Engineering Bureaucracy: The Genesis of Formal Policies, Positions, and Structures on High-Technology Firms

Posted: 29 Feb 2008

See all articles by M. T. Hannan

M. T. Hannan

Stanford University

M. Diane Burton

ILR School, Cornell University

James Baron

Independent

Abstract

This article examines the impact of organizational founding conditions on several facets of bureaucratization - managerial intensity, the proliferation of specialized managerial and administrative roles, and formalization of employment relations. Analyzing information on a sample of technology start-ups in California`s Silicon Valley, we characterize the organizational models or blueprints espoused by founders in creating new enterprises. We find that those models and the social composition of the labor force at the time of founding had enduring effects on growth in managerial intensity (i.e., reliance on managerial and administrative specialists) over time. Our analysis thus provide compelling evidence of path dependence in the evolution of bureaucracy - even in a context in which firms face intense selection pressures - and underscore the importance of the `logics of organizing` that founders bring to new enterprises. We find less evidence that founding models exert persistent effects on the formalization of employment relations or on the proliferation of specialized senior management titles. Rather, consistent with neo-institutional perspectives on organizations, those superficial facets of bureaucracy appear to be shaped by the need to satisfy external gatekeepers (venture capitalists and the constituents of public corporations), as well as by exigencies of organizational scale, growth, and aging. We discuss some implications of these results for efforts to understand the varieties, determinants, and consequences of bureaucracy.

Suggested Citation

Hannan, M. T. and Burton, M. Diane and Baron, James N., Engineering Bureaucracy: The Genesis of Formal Policies, Positions, and Structures on High-Technology Firms. Journal of Law, Economics, and Organization, Vol. 15, No. 1, pp. 1-41, 1999, Available at SSRN: https://ssrn.com/abstract=832209

M. T. Hannan (Contact Author)

Stanford University

Stanford, CA 94305
United States

M. Diane Burton (Contact Author)

ILR School, Cornell University ( email )

Ithaca, NY 14853-3901
United States
607-255-8187 (Phone)

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