Building the iron cage: Determinants of managerial intensity in the early years of organizations

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Citation: James N. Baron, Michael T. Hannan, M. Diane Burton (1999) Building the iron cage: Determinants of managerial intensity in the early years of organizations. American Sociological Review (RSS)
Internet Archive Scholar (fulltext): Building the iron cage: Determinants of managerial intensity in the early years of organizations
Tagged: Business (RSS) Organization Theory (RSS), Entrepreneurship (RSS), Institutionalism (RSS)

Summary (Abstract)

Baron, Hannan and Burton's article attempts to considers how founding conditions within new firms affect later aspects of firms. Their general argument seems to be in favor of a strong path-dependence where-by early conditions of a firm will affect aspects of the firm much later. Their specific argument using administrative intensity as a dependent variable and tests theory about organizational or managerial types and the proportion of women in the organization.

The article first aims to measures founders organizational model. Using survey and interview based data of companies founded by graduates of Stanford, the authors classified founders based on three dimensions: the means of generating attachment to the company, the means of selecting employees, and the type of coordination and control employed. Using these methods, the authors created five "basic employment model types" which compare most of their sample. They call these, engineering, star, commitment, bureaucracy, and autocracy, and their specific operationalized definitions are closely related to the each of the broader concepts associated with those terms.

The authors hypothesize that founders with, for example, a strong bureaucratic organizational model will be associated with organizations that, much later, have higher administrative intensity than commitment based organizations.

Additionally, the authors add a variable for initial gender composition but, citing conflicting theory, do not offer a hypothesis. They also add a number of industry and organizational level control variables.

The authors find support for a strong path dependent relationship for both key types of variables. They find the hypothesized effects for founder's organizational type and find that this is stronger than current CEO's models implying the importance of path dependence. They find that an organization with 25% more women would be associated with only 80% as much management intensity.

Theoretical and Practical Relevance

Baron et al. (1999) have been cited 170 times in the 11 years since the papers publication from a diverse set of cultures. Mostly, they have been cited as an example of path dependencies or on the role of organizational culture.