Building the Iron Cage: Determinants of Managerial Intensity in the Early Years of Organizations

Abstract

We examine how founding conditions shape the proliferation of management and administration in a sample of young technology start-up companies in California's Silicon Valley. Analyzing quantitative and qualitative information, we examine the enduring imprint of two aspects of founding conditions: (1) the initial gender mix in start-ups and (2) the founder's employment model. Both factors influence the extent of managerial intensity that develops over time. In particular, firms with bureaucratic-model founders subsequently became more administratively intense than otherwise similar companies, particularly when compared with companies with “commitment-model” founders. Also, firms with proportionately more women during the first year subsequently bureaucratized less than otherwise similar firms. Our analyses thus support notions of path-dependence in the evolution of organizational structures and underscore the importance of the “logics of organizing” that founders bring to new enterprises.