Organizational growth: linking founding team strategy, environment, and growth among U.S. semiconductor ventures, 1978-1988

Administrative Science Quarterly,  Sept, 1990  by Kathleen M. Eisenhardt,  Claudia Bird Schoonhoven

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The Growth of Young Firms

Stinchcombe (1965) emphasized that underlying the failure of young organizations is their limited resources. Limited resources make young firms particularly vulnerable to even slight inefficiencies or delays (Van de Ven, Hudson, and Schroeder, 1984) and limit their ability to shift to more favorable circumstances. Using this same line of reasoning, we would expect that if limited resources are associated with organizational failure, then an abundance of resources would be related to the growth of young firms. Following this argument and those outlined above, our overall premise is that founding environment, strategy, and top-management team have a significant impact on the resource levels and, ultimately, on growth of young firms. Specifically, the founding environment shapes the resource opportunities of young firms. The founding strategy further locks the young firm into a pattern of resource opportunities and consumption. Yet, simultaneously, founding top-management teams are differentially able to enhance and exploit the available opportunities for growth.