Organizational Origins: Entrepreneurial and Environmental Imprinting of the Time of Founding

Abstract

Explores the effects of the events surrounding the founding of a firm on its subsequent strategic choices and long-term development. Theorists write about how the beliefs and attitudes of the entrepreneur or the environment conditions at time of founding leave imprints on the firm or leave inertial properties. The entrepreneur is likewise imprinted by his or her environmental background and experiences, which affect the strategy of the firm. These differences can explain why organizations begun at different times have different forms and follow different strategies. This study empirically examines the influence of entrepreneur characteristics and of environmental conditions at time of founding on strategies initially adopted by semiconductor firms. Proposes there are four strategy types: first-mover, second-mover, low-cost producer, and niche strategy. Four entrepreneurial characteristics are previous experience, previous employment, education, and age. Four stages of the semiconductor industry are identified: military market, symbiotic competition, expansion and Japanese entry, and custom market. Hypotheses about business strategies are developed for each entrepreneurial feature, strategy, and stage in this semiconductor industry. Data in the form of structured interviews (with supplemental information) were gathered from 51 merchant semiconductor firms in the Santa Clara-San Jose area. Found that the individual's functional experience delimits substantially the range of strategic options considered when beginning new firms. Place of previous employment influences in varying degrees the initial strategy. Level of formal education strongly and significantly affects choice of using first-mover strategy. Founder's age negatively affects choice of first-mover strategy. The relationship between period of founding and initial strategy is mixed. To a limited degree, industry evolution favors strategies meeting dominant environmental requirement. Overall, links are demonstrated between entrepreneurial, environmental, and strategic characteristics. (TNM)

Keywords: Semiconductor industry, Startups, Entrepreneurial environment, Background (biographical), Firm strategies, Firm growth, Experience, First-mover strategy, Business conditions, Founders, Silicon Valley