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Variation in organizational practices: are startups really different?

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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.

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Notes

  1. Results proved consistent regardless of which of the founders we deleted. Results of these sensitivity tests are available upon request.

  2. These results are available upon request.

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Acknowledgements

Authors are listed alphabetically. The project was funded by the Danish Research Council. Data was collected and provided by Statistics Denmark.

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Authors and Affiliations

  1. Department of Public Policy, University of North Carolina, Chapel Hill, CB 3435, 209 Abernethy Hall, Chapel Hill, NC, USA

    Maryann P. Feldman

  2. Department of Innovation and Corporate Transformation, Otto Beisheim School of Management, 56179, Vallendar, Germany

    Serden Ozcan

  3. Department of Strategic Management and Globalization, Copenhagen Business School, Kilevej 14A, 2nd Floor, 2000, Frederiksberg, Denmark

    Toke Reichstein

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  1. Maryann P. Feldman
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Correspondence to Maryann P. Feldman.

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This study was funded by the Danish Research Council.

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Feldman, M.P., Ozcan, S. & Reichstein, T. Variation in organizational practices: are startups really different?. J Evol Econ 31, 1–31 (2021). https://doi.org/10.1007/s00191-020-00702-7

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