Organizational identities and the hazard of change

Hannan, Michael T. and Baron, James N. and Hsu, Greta and Koçak, Özgecan (2006) Organizational identities and the hazard of change. Industrial and corporate change, 15 (5). pp. 755-784. ISSN 0960-6491

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We examine how the life chances and financial performance of nascent high-technology firms were affected by two kinds of organizational changes: altering founders’ blueprints for the employment relation and replacing a founderchief executive officer (CEO) by an outsider. We argue that both events destabilize organizations but that changes in employment blueprints are tied more tightly to the organization’s identity and thus are more destabilizing. We analyze three dimensions of organizational performance among a sample of young high-technology companies in California’s Silicon Valley: survival versus failure, launching an initial public offering (IPO), and changes in financial valuations among organizations that underwent an IPO. As predicted, changing the employment blueprint increased the hazard of failure and diminished growth in market value. Appointing an outsider as CEO did not affect the hazard of failure appreciably but did depress the rate of growth in market capitalization. The implications of these results for ecological and institutional perspectives on organizations are discussed.
Item Type: Article
Subjects: H Social Sciences > HD Industries. Land use. Labor
Divisions: Sabancı Business School
Depositing User: Özgecan Koçak
Date Deposited: 13 Dec 2006 02:00
Last Modified: 04 Sep 2019 14:24

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