Origins of organizations: The entrepreneurial process

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Citation: Martin Ruef (2005) Origins of organizations: The entrepreneurial process. Research in the Sociology of Work (RSS)
Internet Archive Scholar (search for fulltext): Origins of organizations: The entrepreneurial process
Tagged: Business (RSS) Entrepreneurship (RSS)


The major contribution of Ruef's chapter is a process theory of organizational founding. Rather than treating founding a discrete step, Ruef treats founding as a processing involving "potential entrepreneurial activities" that can include:

  • Initiation
  • Resource mobilization
  • Legal establishment
  • Social organization
  • Operational startup

Using this theoretical model, Ruef offers some empirical evidence that aspects of context for entrepreneurs including organizational structure, strategy, and environment, have different effects on the different stages of the proposed process model. These influences include: competition, legitimacy, regulation, niche width, the extent to which innovator or reproducer strategies are pursued, and the level of independence of formal organizations. Ruef suggests 10 different hypotheses about how different stages will be effected differently by these variables.

Ruef's empirics use data from a retrospective survey of graduates of an MBA program where he asked them if they had founded businesses and then about when they completed particular steps (e.g., writing a business plan). The total number of organizations in his sample was 532.

The findings support the validity of the process model and the specific hypotheses seems more in service of the demonstrating the validity of the whole edifice than as stand-alone items of particular interest.

Theoretical and Practical Relevance

Ruef's chapter has only been cited a handful of times, to date, but provides a nice intervention by breaking down the innovation process. As Ruef points out, measuring early stages (e.g., ideation of a new venture) can be extremely difficult except retrospectively.