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

MICHAEL T. HANNAN, M. DIANE BURTON,
AND JAMES N. BARON

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. How-
ever, 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 implica-
tions of these findings for future studies of imprinting and inertia in organizations are
discussed
.


1. Imprinting, Inertia and Organizational Change

How much do origins matter for organizations? This question has pivotal
importance for understanding organizational change. Despite its theoretical
importance, little effort has been directed at gaining evidence that speaks
directly to it. This paper takes a first step in an effort to rectify this gap in
our knowledge. It reports some early results from an effort to examine pro-
cesses of imprinting in a sample of young, high technology companies.

Current theory and research on organizations and industries reflect two
polar views on the importance of origins. One perspective holds that organ-
izational structures reflect mainly current internal and external exigencies:

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Questia, a part of Gale, Cengage Learning. www.questia.com

Publication Information: Book Title: Firms, Markets, and Hierarchies: The Transaction Cost Economics Perspective. Contributors: Glenn R. Carroll - editor, David J. Teece - editor. Publisher: Oxford University Press. Place of Publication: New York. Publication Year: 1999. Page Number: 465.
    
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