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Young and No Money? Never Mind: The Material Impact of Social Resources on New Venture Growth
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2010 | Organization Science | Citations: 21
Authors: Khaire, Mukti

Abstract: Although growth is a desirable outcome for new ventures due to the many advantag ... Expand

Abstract: Although growth is a desirable outcome for new ventures due to the many advantages of large size, most new firms fail to grow, largely because of their limited resources and adaptability. This paper addresses the question of how new ventures grow despite their limited financial resources. I explore the effect of two specific nonfinancial, social resources--legitimacy and status--on new venture growth. I propose that new firms can acquire legitimacy by mimicking the structures and ceremonial activities of established firms in their industry, and can acquire status by affiliating with high-status entities. Using a unique panel data set on a cohort of advertising agencies founded in New York and Chicago between 1977 and 1985, I show that legitimacy and status have favorable impacts on new firms' growth in revenues and number of employees. The paper makes important contributions to social embeddedness and institutional research by examining the strategic implications of firm-level social resources, and to the literature on entrepreneurship in general and new venture growth in particular. Collapse

Semantic filters: organizational impact institutional theory

Topics: advertising management entrepreneurship human resource management organizational productivity social capital

Methods: longitudinal research autocorrelation analysis generalized least square Wald test statistical hypothesis test

Theories: management theory institutional theory
Chasing the Hottest It: Effects of Information Technology Fashion on Organizations

2010 | Management Information Systems Quarterly | Citations: 226
Authors: Wang, Ping

Abstract: What happens to organizations that chase the hottest information technologies? T ... Expand

Abstract: What happens to organizations that chase the hottest information technologies? This study examines some of the important organizational impacts of the fashion phenomenon in IT. An IT fashion is a transitory collective belief that an information technology is new, efficient, and at the forefront of practice. Using data collected from published discourse and annual IT budgets of 109 large companies for a decade, I have found that firms whose names were associated with IT fashions in the press did not have higher performance, but they had better reputation and higher executive compensation in the near term. Companies investing in IT in fashion also had higher reputation and executive pay, but they had lower performance in the short term and then improved performance in the long term. These results support a fashion explanation for the middle phase diffusion of IT innovations, illustrating that following fashion can legitimize organizations and their leaders regardless of performance improvement. The findings also extend institutional theory from its usual focus on taken-for-granted practices to fashion as a novel source of social approval. This study suggests that practitioners balance between performance pressure and social approval when they confront whatever is hottest in IT. Collapse

Semantic filters: organizational impact institutional theory

Topics: innovation management digital innovation IT investment organizational productivity technology diffusion

Methods: regression analysis method survey descriptive statistic archival research longitudinal research

Theories: management fashion theory institutional theory

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Young and No Money? Never Mind: The Material Impact of Social Resources on New Venture Growth

Chasing the Hottest It: Effects of Information Technology Fashion on Organizations