Academic journal article Entrepreneurship: Theory and Practice

Imprinting Effects of Founding Core Teams on HR Values in New Ventures

Academic journal article Entrepreneurship: Theory and Practice

Imprinting Effects of Founding Core Teams on HR Values in New Ventures

Article excerpt

Using the upper echelon perspective and imprinting arguments as key theoretical lenses, this paper examines how characteristics of new venture core teams influence internal consistency and distinctiveness of human resources (HR) values at the early-growth stage of the firm. We found that shared organizational experience among founding core team members positively predicts internal consistency and distinctiveness of the dominant HR values, whereas functional diversity positively predicts distinctiveness of these values. Contrary to our prediction, when the levels of both prior shared organizational experience and functional diversity are high, positive effects turned negative, indicating more complex interaction effects between the two team characteristics.

Introduction

Organizational legitimacy has a significant impact on new venture survival and growth during the formative years of the firm (Delmar & Shane, 2004; Zimmerman & Zeitz, 2002). Legitimacy, a social judgment of acceptance, appropriateness, and desirability, can be enhanced by implementing a set of distinctive, internally consistent organizing principles that makes new ventures appear reliable and accountable (Hannan & Freeman, 1984). Such principles, which are operationalized by organizational ecologists as blueprints represented by different sets of values defining employment relationships (Baron, Hannan, & Burton, 2001; Hannan & Freeman), are referred to as human resources (HR) values in this paper. New ventures with a distinctive and internally consistent set of HR values governing employment relations have greater survival chances, lower employee turnover rates, and higher revenue growth (Baron & Hannan, 2002; Baron et al.). A strong HR system is an important component that can help an organization become more effective and achieve competitive advantage (Becker & Huselid, 1998). Distinctiveness and internal consistency of HR values contribute to the strength of an HR system in building shared, collective perceptions, attitudes, and behaviors among employees

(Bowen & Ostroff, 2004). Given the positive effects of a clear organizational blueprint on new ventures, it is important for us to understand the factors that contribute to the distinctiveness and consistency of HR values. Drawing from both the upper echelon and structural imprinting perspectives, we examine how characteristics of core teams at the start-up of a venture influence the distinctiveness and internal consistency of the dominant set of HR values of the venture in the early-growth stage.

The upper echelon perspective (Hambrick & Mason, 1984) makes the underlying assumption that the top management team (TMT)'s composition affects organizational outcomes through organizational structures and processes, such as HR values, but few studies have explicitly examined which intervening variables are integral to illuminating the proposed causal effects (Carroll & Harrison, 1998, p. 646). Due to the simple structure of new ventures, we adopt the term "core team" rather than top management team in this paper. The core team includes individuals, regardless of job title, reporting directly to the top executive of a new venture, and these individuals have a significant impact on the strategies and practices of the firm (Leung, 2003; Leung, Zhang, Wong, & Foo, 2006).

The structural imprinting perspective is grounded in theories of population ecology of organizations (Hannan & Freeman, 1977, 1984; Stinchcombe, 1965) that founding conditions have a lasting effect on young firms' structures and processes. The composition of the initial core team is a key founding condition that can impact organizational structure and performance of the venture as it develops and grows (Baron, Burton, & Hannan, 1996; Boeker, 1989; Eisenhardt & Schoonhoven, 1990; Kimberly, 1979). We propose that the imprinting effects of founding team characteristics can affect the internal consistency and distinctiveness HR values of a venture in its early-growth stage. …

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