Engineering Bureaucracy: The Genesis of Formal Positions and Structures in High-Technology Firms

Abstract

This paper examines the impact of organizational founding conditions on several facets of bureaucratization--managerial intensity, the proliferation of specialized managerial and administrative roles, and formalization of employment relations. Analyzing information on a sample of technology start-ups in California's Silicon Valley, we characterize the organizational models or blueprints espoused by founders in creating new enterprises. We find that those models and the social composition of the labor force at the time of founding had enduring effects on growth in managerial intensity (i.e., reliance on managerial and administrative specialists) over time. Our analyses thus provide compelling evidence of path-dependence in the evolution of bureaucracy--even in a context in which firms face intense selection pressures--and underscore the importance of the "logics of organizing" that founders bring to new enterprises. We find less evidence that founding models exert persistent effects on the formalization of employment relations or on the proliferation of specialized senior management titles. Rather, consistent with neo-institutional perspectives on organizations, those superficial facets of bureaucracy appear to be shaped by the need to satisfy external gatekeepers (venture capitalists and the constituents of public corporations), as well as by exigencies of organizational scale, growth and aging. We discuss some implications of these results for efforts to understand the varieties, determinants, and consequences of bureaucracy.

JEL Classification: J54, D21, L22