy model refers to employment premised on purely monetary motivations, control through close personal oversight, and selec- tion of employees to perform specified tasks. In addition to being the most prevalent ‘combinations observed for this sample, these five basic model types have two other impor- tant properties. First, each exhibits a high degree of coherence or internal consistency among the three dimensions, suggesting that they complement one another to form an phasis on coordination through organiza- tional norms and on bonds to the company is complementary with selection of employees for values and cultural fit, as is found under the “commitment” model. Second, these models display cultural resonance and sa- lience within this population and its setting ‘They reflect different logics of organizing in ‘other familiar institutions; indeed, the labels for the models are fairly evocative of the characteristics. For instance, the star model resonates with the model of academic sei- ence, which is well-known to many relevant actors in this organizational field. The com- mitment mode! draws on familial imagery and the revered legend of Hewlett-Packard in Silicon Valley. The engineering model reso- nates with the socialization that engineers re~ Given the context—small high-tech start-ups dominated in ther early stages by scientific and technical personnel—the “bureaucracy” label should be thought of as relative. It does not ind ‘ete that founders envisioned running their com- ‘panies like a huge government agency, but rather that they tended early on to place more emphasis ‘on formal controls, specialization of functions, nd the like than did other founders. DETERMINANTS OF MANAGERIAL INTENSITY 331 ceive in professional school. The bureau- cratic model is readily familiar to most em- ployees from encounters with bureaucracies in numerous contexts. And the austere, no- nonsense autocracy model communicates a powerful and consistent message that em- ployees are certain to have encountered else- where. We do not claim that these model types are generic, or even generalizable out- side the population of organizations we are studying. Rather, we simply claim thet these basic model types capture blueprints for or- ganizing that have a systemic quality and display cultural resonance in this setting Of course, not all founders’ responses fit into one of the five basic model types. Just under 10 percent of founders gave a pattern of responses that differed on one dimension from one (and only one) of the basic model types. In the analyses reported below, we as- signed these “near-model type” responses to their corresponding basic types. (Our results ae litte affected by this treatment of these cases; for details, see Baron, Hannan, and Burton [1999a]). Finally, 34 percent of founders’ responses were one “step” (dimen- sion) away fom multiple basic types or more than one step away from each of the five ba- sic types. We refer to this diverse set as “ab- errant,” “incongruent,” or “nonmodel” types. Methodological concerns. This effort to characterize the organizational blueprints of entrepreneurs raises a host of conceptual and methodological issues (Burton 1999). Here ‘we touch briefly on two concerns. First, the coding effort and our conceptualization of “organizational blueprints” concer the pre- mises ofthe key actors (the founders and, for assessing the current blueprints, the CEOs). These premises might or might not bear & lose relationship to organizational reality. In classifying responses on the dimensions de- scribed above, we were careful to rely on What the informant recounted about his or her underlying organizational model, not on ‘what the organization actually did. Second, founders might have selectively reconstructed the past. We address this issue in several ways in presenting results. Al- though we cannot definitively rule out biases due to retrospection, some of our results pro- vide reassurance on that score, Furthermore, founders sometimes acknowledged that their original models were naive or ill-conceived. On one hand, founders’ ability and willing- ness to be self-critical suggests that they ‘were not simply reporting ex post a self-serv- ing conception tailored to actual develop- ‘ments, On the other hand, given the retro- spective nature of founders" accounts of their corganization-building activities, and given other limitations of the availabie data, our findings and inferences regarding path-de- pendent organizational development should be treated as suggestive, not definitive ORGANIZATIONAL FOUNDING CONDITIONS AND THE RISE OF BUREAUCRACY ‘We want to learn whether the evolution of bureaucracy reflects an enduring imprint of formative influences at the inception of or- ganizations. Our analyses focus on the rise of managerial and administrative specialists, which some students of organizations have identified as the defining feature of bureau- cracy (e.g., Scott 1992:40). Founder's Model and Managerial Intensity If founders’ models of the employment rela- tion affect the evolution of their organiza- tions, this imprinting should be reflected in the intensity of administration over time. Ac- cording to Hannan and Freeman (1977, 1984), images of how tasks and workers should be organized are among the most dif- ficult aspects of organizations to change. Once formulated and articulated, a founders organizational blueprint likely “locks in” the adoption of particular structures; it also “locks in” certain premises that guide deci- sion-making. The founder's model also shapes the work force composition, creates expectations and interests within the organi- zation, and helps foster a reputation for the firm in the labor market. So we expect that founders’ models have enduring effects on their enterprises, even after the departure of the founder(s). Consistent with this conjecture, our previ- ‘ous work has shown that founders" blueprints shape not only the evolution of human 1 source practices and the human resource function, but also the likelihood of going public and the odds and timing of CEO suc- 532 AMERICAN SOCIOLOGICAL REVIEW cession (Baron, Burton, and Hannan 1996; Hannan, Burton, and Baron 1996). In the same vein, we predict that founders’ models shape the subsequent development of orga- nizational structure, including the extent of ‘managerial intensity. ‘We expect firms with bureaucratic-model founders to proliferate more specialized managerial and administrative positions. ‘There is no automatic connection here. In- deed, bureaucratically inclined founders might be able to economize on administra- tion by relying on information technology, budgeting, rules, and the like. Nonetheless, ‘we expect that when founders initially cham- pion formal means of coordination and con- trol, employees are less likely to develop a capability to self-manage and more likely to ‘view administration as the purview of spe- cialists ‘At the other extreme, we predict that com- ‘mitment-model firms will develop the least bureaucratic overhead. Advocates of “high commitment work systems” argue that orga- nizations can economize on formal control by providing long-term employment pros- pects, relying on peer pressure, encouraging employees to internalize the organization's goals and values, and investing in workers’ development (Walton 1985).5 We predict that, all else being equal, star- model firms also develop less managerial overhead than do firms built on a bureau- cratic model. “Stars” are hired, in part, be- cause they require less formal oversight. In- deed, they tend to be highly resistant to for- mal control. However, several attributes of star-model firms might temper this effect. Such organizations, which typically focus on a cadre of key employees, might find that mechanisms used to gain the commitment of stars (stock options, reliance on recruitment from elite institutions, etc.) fail to elicit con- summate cooperation from those who enter at later stages and in “nonstar” roles. More- ‘ver, the disdain of technical stars for admin- 57To be sure, more managerial effort might be of interest here is the proliferation of managerial and administrative staff, which we predict will ‘occur less among commitment-model firms as they grow and age. istration might cause firms to add more spe- cialists in oversight activities, activities that can be handled readily through self-manage- meant in firms built along commitment lines. Hence, we expect greater administrative in- tensity in star-model firms than in commit- ‘ment-model firms, but less than in engineer- ‘ng, autocracy, and bureaucracy firms. We predict that the autocracy and engi- neering models fal between the commitment and bureaucratic models. The autocracy ‘model entails an antipathy toward overhead of all forms because autocratic founders ‘want to minimize costs and also resist del- cegating control. However, we suspect that such firms, which typically make low initial investments in enculturation and formal con- trols, will be forced subsequently to burea cratize more than commitment-model firms. We expect the engineering model to fall above commitment and star models in ad- ministrative intensity and below the bureau- racy model. We do not make & prediction about its ordering relative to the autocracy model. As the default blueprint for Silicon Valley start-ups, the engineering model might attract and accommodate successive generations of new (and diverse) employees and promote clear expectations regarding their roles without extensive administrative ‘overhead. Yet several characteristics of engi- neering cultures—the lack of organizational loyalty, aversion to managerial and adminis- trative tasks, and affinity for order and struc- ture (Shenhay 1995)—might foster greater bbureaucratization as enterprises embodying the engineering model grow and mature Tn sum, we hypothesize the following par- tial ordering of basic model types from least to most administratively intense: commi ment < star < {autocracy, engineering} < bu- reaucracy, Initial Gender Composition and ‘Managerial Intensity Does a firm’s initial composition also shape the evolution of its structures? Like archi- tects, founders might design enduring struc tures that reflect the social characteristics ‘of—and relations among—the first intended ‘occupants. If $0, initial composition of the membership might be a crucial “founding condition. DETERMINANTS OF MANAGERIAL INTENSITY ‘We are unaware of any systematic work on this topic. As an inital, exploratory analysis, we focus on gender mix for two reasons: Longitudinal data on work force demography available for the SPEC firms are limited; and more theory and past research address orga- nizational gender composition than other di- mensions of work force demography (e-., ethnicity). Given extensive gender segregation in the labor market, the initial composition of a company is likely to reflect its occupational mix, with women concentrated in clerical positions and men concentrated in scientific and engineering roles. However, past re- search documents that employers have some latitude in staffing occupational roles (Bielby and Baron 1986; Reskin and Roos 1990) Economic and sociological perspectives of- fer competing predictions about the effect of initial gender mix on subsequent organi tional structure, including administrative in- tensity. According to human capital econom- ics (Becker 1957; Polachek 1979), employ- ers anticipate greater stability among male ‘employees and consequently reserve jobs for ‘men when they anticipate that tumover will be costly and disruptive—for instance, be- cause of high training costs or team produc- tion. Under these conditions, employers seek to bind employees to the firm through em- ployment security and/or efficiency wages. This argument implies a positive relationship between proportion female and administra- tive intensity for two reasons. First, the rela- tive absence of employment security and pre- ‘ium wages in female-dominated settings presumably requires more managerial con- trol over the work force and more adminis- trative resources devoted to replacing and training recruits. Second, when team produc- tion makes turnover costly (and males are therefore preferred by employers), peer con- ‘tol should largely supplant formal adminis- trative controls © Some sociological and cultural approaches suggest the opposite prediction—namely, less bureaucratization in settings character. ized by more female employment. Past re- © However, if employers offer more extensive benefits to men to bind them to the firm, more overhead might be required to administer those benefits, 533 search shows that employers use job titles that are more detailed and differentiated (both horizontally and vertically) for men and concentrate women in fewer, larger job titles (Baron, Davis-Blake, and Bielby 1986 Strang and Baron 1990). If employers con- struct opportunity chains more for men than for women and if one rationale for elaborat- ing administrative positions is to provide ca- reer opportunities for employees, this could explain a stronger tendency to add adminis- tration in organizations with an initially larger fraction of men. In addition, some feminists contend that bureaucracy is prima- rily a male contrivance and that control and ‘coordination of female employees might re- quire less management and administration (Martin, Knopoff, and Beckman 1998). Given these competing predictions, we do not offer a specific hypothesis. Instead, we address the issue empirically. Control Variables ‘Various other characteristics, such as indus- try, need to be held constant when examin- ing whether a firm's initial employment blueprint and gender composition influence managerial intensity. The SPEC firms vary, even within industries, in the main dimen- sion along which founders planned to seek competitive advantage—through breakaway technological innovation, enhancement to existing technology, superior marketing, or ow cost. A founder's business strategy has implications for the scope of the firm and the administrative functions required. We also control for the level of nonadministrative ‘employment (and for possible nonlinearities in the relationship between administrative and nonadministrative employment), firm ‘age, and whether the firm underwent an ini- tial public offering, a crucial event in the lives of start-up companies that can influence administrative intensity. In supplementary analyses we also con- trolled for the extent of employment formal- ization (the number of specific human re~ source policies and benefits aimed at formal- izing and systematizing employment rela~ tions); growth in the firm's human resource function; whether the firm received venture ‘capital financing; the firms initial occupa- tional composition (e.g., the predominance 534 of scientists and engineers versus clerical workers); CEO succession (whether the founder had been replaced by another CEO); and reliance on external sourcing (e.g., use of independent contractors). We also con- ducted supplementary analyses that con- trolled for each firm's level of managerial intensity in its first year of operations in or- der to model change in managerial intensity between the first year of operations and 1994-1995, when data were collected, These ‘control variables capture possible sources of unobserved heterogeneity and help ensure that any observed enduring effects of initial ‘gender mix or the founder's model are not spurious. MODELS AND METHODS ‘The outcome of interest is the prevalence of ‘managers and administrators,” We are inter- ested in the effect of conditions during the first year of founding (time 1) on managerial intensity in the year in which the firms were first interviewed, either 1994 or 1995 (time 1). Because previous research has docu- ‘mented returns to scale in administration, we use as the baseline a power-law relationship between the number of administrative and managerial employees and the size of the re- ‘maining work force, and we allow the sub- stantive variables of interest (employment ‘models and gender composition) to moder- ate this relationship: ADM, = NP exp(b + DyB, + B58, +bgE, + byAy +00, +bFemale, +¢,) ay where ADM, is the number of full-time man- agers and administrators at time f; N, mea- sures nonadministrative, nonmanagerial 7 A survey sent tothe person in each firm re sponsible for human resources asked for the num ber of fll-time equivalent employees, or "FTES (otal and female), in the following occupational categories: senior management, other administe- tive and managerial positions, engineering and science, sales and marketing, clerical, skilled Ia- bor, semiskilled and unskilled labor, and other. Respondents provided this information or one year after founding and for the period when the Company was frst visited by the research team (une 1, 1994 of June 1, 1995). AMERICAN SOCIOLOGICAL REVIEW FTEs at time ¢; By. S;, Ey, and Ay are dummy variables denoting (respectively) the bureau- cratic, sta, engineering, and autocracy mod- els of employment at founding (time 1); is a dummy variable for other employment types—the aberrant or incongruent blue- prints that do not fit into any of the five ‘model categories; Female, denotes the pro- portion female in the firm's full-time work force at the end of year 1; and ¢; is an error term. The effects of employment model are expressed relative to an omitted category, and we show results using both the commit: ment and bureaucratic models as baselines. If by in equation 1 equals 1, then the num- ber of managers and administrators increases linearly with the number of nonadmini- strators.* If bo < 1, then there are economies of scale in administration. We chose this functional form to constrain the predicted dependent variable to be nonnegative. Using ‘weighted least squares regression,” we esti- mate this model in log-linear form: IADM, = by InN, +, +62, +byS, +D4E; +bsA, +560, +b, Female, + ¢, ® We detected some nonlinearity in the rela tionship between InADM, and InN, To en- sure that any substantive results Were not merely artifacts of misspecification of this relationship, we constructed a term to cay ture quadratic effects: Q, = (N, ~ 1002. Thus, isthe squared deviation between the num- ber of nonadministrators in the firm and 100 (which is close to the average value for the sample as a whole). Expressing this effect as, 1 deviation from 100 produces a meaningful reference point for the effect of by: It is roughly the size effect for the average firm in the sample. We include InQ, as an addi- tional regressor in equation 2. The models also include measures to control for firm age, industry, business strategy, and public/p vate status. " Henceforth, we use “nonmanager” and “non- administrator” interchangeably to subsume em- ployees whose roles are neither managerial nor administrative. To correct for heteroskedasticity, we weight by an empirically derived function of the natural log of 1994-1995 full-time employment. DETERMINANTS OF MANAGERIAL INTENSITY Missing Data ‘We have a substantial problem with missing data. Of the 173 firms that agreed to take part inthe study, 101 furnished complete hu- ‘man resource management surveys. Staist- cal analyses (not reported here but available on request) predicting whether firms re- tured the survey revealed little evidence of systematic differences between firms that did versus those that did not complete the survey. Nor did the pattern of results re- ported below change when we controlled for nonresponse (by including the predicted probability of having completed the human resource management survey, based on probit analysis, as an independent variable in models of managerial intensity). We did not have adequate information on seven firms to characterize the founder's blueprint (.g., we were unable to interview a founder, or the interview was abbreviated and did not pro- vide adequate information to code his or her assumptions reliably). This reduced the number of available cases to 94 Of those 94 companies, 18 did not furnish information on their occupational or gender distribution at the end of the first year of operations."° The pattern of missing data is not random. Rather, the effects of founders’ employment models on subsequent manage- rial intensity are weakened when firms that were unable to provide time 1 occupational data are included in the analysis. In particu- Jar, only the extreme contrast—between bu- reaucracy and commitment—is statistically significant (see Baron et al. 1999, app.). ut differently, we find weaker evidence of path-dependent development when our analyses include enterprises lacking suffi- cient “organizational memory” to provide work force data from their first year of op- erations Given that we have complete data on the dependent and key independent variables for only 76 companies, we also bootstrapped the analyses to gauge whether our estimates of "© One reason for this is that many of the people who completed the human resource man- ‘agement surveys were not employed in the firm during its first year and did not have easy access to the information on gender and occupational mix at that time, 535 coefficients and standard errors are distorted by sampling variability. RESULTS Descriptive Statistics Table 2 reports descriptive statistics for the 76 firms with complete data. (Descriptive statistics for key independent variables are reported separately by founder's employ- ment model in Appendix Table A.) The av- erage firm was roughly 6 years old when first interviewed in 1994-1995 and had 28 senior managers and administrators oversee ing 116 other employees."? ‘There is considerable variation among these companies, even in thei fist year of operations. At the end of the first year, the firms ranged in size from 1 to 440 employ- ces, with a mean size of 29; by 1994-1995, they ranged from 6 to 1,895 employees, with an average of 136. Though not shown in Table 2, at the end of the first year the administrative-managerial contingent aver- aged about 40 percent of the work force, ranging from 9 percent to 100 percent; by 1994-1995, the average had declined to 24 percent, with a range from 6 percent to 89 percent, Women averaged 22 percent of the full-time work force at the end of the first year of operations (ranging from 0 percent to 64 percent); the mean increased to 31 percent by 1994-1995, with a range of 0 percent to 77 percent. Effect of Founders?’ Models ‘The effects of the founder's employment ‘model generally support our hypotheses (see Tn those bootstrap analyses, firms were ran- domly sampled (with replacement) to create a peudo-sample with N = 76 that is used to reest- Tuate the specification on which our main sub- stantive conclusions are based, One thousand such pseudo-samples were drawn, and the bootstrapped estimates of regression coefficients and ther associated t-statistic foreach indepen- dent variable reflect the mean values realized across those 1,000 replications (see Table 3, Model 10), "2 All counts of employees are given in terms of fulltime equivalents (FTES) 536 AMERICAN SOCIOLOGICAL REVIEW le 2. Descriptive Statistics (Unwelghted) for Selected Variables Used in the Analysis Variable Mean ‘SDs ‘Age of firm at first interview, 1994-1995 6.7 298 [Number of full-time employees, 1994-1995 135.82 mata [Number of full-time nonadministrative employees, 1994-1995 115.80 215.50 ‘Number of full-time nonadministrative employees (In), 1994-1995 31 26 ‘Number of full-time managers and administrators, 1994-1995, 2783 444 [Number of full-time employees at end of first year 29.09 67 Proportion female employees at end of first year 2 6 Firm became public by 1994-1995 2 = Firm received venture capital by 1994-1993" n = Founder was stil CEO in 1994-1995° 64 = Founder's Employment Model ‘Commitment 13 = Sur ° - Engineering 33 - Avtocracy 05 . Bureaucracy 05 - Aberrant 34 = CEO's Employment Model Commitment a3 = sar 05 = Engineering 25 = ‘Atocracy of = Bureaucracy 20 = Aberrant 3 = Founder's Intended Business Strategy Innovation focus 35 S Enhancement focus 16 = Marketing focus 4 2 Cost focus 0 ~ Hybrid marketing-technology focus a - Industry Manufacturing 0 - Medical-related 13 = Semiconductor an = Research 03 = ‘Computer (hardware or software) “9 5 ‘Telecommunications/networking 20 2 ‘Note: Unless otherwise noted, * Standard deviations are not shown for binary variables. ten. °N= 7, DETERMINANTS OF MANAGERIAL INTENSITY Table 3).!9 Model 1A of Table 3 reports weighted least squares estimates with the commitment model as the omitted (refer- ence) category. Each other employment model entails significantly more managerial intensity. As predicted, the contrast is great- est vis-A-vis the bureaucracy model: The es- timated effect of the bureaucracy model in the log-linear specification (.976) implies that bureaucracy-model firms had 2,65 times the number of administrators (€°% = 2.65) than otherwise similar firms founded along commitment-model lines. For instance, con- sider two firms each with 50 nonadministra- tive employees in 1994-1995 and differing only in the founder's employment model— bureaucratic versus commitment. Our esti- mates (for the constant, employment size variables, and founder's model effects) im- ply 30.3 administrators for the bureaucracy ‘model and 11.4 for the commitment model ‘At 500 nonadministrative employees, the contrast is 214.9 versus 81.0; and at 1,500 nonadministrative employees, the difference is 555.2 versus 209.2 administrators. Autocracy-model firms are the next most bureaucratic, as predicted, having 1.77 times the number of administrators (¢5 1.77) than otherwise comparable commit- ‘ment-model firms. The remaining three em- ployment models (star, engineering, and ab- errant) are also more administratively in- tense than commitment-model firms. The difference between star and commitment ‘models is not statistically significant. How- fever, when the bureaucracy model is the ref- erence category (Model 1B in Table 3), the star model is significantly less administra- tively intense than the bureaucracy model. Model IC in Table 3 reports mean coeffi- cients over 1,000 replications of “boot- strapped” weighted least squares regressions and the t-statistic associated with each mean coefficient. (The specification is the same as that for Model 1B.) The estimated effects are similar in the two sets of results: The ¢- statistics are smaller for the bootstrapped estimates, but the substantive conclusions are not affected. Therefore, we conclude "Given that we have made directional predic- tions for effects of founders" employment mod- els, we use one-tailed tests (and the p <.05 sig- nificance level) here. 337 thatthe basic pattern of results isnot driven by a few outliers. ‘These estimates generally conform to our predicted partial ordering: The bureaucratic model is the most administratively intense; the autocracy model comes next, followed by engineering, then star, and finally commit- ment. Each of the intermediate categories (star, autocracy, engineering, and aberrant) differs significantly from one or both of the ‘extreme categories (bureaucracy and com- mitment). However, either the differences among the intermediate categories are not great in our sample or else we lack the statis- tical power to detect them, as there are no statistically significant differences among them (detailed results available on request). The effect of founders’ blueprints on ‘growth in administration suggests a process of path-dependent development. Before ac- cepting that interpretation, however, we conducted several supplementary analyses (results available upon request). First, we estimated models that controlled for admi istrative intensity and/or for nonadministra- tive employment during the company's first ‘year of operations. These specifications Control for any unobserved differences among firms (e., in scale or scope) that might have required more bureaucracy from the outset. When added to the specification in Models 1A and 1B of Table 3, the number of full-time managers and administrators at time 1 (natural log) does not have a signifi- cant net effect (b = ~035; 1 = ~.56). Its in- clusion does not change the results appre- ciably; neither does controlling for the num- ber of nonadministrative full-time employ- fees (natural log) at time 1 ( = —021; 69), Do founders’ retrospective accounts merely reflect what has transpired since the founding of their firms? For instance, they ‘ight now recall having embraced a bureau- cratic model after having seen the firm be- come top-heavy with administrators (Golden 1997). And when asked in 1994 1995 to characterize their implicit assump- tions regarding employment relations, the CEOs might have been rationalizing what is rather than espousing their views of what should be. If such biases are at work, they should be most evident in CEOs’ responses about the present, particularly when @ 538 AMERICAN SOCIOLOGICAL REVIEW ‘Table 3. Unstandardized Coefficients from Weighted Least Squares Regresslons of Managerial In- tensity on Selected Independent Variables Medel 1 * B © Commitment ‘Bureaucracy Bureaucracy Omited, ‘Omited ‘Omited__Bootsvapped* Model 2 Independent Variable ° & Founder's Employment Model at Time 1 Bureaucracy ar Commitment — = 96 (353) 938 C2) Star 163 (73) 813" (301) ~765" C21) Enginering 21 169) 685% (288) 026" C20) — ‘Autocracy See @34) 407 C130) 419 105) ‘Aberrant 3s @On -633" C260) -57 GL (CEO's Employment Model in 1994-1995 Commitment 209.15) Siar - FF 0G Engineering - FF a 650) Astocracy es ay Aberrant —- ee oD Proportion female 2m 903" C27) ~826" (2.22) -811" 2.28 ‘time | ‘Age of firm in O16 (83) O16 (83) oa 106) OIC) 1994-1995 aN, (aumber of non- 800" (14.28) 428) 778 3.43) 817" 1292) sdminiswative FTEs fn 1994-1995) InN, 1008 028 (116) 028 (1.16) 031 (1.06) 030 (1.20 Firmbecame public 387" 3.22) 357" G22) 358" 276) 297" 49) by 1994-1993 Research, computer, 162. LIN) 62 GIN) 15S (TT) IZ IT) ‘or telecommonic- ons industry Semiconductor or manu —373" (-2.01) ~373" (201) -340 (134) =444" (2:38) facturing industry Clr —“‘“—O™SSNSsss ‘rates Constant 913" (287) 063 (19) 020 (05). = 7152.39) ‘Lop likelihood 39.88 39.88 = 46.1 ‘Adjusted R? 39 39 89 a F(at.=13) 461 46 461 384 ‘Note: Observations were weighted ata function of fll-time employment in 1994-1995 (In) to correct for beteroskedasicity, N = 76 firms for each model ‘Adjusted R2 and F for Model 1C calculated by applying means for bootstrapped coeffici (weighted) data and comparing observed and predicted values. ® Includes strategies that combine technology and marketing focus. “p<.0S — “p<.01_“p-<.001 (twouiled tests) *p<.0S — “p<.0l *p-<.001 (one-tailed tests) 8 t0 DETERMINANTS OF MANAGERIAL INTENSITY 539 founder was still CEO (as was the case for 64 percent of the 76 companies). Model 2 in Table 3 reports results ob- tained by replacing founders’ models with ‘CEOs’ models in 1994-1995, specifying bu- reaucracy as the reference category. None of the contrasts vis-d-vis bureaucracy is sig- nificant. If commitment-model firms are treated as the reference category, contrasts with engineering-model or aberrant-model CEOs approach significance (¢ = 1.77 and 1.78, respectively). However, the set of variables representing CEOs’ models is not statistically significant as a group (F =.970; p= 4), (In a model that specifies effects of both founders’ and CEOs’ models, none of the latter effects is significant and the ef- fects of founders’ models are not dimin- ished; results available on request). Supple- mentary analyses that control for whether the founder was still CEO in 1994-1995 do not yield a significant main effect or any significant interaction effect with founder's model. In other words, the “imprinting ef- fect” of the founder's model on present-day administrative intensity does not differ ap- preciably according to whether the current CEO is or is not a founder. In our view, these results suggest thet bi ased responses by our respondents are not a major problem. It is the founder's organiza- tional blueprint—not that of the current ‘CEO—that relates most strongly and system- atically to current administrative intensity. ‘The effect of the founder's model is just as strong when the CEO is not a founder. More over, recall that our data on occupational dis- tributions in firms come from the human re- source management survey (typically filled ‘out by someone other than the founder or CEO). This reduces the likelihood of any spurious association between our dependent variable and the interview responses of founders and CEOs. Effect of Initial Gender Composition Gender composition at time 1 has a signifi- cant negative effect on administrative inten- sity at time 1, in support of the sociological account (6 = -903; ¢ = -2.71). Given the small sample and exploratory nature of this analysis, we do not want to overinterpret this result. Nonetheless, this effect is large in substantive terms, and it is robust across ‘many different specifications. Relative to an all-male baseline, a firm that was 25 percent female at the end of the first year (Which is close to the sample mean) would have only 80 percent as many administrators by 1994 1995, ‘Not surprisingly, differences among firms in gender composition remain fairly stable over time—the bivariate correlation be- tween percent female in the first year and in 1994-1995 is .52. Yet we found an interest- ing parallel to the results on employment models: Early gender mix matters more than ‘contemporaneous gender mix for the growth of administrative overhead. When we re- placed first-year gender composition with ‘gender composition in 1994-1995, the latter effect is sizable (b = -942) but is not sig- nificant (¢ = -1.77, p = .08, two-tailed test). ‘When we include measures of gender mix at both points in time, first-year gender com- position continues to have a strong and sig- nificant impact on administrative inten- sity." This evidence also supports the n0- tion of path-dependence. We also estimated models incorporating controls for the natural log of the number of managers and administrators at time 1 (to focus solely on growth in bureaucratization over time) and models that controlled for the natural log of the number of nonadmi istrative personnel at time 1. Neither had a significant effect on administrative intensity in 1994-1995, and the large negative effect, of initial gender composition on bureaucra- tization persists despite these controls. Finally, we conducted analyses that disag- gregated the gender composition at time 1 by occupation. The results indicate that itis the early presence of women among the firm's core work force that matters: The pro- portion of scientist and engineering jobs held by women at time 1 has a significant negative effect on administrative intensity (b = ~629; 1 = -2.38), whereas women’s share of other jobs has a trivial effect (b =.112; t = -.40). Thus, it is apparently ‘women's early representation in the core scientific and engineering occupations that 7 The effect for gender composition at time 1 811 (1 = -2.02) the effect for gender compo- sition in 1994-1995 is ~271 (r= -.44). 540 AMERICAN SOCIOLOGICAL REVIEW shaped subsequent bureaucratization within these technology-based companies. This finding provides additional evidence that the effect of gender composition is not spu- rious but instead captures differences in the propensity to formalize administration and management that depend on the social de- ‘ography of a firm’s core work force early in its history. Effects of Control Variables With a constant of 063, = 800, and a quadratic effect of 028 (and setting ail other Covariates to zero), the estimates for Model 1B in Table 3 imply a ratio of managers and administrators to other employees of 1.38 for a (bureaucracy-model) firm with one nonadministrator (the minimum in our sample), .86 for a firm with 10 nonadmini- strators, and around .42 at 100 nonadmini stators. However, the ratio increases only slightly beyond that size—to around .48 for a firm with 120 to 200 nonadministrators— before declining to .43 at $00 nonadmini- "5 An anonymous reviewer suggested that the effect of inital gender mix may reflect organiza- tional cheracteristics—specifically, gender segre- ‘gation—missing from our model. in supplemen- tary analyses, we added a measure of occupa- tional segregation at time 1 to our model. Not sut- prisingly, there is a negative correlation (about =.4) between occupational gender segregation and roportion female in the firm. Either measure jone has a statistically significant effect on ad- ministrative intensity; when both measures are included, neither effect is significant, but the ef fect of segregation is diminished considerably ‘more than isthe effect of proportion female. Un- fortunately, some firms that provided occupa- tional data from their first year of operations did not provide complete staffing information by gen- der for every occupation, 50 a segregation ( similarity) index could be calculated for only 63 of our 76 companies. Consequently, we have em- phasized the results incorporating the effect of proportion female, which reflect a larger sample. Moreover, we believe that gender segregation is captured adequately in our supplementary analy~ ses, Among the SPEC companies during their first year of operations, the scientific and engi neering category typically represented the largest share of employees (median = 42.7 percent, mean += 38.5 percent) relative to the other occupational strators, .39 at 1,000, and .37 at 1,582 (the largest observed value). Thus, our results suggest strong economies of scale in admin- istration as young companies grow to the av- erage size in our sample (roughly 115 non- iministrators). However, administrative {jobs appear to grow slightly faster than the rest of the work force as firms add their sec- ond hundred nonadministrative employees. Boyond several hundred nonadministrators, only slight economies of scale accompany growth in administrative staff—the implied ratio of overhead to nonoverhead positions remains at about 2:3 throughout the rest of the size range. Our specification of the relationship be- tween administrators and nonadministrators is based on examination of the data rather than being derived from a theory or model Interestingly, among the SPEC firms (with complete data) that had added a full-time hhuman resource specialist, the average em- ployment size was around 100 employees at the time the human resource function was added, This result suggests that it is at this scale that substantial organizational infra- ‘categories for which we have data on year 1 em- ployment. And the main axis of gender segrega- tion within these companies typically is the vide between “core” scientific, technical, and en gineering jobs versus al other occupations in the firm. In its first year of operations, the me ficm had O percent female among scientific and engineering employees; forall other occupations combined, the median percent female was 33.3 Hence, we believe the analysis reported above, which’ incorporates separate measures. of women’s representation within scientific and en- ering roles versus all other jobs, captures the basic magnitude and pattern of segregation within these technology companies. In any event, our analyses ofthe effects of gender composition are tended to be suggestive, and they do suggest & link between initial gender mix and subsequent administrative structure. Future research should ‘assess whether () these findings generalize to ‘other samples; (b) any effects of gender mix in- teract with occupational composition or occupa- tional segregation within organizations; and (c) the effect of gender mix on administrative inten- sity generalizes to other dimensions of social de- ography (eg. ethnic composition) and to other dimensions of orgenizational structure. DETERMINANTS OF MANAGERIAL INTENSITY structure begins to be added. Moreover, the upturn in the rate of bureaucratization ob- served in this sample after firms reach about 100 employees is broadly consistent with ‘other organizational research (Haire 1959). If these results capture the dynamics of bu- reaucratization within this sample, they sug- gest that the principal bursts of overhead creation occur at founding and later as orga- nizations grow to between roughly 100 and 200 employees. Becoming a publicly traded company sig~ nificantly increases administrative intensity. Neoinstitutionalists might construe this as evidence of public companies seeking le- gitimacy by adopting formal structures. Elsewhere we have reported some evidence oon formalization among the SPEC firms that is broadly consistent with such accounts (Baron, Burton, and Hannan 1999). How- ever, any public company must discharge responsibilities—including financial report- ing, compliance with regulatory agencies, and managing investor relations—that are likely to increase the need for administra- tion and management. Consequently, this particular result is not startling. In supple- mentary analyses, we examined the effects of CEO succession, employment growth, and receipt of venture capital, but none had a significant net effect on administrative in- tensity Finally, we found only modest effects of industry and strategy. Not surprisingly, companies intending to rely on marketing, service, and close customer relations as key competitive competencies added more ad- ministrative overhead than did companies pursuing other strategies." Relative to the omitted industry category (medical devices and biotechnology, an industry that faces, considerable legal and regulatory demands), other firms were slower to add overhead, particularly companies in semiconductors or technology-based manufacturing. "Some founders’ strategies combined a strong, ‘customer focus with a technology emphasis—for instance, intending to leverage close customer re- lations for “concurrent engineering” of products ‘or services. We grouped those “hybrid” strategies ‘with pure marketing-service strategies in the analyses reported in Table 3, sat Other Supplementary Analyses ‘We were concerned that the founder's blue- print or the early gender mix might reflect other differences across organizations affect- ing the demand for managers and adminis- trators. For instance, differences in firms’ oc- ccupational composition could account for variation in both employment model and in gender mix. Similarly, firms might vary in their propensity to purchase administrative services from external providers. To explore these possibilities, we estimated numerous other specifications that controlled for occu- pational composition at time 1 and time f; outsourcing of administrative functions and use of independent contractors; employment formalization (the number of formal human resource practices adopted) within the first year and over time; the size, growth, and structure of the human resource function; CEO succession; and women’s presence within senior management in the firm's first year. We found few consistent effects of any ‘of these factors on administrative intensity (detailed results available on request). More over, the effects of initial gender mix and founders’ models were unchanged in models including these additional controls. DISCUSSION ‘Neoinstitutionalist research emphasizes how top managers" conceptions of control shape the enterprises they command (Fligstein 1987). We have empirically characterized the organizational models or blueprints of founders. Drawing on our previous work, we have argued that these blueprints can be cat- egorized into a small number of distinctive types that vary in their assumptions about the nature of organizational attachment, strategies for selecting employees, and the principal basis of coordination and control. It is noteworthy that we identified five distinct basic blueprints within this rela- tively homogeneous set of companies— high-technology enterprises founded during ‘one historical period that were located in the same area and were founded by people who tend to know one another and to draw on the same pools of employees, advisors, and po- tential financiers. These different blueprints draw on widely shared conceptions about sa AMERICAN SOCIOLOGICAL REVIEW organizations that were available to the founders and prospective employees of these companies. For instance, the revered status of Hewlett-Packard in Silicon Valley folklore, coupled with writings on Japanese management styles in the 1980s, ensured that founders and employees had a clear conception of the commitment model. Simi larly, the star model is isomorphic with the familiar organizational model of basic sci- ‘ence (including university laboratories). Such diversity seems at odds with ac- counts that assume a dominant logic of or- ganizing within particular organizational fields, Yet some institutionalists (e.g., Scott 1995) argue that institutional forces can also define the contours of differentiation within 4 population. To have predictive value, in- stitutional theory ultimately must be able to specify ex ante when norms and institutions will promote isomorphism and when they will structure and sustain differentiation. For example, as dependent care and elder- care providers proliferate, how broad a range of models will be viable, along what dimension(s) will they be organized, and ‘what will be the regulatory, normative, and ‘cognitive factors that encourage or discour- age isomorphism within that sphere? Are the answers different for, say, Intemet ser- vice providers? If so, how and why? ‘We emphasize that in operationalizing founders’ models or blueprints, we do not intend to reduce the organization-building process to the personality, temperament, or idiosyncrasies of the founders. In other re- search, we documented that founders’ orga- nizational blueprints are associated with a number of factors, including the intended business strategy and the early influence of important external constituents such as ven- ture capitalists (Baron, Burton, and Hannan 1999; Burton forthcoming). Founders may ‘embed their distinctive visions and values in enterprises, or founders may simply be con- duits through which economic, social, or cultural forces systematically shape organi zational blueprints. Our results demonstrate that those blueprints affect the pace of bu- reaucratization, but they do not resolve the thomy issue of the distinctive contributions made by founders and other actors in build- ing and changing organizations. Attempts to trace the evolution of organi- zations from their infancy forward are fraught with difficulties, especially when the researcher seeks to understand the con- ceptions of key actors. Accordingly, our study has several limitations, including: a relatively small and homogeneous sample (of firms that survived long enough to per- mit study by our team); retrospective ac- counts of organization-building (obtained in ‘most cases from a small number of key ac- tors); 2 method of classifying organizational models based largely on the assumptions and rationales provided by informants; and limited data on the sources of the founders’ models and on how faithfully they were implemented. The results about employment ‘models also depend on the firm's ability to supply us with detailed information on oc- cupational and gender distributions during the first year of operations. Consequently, ‘we regard the results reported here not as definitive, but as suggesting promising di- rections for further research, theory devel- ‘opment, and methodological refinements. ‘At the same time, our study is distinctive in taking seriously the institutionaists’ con- cept of “models of organizing” —secking to operationalize the construct and empirically assess how founders’ blueprints affect orga- nizational evolution. For the most part, in- stitutionalists have (a) posited a single dominant logic of organizing within a given field; (b) inferred organizational models from organizational outcomes; or (c) as- sumed that models emanate from various sources of influence (e.g., educational insti- tutions, occupational socialization, govern- ‘ment regulation, professional groups) and ‘measured an organization's “proximity” to those sources (e.g., the occupational back- ground of its top executives, extent of gov- ‘emment regulation). In gauging the validity of our typology of ‘employment models, we are encouraged by recent research documenting disruptive con- sequences—such as higher labor tumover, especially among the most senior employ- cees—when companies alter their founder's blueprint (Baron, Hannan, and Burton 1999b). Turnover was especially high ‘among firms that shifted from one incongru- ent (nontype) blueprint to another and DETERMINANTS OF MANAGERIAL INTENSITY 543 ‘among firms that abandoned the commit ‘ment or star models. In contrast, changing the model was generally less disruptive (i.e. produced less turnover) when firms moved from a near-type or nontype blueprint to one of the basic employment model types (ex- cept to “bureaucracy” or “autocracy.” types that fostered high turnover). The facts that changing the model increases turnover, that the magnitude of the effect depends system- atically on the particular transition path a firm follows when altering its employment model, and that turnover is especially high among companies that exchanged one in- ‘congruent blueprint for another suggest that the five basic model types do indeed capture meaningful differences in founders’ organi- zational “recipes.” Yet future research can no doubt improve on our efforts to identify the organizational models embraced by key actors as they seek to create new enterprises (or transform old ‘ones), by tracing the origins of these models and examining their effects on organiza- tional evolution. It remains to be seen whether the particular dimensions and ty- pology we have used to differentiate among employment blueprints in our sample will rove useful in studying other organiza- tional populations. Until the new institu- tionalism tackles these issues, it will remain susceptible to the criticism that its central constructs—conceptions of organizing and the legitimacy those conceptions supposedly confer—are not well represented in empiri- cal research (but see Deephouse 1996). ‘Our analyses provide provisional evi- dence of path-dependence in bureaucratiza- tion. Founders’ initial models of the em- ployment relation shaped the administrative and managerial intensity of their firms in ‘ensuing years. We found sizable differences in the extent to which organizations of the same size elaborated administrative and ‘managerial jobs. The most extreme contrast ‘was between firms with commitment-model founders versus those with bureaucrat model founders. Thus, our findings are con- sistent with the assertion that early invest- ments in systems of cultural control enable ‘organization-builders to economize on the need for formal management and adminis- tration. Indeed, founders’ initial organiza tional blueprints were better predictors of managerial intensity in 1994-1995 than were the blueprints of the CEOs in 1994— 1995, ‘One might ask whether a six-year time in- terval (which was typical of the firms we studied) is long enough to provide a strong test of path-dependence. For many compa- ies in our sample, six years is a long time indeed, subsuming several generations of products, stages of financing, and executive tumover events. (One SPEC firm, just over cight years old when we visited it in 1995, ‘was on its seventh president and sixth chief executive!)!” As Hannan and Freeman (1984) argue, the pace of organizational change must be assessed relative to the en- vironmental pressures and turbulence an en- terprise faces. By that criterion, an enduring imprint of founding conditions five to ten years into the life of technology companies seems to us fairly compelling evidence of path-dependence. The enduring effects of founding conditions are particularly striking given the frequent changes in leadership and organizational models experienced by these start-ups, along with many other dramatic events (rapid growth, mergers, going public, etc.).!¥ Future theoretical and empirical ‘work identifying the internal and extemal factors that strengthen or weaken the im- printing of founding conditions would be useful ‘An important founding condition bearing ‘on organization-building may be the social composition of an organization's initial work force—specifically, its gender mix We found a robust, negative effect of initial proportion female on later administrative in- tensity. As was the case for the effects of employment models, intial conditions (gen- der mix in the first year) mattered more than contemporaneous conditions (gender mix in The founding CEO was temporarily brought back as CEO after having previously stepped down, so the six regimes actually reflect five dif. ferent leaders '* For instance, roughly 36 percent of the com- panies had replaced their original founder with @ new CBO by 1994-1995. Moreover, based on our coding protocol, the organizational model had changed in 51 percent of the companies (65 per- cent of firms with a different CEO than the founder versus 43 percent of those in which a founder was still CEO). sa AMERICAN SOCIOLOGICAL REVIEW 1994-1995) in predicting subsequent bu- reaucratization ‘To explore the process by which early gen- der mix influences subsequent bureaucratiza- tion, we focused on firms with an unusually large fraction of women in the first year and that were less administratively intense than otherwise comparable companies, drawing on transcripts of our interviews with Key in- formants.” These analyses suggest that the early presence of women in these firms may be an indirect result of network-based re- cruitment strategies. This suggests a difter- cent interpretation for our finding that tech- nology start-ups with a high fraction of women in the early years develop less bu- reaucracy over time. Pethaps firms with a substantial representation of women from the start are more likely to hire through personal networks, thereby creating a larger stock of “social capital” on which founders could draw as an alternative to formalized struc- tures of coordination and control. (Recall that the effect of gender composition was re- stricted to women’s prevalence within the core scientific and engineering occupations in these companies, which is where network- based recruitment is most likely to take place in the start-up phase.) The social similarities and strong interpersonal connections estab- lished through network-based hiring facili- tate reliance on peer monitoring and self- management as alternatives to formal coor- dination/control. Should this tentative finding prove to gen- eralize and should our interpretation be borne out by future research, some interest- ing questions would arise. The notion that women might penetrate technology-based start-ups through network-based hiring po- tentally runs counter to two widely accepted views. First, bureaucratic employment sys- tems are generally thought to favor less advantaged groups because these systems enforce universalistc criteria in recruitment and selection. Second, social networks are generally thought to be so homophilous with 1? We identified these firms by estimating the regression in Model A of Table 3 but omitting time I gender mix, calculating residuals from that equation, and identifying cases with large nega- tive residuals that were also well above the me- dian proportion female at time | respect to gender (McPherson and Smith- Lovin 1987) that network-based recruitment ‘would lower the gender diversity of employ- ‘ment. If women secured senior management cr key scientific and technical roles in our sample of start-ups primarily through net- work ties, this would raise the question of how they were able to form those ties in the first place. Are there particular organiza- tional settings (e.g., well-established compa- nies, business and engineering schools) that are conducive to the formation of ties that cross lines of sex, race, ethnicity, and other social categories and that can be leveraged to gain positions in new enterprises? Re- search along these lines could enhance not only our understanding of social networks and labor market outcomes, but also the fac- tors that influence who gets represented among the founders and key employees of new enterprises, factors that our analyses suggest play a crucial role in how these or- ‘ganizations evolve. James N. Baron isthe Walter Kenneth Kilpatrick Professor of Organizational Behavior and Hu- ‘man Resources and (during 1998-1999) the Rob- ert and Marilyn Jaedicke Faculty Scholar at ‘Stanford University's Graduate School of Busi- ness. His current research interests include eco- nomic sociology, career inequality in organiza- tions, and the determinants and consequences of employment relations in organizations. With David'M. Kreps, he recently published Strategic Human Resources: Frameworks for General M: agers (John Wiley, 1999). Michael T. Hannan is the Stratacom Professor (of Entrepreneurship (in the Graduate School of Business) and Professor of Sociology at Stanford University. In addition to continuing research on the Stanford Project on Emerging Companies, he Is involved in a collaborative effort (with Laszlo Palos, Glenn Carroll, and Gabor Péli) in formal- ing theorles of organizational ecology. His lat- ‘est book, The Demography of Corporations and Industries (with Glenn Carroll), is forthcoming from Princeton University Press. ‘M, Diane Burton is Assistant Professor of Orga- nizational Behavior and Entrepreneurial Mar ‘agement at Harvard Business School. Her re- search interests include organizations, employ- ‘ment, human resource management, and strat Cation. In addition 1o studying young firms in Sili- ‘con Valley, she is examining managerial careers ‘and executive mobility. She is also conducting a study of the people and organizations involved in the global medical devices industry DETERMINANTS OF MANAGERIAL INTENSITY 545 Appendix Table A. Descriptive Statisties (Unwelghted) for Selected Independent Variables by Founder's Employment Model “Autooracy ‘Mem SD* “Mean SD, 25 (18) Independent Variable Proportion female employees ‘tend of first year ‘Age of firm a fret interview, 1994-1995, InN, Number of full-time ‘onadministative employees, 1994-1995) 2 (18) soi ) 1027 (4 402 (1.47) 3.98 (1.87) 1m (y,-100)* 9) 9.32 (1.64) Firm became public by 2 0 = 1994-1995, Research, computer, ortele- 77 — 1.00 — ‘communications industry Semiconductor ormame- 12 — «00 — ‘facturing industry Marketing-oriened suategy® 27 — 00 — (CEO's Model in 1994-1995 Commitment CS fp sur o — mo — Engineering Se Autocracy oo os Bureaucracy Ho yo Aberrant so — 0 ember of cates 2% ‘ * Standard deviations are not shown fo Founders Employment Model ‘Commitment Star ‘Engineering Bureaucracy Mean S.D. Mean S.D._Mean SD. Mean SD. 28 (20) 31 12) 16 (10) 23 (4) 652.1 7418 8.38) 597 @52) 423 (1.61) 384 (137) 444 (53) 3.69.1) 3:72 (79) 8.46 (1.38) 7.21 (1.28) 7.44 @.12) 7.22 (85) 0 — 97 — 28 — ow so - 8 m= 10H so — 0 — 6 — oo — Mo Po oo % — © — © ~ ow ~ — 4 = © — o — SH oS = % = 0 — ow» — SM] 3S Ho oOo - 4 — 2% — ow» — 10 7 25 4 ary variables * Includes strategie that combine technology and marketing focus. REFERENCES Barnett, William P. and Glenn R. Cerrall, 1995, “Modeling Internal Organizational Change.” Annual Review of Sociology 21:2117-36. Baron, James N.,.M. Diane Burton, and Michaet "T. Hannan, 1996. “The Road Taken: The Ori- sins and Evolution of Employment Systems in Emerging High-Technology Companies.” In- dustrial and Corporate Change 5:239-16. 1999. “Engineering Bureaucracy: The Genesis of Formal Policies, Positions, and Structures in High Technology Firms.” Journal ‘of Law, Economics, and Organization 15:1. Baron, James N., Alison Davis-Blake, and Will. iam T. Bielby. 1986. 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