Building the Iron Cage: Determinants of Managerial Intensity in the Early Years of Organizations

Posted: 17 Nov 2009

See all articles by James Baron

James Baron

Independent

Michael Hannan

Stanford Graduate School of Business

M. Diane Burton

affiliation not provided to SSRN

Date Written: 1999

Abstract

Considers the impact of founding conditions on the later administration and management of technology startups in Silicon Valley. Data were collected in 1994-1995 by survey and interviews with 173 technology firms that had at least 10 employees and were no more than 10 years old. This research draws on the Stanford Project on Emerging Companies. The interviews with firm founders identified three dimensions along which work and employment are organized. These are: attachment, basis of coordination and control, and selection. Within these three dimensions, founders created employment models related to their views about desired organizational culture, strategies for employee selection, or perceptions of employee motivation. These three organizational dimensions are used to explain the five basic employment models - engineering, star, commitment, bureaucracy, and autocracy. Results show that the bureaucratic model is the most administratively intense with autocracy in second place, then engineering, star, and commitment. Both the model that is chosen by the founder and the gender balance in these firms affected the level of managerial intensity that resulted in the firms. Firms with a higher proportion of women in the first year became less bureaucratized than other firms. Administrative intensity is found to increase drastically when a firm goes public. This likely results from the need for more financial reporting, regulatory compliance, and investor relations management. Overall, this analysis demonstrates the path-dependence in bureaucratization. (SRD)

Keywords: Bureaucracy, Startups, Gender, Employee management, Organizational structures, Employee recruitment, Motivation, Organizational change, Commitment, Organizational cultures, Silicon Valley

Suggested Citation

Baron, James N. and Hannan, Michael and Burton, M. Diane, Building the Iron Cage: Determinants of Managerial Intensity in the Early Years of Organizations (1999). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1504515

Michael Hannan

Stanford Graduate School of Business ( email )

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Stanford, CA 94305-5015
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M. Diane Burton

affiliation not provided to SSRN

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