W e contrast life-cycle and path-dependent views of entrepreneurial firms by examining the evolution of top management teams. We show how initial conditions constrain subsequent outcomes by demonstrating that the founding team's prior functional experiences and initial organizational functional structures predict subsequent top manager backgrounds and later functional structures. We find that narrowly experienced teams have trouble adding functional expertise not already embodied in the team. We also find that firms beginning with a limited range of functional positions are less likely to develop complete functional structures. Importantly, we do not find functional structure and functional experience to be interchangeable. We find that firms beginning with more complete functional structures are likely to go public faster, and firms beginning with broadly experienced team members obtain venture capital more quickly regardless of the experience and structural composition of the top management team in place at the time of these outcomes. Further, broadly experienced founding teams that build an early team with a full complement of functional positions achieve important milestones faster than firms that start with neither experience nor structure. This suggests that creating positions as "placeholders" in new ventures, where positions are created and filled with the intent of bringing individuals with more relevant experience onboard later, is not obviously a path by which to succeed. By examining the origins of top management team experience and functional structures, we illustrate the lasting imprint of founders on top management team composition and firm outcomes.

No abstract

We examine how the social structure of existing organizations influences entrepreneurship and suggest that resources accrue to entrepreneurs based on the structural position of their prior employers. We argue that information advantages allow individuals from entrepreneurially prominent prior firms to identify new opportunities. Entrepreneurial prominence also reduces the perceived uncertainty of a new venture. Using a sample of Silicon Valley start-ups, we demonstrate that entrepreneurial prominence is associated with initial strategy and the probability of attracting external financing. New ventures with high prominence are more likely to be innovators; furthermore, innovators with high prominence are more likely to obtain financing.

This study investigates how top management team (TMT) demographic characteristics affect firm outcomes for young high technology firms in Silicon Valley. We study how team composition and turnover shape an entrepreneurial firm's ability to attract venture capital and its ability to successfully complete an initial public offering. We find that broad access to information by virtue of having top management team members that have worked for many different employers (diverse prior company affiliations) and have diverse prior experiences (functional diversity) tend to be associated with positive outcomes. In addition, entrants to and founder exits from the TMT increase the likelihood that a firm achieves an IPO. TMT exits, in turn, reduce the likelihood of achieving an IPO. Results also suggest that prior human capital experience is consistently associated with positive firm outcomes. These findings suggest that team experiences, composition and turnover are all important 0883-9026/$ -see front matter D

Abstract[Excerpt] Organizational theories, especially ecological perspectives, emphasize the disruptive effects of change. However, the mechanisms producing these effects are seldom examined explicitly. This article examines one such mechanism-employee turnover. Analyzing a sample of high-technology start-ups, we show that changes in the employment models or blueprints embraced by organizational leaders increase turnover, which in turn adversely affects subsequent organizational performance. Turnover associated with organizational change appears to be concentrated among the most senior employees, suggesting "old guard disenchantment" as the primary cause. The results are consistent with the claim of neoinstitutionalist scholars that founders impose cultural blueprints on nascent organizations and with the claim of organizational ecologists that altering such blueprints is disruptive and destabilizing. Organizational theories, especially ecological perspectives, emphasize the disruptive effects of change. However, the mechanisms producing these effects are seldom examined explicitly. This article examines one such mechanism-employee turnover. Analyzing a sample of high-technology start-ups, we show that changes in the employment models or blueprints embraced by organizational leaders increase turnover, which in turn adversely affects subsequent organizational performance. Turnover associated with organizational change appears to be concentrated among the most senior employees, suggesting "old guard disenchantment" as the primary cause. The results are consistent with the claim of neoinstitutionalist scholars that founders impose cultural blueprints on nascent organizations and with the claim of organizational ecologists that altering such blueprints is disruptive and destabilizing.