Inertia and Change in the Early Years: Employment Relations in Young, High Technology Firms

Abstract

This paper considers processes of organizational imprinting in a sample of 100 young, high technology companies. It examines the effects of a pair of initial conditions: the founders' models of the employment relation and their business strategies. Our analyses indicate that these two features were well aligned when the firms were founded. However, the alignment has deteriorated over time, due to changes in the distribution of employment models. In particular, the ‘star’ model and ‘commitment’ model are less stable than the ‘engineering’ model and the ‘factory’ model. Despite their instability, these two blueprints for the employment relation have strong effects in shaping the early evolution of these firms. In particular, firms that embark with these models have significantly higher rates of replacing the founder chief executive with a non-founder as well as higher rates of completing an initial public stock offering. Some implications of these findings for future studies of imprinting and inertia in organizations are discussed.