Variation in organizational practices: are startups really different?
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Variation in organizational practices: are startups really different? Maryann P. Feldman 1 & Serden Ozcan 2 & Toke Reichstein 3 Accepted: 8 September 2020/ # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The idea that new ventures are simple mimetic reflections of the organizational practices of existing organizations contradicts the recognized importance of organizational diversity for innovation. There is an inherent contradiction in the literature between the persistence implied by the inheritance of practices from prior employment, and the experimentation prevalent in the organizational practices contributed by new organizations. This paper first accounts for mechanisms that may drive heritage of practices from parent organizations to their spawns. It then sets out to explore mechanisms that may cause a lower degree of diversity in applied practices among established organizations, and lastly, the conditions that may cause a greater degree of diversity among practice combinations of startups. The reviewed mechanisms suggest that the distribution of organizational and strategic practices among established organizations and startups to be somewhat dissimilar, and that startups significantly contribute to the variation in organizational practices. Using a sample set of Danish organizations, we find evidence of greater diversity in organizational practices among newer organizations, while established organizations are more likely to converge on a set of similar practices. Our results further indicate that strategic disagreements between the entrepreneur and their prior employer are associated with greater differences in strategic orientation. A distinction between strategic and HRM practices provides additional insights. Keywords Entrepreneurship . Newfirms . Startups . Corporate culture . Diversity JEL code (L26) . (M13) . (M14)
* Maryann P. Feldman [email protected] Serden Ozcan [email protected] Toke Reichstein [email protected] Extended author information available on the last page of the article
M. P. Feldman et al.
1 Introduction While entrepreneurs are seen as a source of change, introducing new ideas and organizational practices, there is evidence that new ventures embody mimetic reflections of the organizational practices of existing organizations where founders were previously employed (see e.g., Feldman et al. 2019a; Phillips 2005; Stinchcombe 1965). The borrowed practices may pertain to: practices on technicalities or product issues (Agarwal et al. 2004; Basu et al. 2015; Chatterji 2009; Cirillo et al. 2013; Feldman et al. 2019b), market related practices (Adams et al. 2015; Agarwal et al. 2004; Klepper and Sleeper 2005), or practices that have to do with reputation and legitimacy (Vanacker and Forbes 2016). The persistence of established routines seems to contradict the idea that entrepreneurial ventures are a primary sources of new organizational practices and hence a major source of variation in the population of organizations. It is a conundrum that research depicts
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