New to the game and questioning the rules: The experiences .../media/... · New to the game and...

Journal of Business Venturing 21 (2006) 633–663

New to the game and questioning the rules:

The experiences and beliefs of founders who start

imitative versus innovative firms

Jennifer E. Cliff *, P. Devereaux Jennings 1, Royston Greenwood 2

Department of Strategic Management and Organization, Faculty of Business, University of Alberta,

Edmonton, AB Canada T6G 2R6

Received 1 January 2004; accepted 1 February 2005

Abstract

This paper examines how founders’ work experiences and beliefs about an industry’s prevailing

practices influence the degree of novelty exhibited by their firms. Our results indicate that extensive

experience in the core of an organizational field constrains individuals into acting as bimitative

entrepreneurs,Q essentially reproducing established routines even if they question their legitimacy. In

contrast, founders with greater experience in the field’s periphery are more likely to act as

binnovative entrepreneurs,Q as are those who more strongly question the ethicality of prevailing

practices. Doubts about the functionality of established routines are not sufficient, on their own, to

provoke acts of innovative entrepreneurship.

D 2005 Elsevier Inc. All rights reserved.

Keywords: Innovative entrepreneurship; Organizational creation; Opportunity recognition; Organizational design;

Institutional theory

0883-9026/$ -

doi:10.1016/j.

* Correspon

E-mail add

royston.greenw1 Tel.: +1 782 Tel.: +1 78

see front matter D 2005 Elsevier Inc. All rights reserved.

jbusvent.2005.02.010

ding author. Tel.: +1 780 492 0648; fax: +1 780 492 3325.

resses: [email protected] (J.E. Cliff)8 [email protected] (P.D. Jennings)8

[email protected] (R. Greenwood).

0 492 3998; fax: +1 780 492 3325.

0 492 2797; fax: +1 780 492 3325.

J.E. Cliff et al. / Journal of Business Venturing 21 (2006) 633–663634

1. Executive summary

This paper poses and addresses a question consistent with Shane and Venkataraman’s

(2000) fundamental questions for entrepreneurship research: when launching their own

firms, why is it that some individuals act as bimitative entrepreneurs,Q reproducing existing

routines, whereas others act as binnovative entrepreneursQ and do things differently? We

propose that founders’ experiences and beliefs are important considerations. More

specifically, we extend the bknowledge corridor thesisQ (Ardichvili et al., 2003; Kirtzner,1997; Ronstadt, 1988; Samuelsson, 2001; Shane, 2000; Shane and Venkataraman, 2000;

Venkataraman, 1997) by arguing that individuals with less experience in the core of an

organizational field, more experience in its periphery, or greater experience in other

industries are more likely to act as innovative entrepreneurs. We also develop the

bsubjective valuation thesis,Q positing that founders who more strongly question the

functional or ethical legitimacy of prevailing practices are also more likely to do things

differently. We examine these ideas through a study of newly established, knowledge-

intensive firms in a single regional metropolitan district.

The findings support the knowledge corridor thesis. The founders in our study who

possessed less experience in the field’s core and/or greater experience in its periphery

tended to head more innovative firms. In other words, they were newcomers to the way

bthe gameQ is typically played. More extensive experience in other industries, however,

was not associated with a firm’s degree of novelty. Assuming that our findings are valid

and generalizable, they are of practical significance because they provide insights into the

career pathways of individuals more likely to act as innovative entrepreneurs upon

launching a new venture and those more likely to act as imitative entrepreneurs when

doing so. Given that innovation is often touted as a source of competitive advantage (e.g.,

Barney, 1991; Porter, 1980, 1991; Wernerfelt, 1984), understanding how the experiences

of founders affect the likelihood of them becoming imitative or innovative entrepreneurs is

clearly important.

Our findings also partly support the subjective valuation thesis, revealing that

innovative entrepreneurs are also those who question bthe rules of the game.Q In

particular, we found that individuals who more strongly questioned the ethicality of the

field’s prevailing practices tended to head more innovative firms. However, disbelief in

the functionality of dominant routines was not significantly associated with a firm’s

degree of novelty, unless the founder also possessed below-average experience in

organizations within the field’s core or above-average experience in organizations on its

periphery. Assuming that these findings are also valid and generalizable, they, too,

suggest implications of practical importance. They imply, for example, that being

motivated to conduct business more efficiently or effectively is not sufficient to

override the constraining influence of extensive experience in the field’s core. A high

level of moral disenchantment with prevailing practices, however, is sufficient. These

findings run counter to popular characterizations of entrepreneurs, which emphasize

their motivation as primarily economic rather than social in nature. Instead, our results

raise the intriguing possibility that some acts of innovative entrepreneurship represent

efforts to conduct business in a more ethical – rather than simply a more profitable –

manner.

J.E. Cliff et al. / Journal of Business Venturing 21 (2006) 633–663 635

2. Introduction

After years of debating whether economic innovation or organizational creation more

accurately captures what is distinctive about the nature of entrepreneurship, many scholars

now agree on one simple but important observation—that new firms differ in their degree

of novelty (Bhave, 1994; Davidsson and Wiklund, 2001; de Bruin and Dupuis, 2003; Low

and Abrahamson, 1997; Shepherd et al., 2000; Zimmerman and Zeitz, 2002). Aldrich, for

example, distinguished between bimitativeQ and binnovativeQ foundings, pointing out that

the majority of new firms are mere reproducers of what has been done before (1999: 80).

Surprisingly, little is known about the processes and circumstances that inspire innovative

rather than imitative foundings, even though innovation is commonly touted as a source of

competitive advantage (e.g., Barney, 1991; Porter, 1980, 1991; Wernerfelt, 1984). In

particular, little is known about the role played by individual founders, despite the

argument that they often leave an identifiable and enduring imprint upon their firms (e.g.,

Baron et al., 1999; Schein, 1983; Shaver and Scott, 1991). This paper attempts to address

this gap by posing the question: why is it that some individuals act as bimitative

entrepreneurs,Q starting new ventures that essentially replicate prevailing practices,

whereas others act as binnovative entrepreneurs,Q founding firms that exhibit novelty

and difference?

Recent work relevant to this question focuses upon the role of social experiences in

channelling individuals into different bknowledge corridors,Q thus shaping their cognitive

ability to recognize opportunities for innovation (Ardichvili et al., 2003; Kirtzner, 1997;

Ronstadt, 1988; Samuelsson, 2001; Shane, 2000; Shane and Venkataraman, 2000;

Venkataraman, 1997). Although intuitively compelling, the knowledge corridor thesis

remains underdeveloped and has received limited empirical testing. In particular, it is not

known which experiences enable founders to recognize alternative possibilities. Nor is it

fully known why some founders act on perceived opportunities whereas others do not.

Institutional theory offers insights here. Drawing upon imagery suggested by DiMaggio

and Powell (1983), Kraatz and Moore (2002), and Leblebici et al. (1991), we propose that

the degree of novelty exhibited by a new firm depends upon its founder’s experiences in

organizations: (a) at the core of an organizational field; (b) on its periphery; and (c) outside

the field.

The logic underlying the knowledge corridor thesis is that mere exposure to certain

ideas and practices is the determining factor in entrepreneurial behaviour. Individuals,

however, are not passive recipients of organizational experiences. Rather, they reflect upon

and critically evaluate the ideas and practices to which they have been exposed. Drawing

upon additional work in the institutional literature (Aldrich and Fiol, 1994; Suchman,

1995), we suggest that organizational founders evaluate prevailing practices in terms of

their pragmatic legitimacy (i.e., do they work?) and their moral legitimacy (i.e., are they

ethical?). We propose that these subjective reflections also influence the extent to which a

founder acts in an imitative or innovative manner.

We tested these ideas by studying firms founded between 1990 and 1998 within a

knowledge-intensive industry of a single regional metropolitan district. We find that

founders’ experiences and beliefs are associated with innovative behaviour. As such, one

of the study’s distinctive contributions is demonstrating that some acts of innovative


entrepreneurship are not solely a function of the opportunities and constraints provided by

prior work experiences (the emphasis of the knowledge corridor thesis). In some instances,

innovative entrepreneurship can also stem from founders’ beliefs – particularly their

disbeliefs – about the legitimacy of prevailing practices.

3. Theory and hypotheses

3.1. Conceptualizing innovative entrepreneurship

Innovative entrepreneurship takes many forms. These include product-market innova-

tions, innovative technological processes and novel organizational designs (Aldrich, 1999;

Davidsson and Wiklund, 2001; Low and Abrahamson, 1997; Schumpeter, 1934; Shepherd

et al., 2000; Shane and Venkataraman, 2000). In this paper, our interest is in the latter: i.e.,

the extent to which a founder creates an organizational design that differs from an

industry’s configuration of prevailing organizational practices. Specifically, we are

interested in why certain individuals, but not others, found ventures that exhibit novel

structures, systems, and policies. Innovative organizational designs are significant because

they can be the source of an industry’s transformation or even the source of a new industry

(Schumpeter, 1934). These possible consequences are why it is important to study their

origins, although, as with novel products and strategies, a priori it is difficult to know

whether certain innovative organizational designs will ultimately have such an impact.

Thus, for our purpose, it is only necessary that the design of a new firm is different from

the prevailing practices within an industry—a conceptualization consistent with Aldrich’s

definition of an innovative founding (1999: 80).

Institutional theorists suggest that the prevailing practices within an industry constitute

the field’s dominant btemplate for organizingQ (DiMaggio and Powell, 1991: 28). A

dominant template embodies widely understood and normatively sanctioned ideas or logic

about the bappropriateQ means for accomplishing business activities (Meyer and Rowan,

1977). As fields mature, these templates become more articulated, more widespread, and

increasingly taken-for-granted. Dominant templates are closely followed by the field’s

prominent firms. Prominent, or bcore,Q firms do not necessarily constitute a numerical

majority within an organizational field: they are defined by their high status and are thus

perceived as exemplars (DiMaggio and Powell, 1983; Haveman, 1993; Kraatz and Moore,

2002). A dominant template, therefore, is a set of widely held perceptions about how the

core firms of an organizational field are structured and managed. Thus, one way to

investigate imitative versus innovative entrepreneurship is by examining the extent to

which a new firm adopts organizational practices that differ from those of the dominant

template.

3.2. The knowledge corridor thesis

Some entrepreneurship theorists point to differences in personality characteristics as a

key determinant of activities associated with imitative versus innovative entrepreneurship.

Schumpeter’s (1934) early work, for example, highlighted the role played by individual


creativity in the opportunity recognition process. In a similar vein, Kirtzner (1973)

introduced the notion of entrepreneurial alertness, defined as receptiveness to available but

overlooked opportunities. More recently, Shaver and Scott (1991) expanded upon the

unusual perceptive abilities of those able to recognize entrepreneurial opportunities.

An alternative explanation focuses upon the role played by knowledge and experience.

According to this view, idiosyncratic life circumstances, such as prior work and

educational experiences, channel individuals into different bknowledge corridors;Q as a

result, individuals possess different stocks of information, which influence their ability to

recognize certain opportunities but not others (see, for example, Ardichvili et al., 2003;

Kirtzner, 1997; Ronstadt, 1988; Shane and Venkataraman, 2000; Venkataraman, 1997).

Preliminary support for the knowledge corridor thesis can be found in a handful of recent

studies. Shane (2000) demonstrated how individuals from different industries possess

disparate ideas about how to best exploit the same technological innovation. Samuelsson

(2001) revealed that tacit knowledge, in the form of prior industry and start-up experience,

influences the exploitation of innovative opportunities but has no effect on the exploitation

of equilibrium (i.e., imitative) opportunities. Finally, Shepherd and DeTienne (2001)

demonstrated that individuals with greater knowledge of customer problems are more

likely to discover innovative opportunities.

The argument that knowledge corridors affect innovative entrepreneurial behaviour is

compelling, as it explicitly recognizes the significance of the social structures in which

organizational founders are embedded (Aldrich and Zimmer, 1986; Granovetter, 1985;

Van de Ven, 1993). At the moment, however, the knowledge corridor thesis remains

somewhat general. We do not fully understand which knowledge corridors facilitate

innovative versus imitative acts. Nor do we know why they do so. To answer these

questions, we find it helpful to incorporate imagery from institutional theory—especially

the idea that the structural location of actors within an organizational field provides

experiences of consequence (DiMaggio and Powell, 1983; Kraatz and Moore, 2002;

Leblebici et al., 1991). We focus upon the effect of prior employment within organizations

from three locations: those in the core of an organizational field, those on its periphery, and

those outside the field.

A central tenet of institutional theory is that dominant templates for organizing are

typically developed and maintained by the elite, high-status firms at the core of an

organizational field (DiMaggio and Powell, 1983). Core organizations maintain prescribed

templates not only because they are extensively connected to other organizations and thus

recipients of multiple and reinforcing institutional expectations (Greenwood et al., 2002),

but, also, because they benefit from prevailing arrangements and are thus less motivated to

disturb them (e.g., Leblebici et al., 1991). It follows that extensive socialization within

these core firms will constrain individuals who leave to found their own organizations into

duplicating prevailing practices, for four reasons. First, having worked in core firms, they

have greater first hand exposure to the dominant template and are thus more likely to fully

understand it. As such, they represent a less likely source of the bimperfect and fumbling

effortsQ (North, 1990: 96) that unwittingly result in bblind variationsQ (Aldrich and

Kenworthy, 1999). Second, experiences in a field’s core firms provide an enhanced

appreciation of the risks, in the form of social disapproval and withdrawal of support,

associated with failure to meet social expectations. Third, extensive experience of a


particular format can result in the development of tight cognitive frames that produce

perceptual blindspots and habitual reactions (Ford, 1996; Perry-Smith and Shalley, 2003;

Weick, 1995). Finally, experience in successful firms may convince individuals that

superior organizational performance is a consequence of conformity to the dominant

template. In other words, founders with more extensive core firm experience may view the

replication of prevailing practices as a critical strategy for overcoming the liabilities of

newness. Thus:

Hypothesis 1. Individuals with greater experience in a field’s core organizations will be

less likely to act as innovative entrepreneurs.

Although extensive experience in a field’s core organizations likely acts as a constraint

on a founder’s ability (and willingness) to depart from prevailing practices, experience in

other corridors likely acts as a catalyst for innovative entrepreneurship. Several

entrepreneurship scholars, for example, believe that innovations result from combining

existing stocks of information in different ways (Schumpeter, 1934; Shane, 2000; Shane

and Venkataraman, 2000; Venkataraman, 1997). Thus, possessing knowledge of

alternative routines – rather than merely being ignorant of, and/or uninfluenced by,

dominant routines (Aldrich, 1999: 95) – may also determine who acts as an imitator or an

innovator. Institutional theorists make a similar argument. Greenwood and Hinings, for

example, postulated that radical change occurs bonly if alternatives to the prevailing

archetypal template are knownQ (1996: 1039, emphasis in original; see also Kraatz and

Moore, 2002; Oliver, 1992).

Institutionalists have identified two means by which individuals gain knowledge of

alternative possibilities. First, they may learn from experiences in peripheral organiza-

tions, where non-dominant practices are more likely to be found (Greenwood and

Hinings, 1996: 1041; see also Tushman and Anderson, 1986). These alternative practices

will likely be reproduced, wittingly or unwittingly, when individuals from peripheral

firms leave to launch their own ventures. Other institutional theorists add that peripheral

players are often motivated to introduce novel practices because they are disadvantaged

by prevailing arrangements (e.g., Greenwood and Suddaby, 2003; Kraatz and Moore,

2002; Leblebici et al., 1991). These arguments resonate with recent theorizing about the

facilitative effects of a peripheral network position on creativity in general (Perry-Smith

and Shalley, 2003) and are supported by empirical research on institutional change.

Kraatz and Zajac (1996) and Leblebici et al. (1991), for example, demonstrated how

challenges to institutional prescriptions usually begin on the margins of an organizational

field before spreading towards its center. Similarly, Kraatz and Moore (2002) showed

that organizations are more likely to change when led by individuals migrating from

lower-status organizations. Thus:

Hypothesis 2. Individuals with greater experience in a field’s peripheral organizations will

be more likely to act as innovative entrepreneurs.

The second means by which individuals gain knowledge of alternative ways of doing

things is through experience in other industries. Aldrich, for example, claims that btrulyinnovative start-ups are often the result of creative experimentation with new ideas by

outsiders to a populationQ (1999: 112). Kraatz and Moore make the same point: bAs a


result of their past experience in different systems, immigrant executives may often import

new and very different conceptions of what is natural, reasonable, or inevitable, thus

overcoming the limiting assumptions of dinstitutional nativesTQ (2002: 124). Thornton’s(2002) research on the college textbook publishing industry also illustrates how actors

entering from other industries imported alien routines from their previous settings.

Similarly, Suddaby and Greenwood’s (2005) analysis of the emergence of a new

organizational form in the accounting industry revealed how the (then) Big Five firms

initiated change by incorporating ideas originating within their clients’ organizations.

Thus:

Hypothesis 3. Individuals with greater experience in organizations outside of an

organizational field will be more likely to act as innovative entrepreneurs.

3.3. The role of subjective valuations

Although innovative entrepreneurship may be a function of the constraints and

opportunities associated with certain types of experience, the knowledge corridor thesis

provides only a partial account of why some individuals, but not others, establish

innovative organizations. A fuller understanding must give attention to how founders

evaluate prevailing practices. We thus raise the subjective valuation thesis as a

complementary, rather than competing, explanation for the determinants of innovative

entrepreneurship.

Subjective valuations are judgements, or beliefs, that individuals hold about people,

objects or events. The significance of beliefs is not new to the entrepreneurship literature.

Several studies have shown that entrepreneurs tend to possess highly optimistic beliefs

about their chances of success (e.g., Cooper et al., 1988; Kahneman and Lovallo, 1994).

Baron et al. (1999) demonstrated that beliefs in certain bemployment modelsQ shape how

entrepreneurs design their firms. Shane and Venkataraman (2000: 220) alluded to the role

that beliefs play in the opportunity recognition process, suggesting that some individuals

possess basymmetric beliefsQ about whether resources are optimally used and whether new

markets could be created. Stoner and Fry (1982) demonstrated how a particular type of

belief – high dissatisfaction with pre-entrepreneurial employment – leads to venture

creation in an unrelated field whereas high satisfaction with pre-entrepreneurial

employment leads to venture creation in a related field. More recently, Shepherd and

DeTienne (2001) illustrated how dissatisfaction with existing conditions motivates

discovery of innovative opportunities. This work implies that founders’ beliefs about

the legitimacy of prevailing practices should also be factored into frameworks for

explaining innovative entrepreneurship.

Early institutional theorists tended to assume that prevailing practices within an

organizational field are unquestioningly taken-for-granted as the most appropriate means

for conducting business activities (Meyer and Rowan, 1977; DiMaggio and Powell, 1983).

Others have questioned this presumption (e.g., Greenwood and Hinings, 1996; Oliver,

1991, 1992; Scott, 1994; Tolbert and Zucker, 1996). As Miller put it: bPerceptions of whatis considered appropriate can differ greatly among managers and companiesQ (1996: 285).In some cases, conformity to institutional prescriptions can even engender cognitive


dissonance, especially when prescribed practices are perceived as impinging upon an

individual’s freedom of choice or as conflicting with an individual’s personal value system

(Seo and Creed, 2002). Cognitive dissonance, in turn, can fuel various forms of resistance

(Lawrence et al., 2001), including lack of commitment to dominant arrangements and

attempts to transform prevailing practices (Dutton and Dukerich, 1991; Meyerson and

Scully, 1995). Several theorists regard disenchantment with dominant arrangements as a

precipitating pressure for institutional change (e.g., Greenwood and Hinings, 1996; Oliver,

1991, 1992; Scott, 1994; Tolbert and Zucker, 1996). The link between disenchantment and

innovation is likely to be particularly strong in the case of newly created firms, whose

founders possess greater authority to translate their beliefs into organizational practices

(Staw and Sutton, 1993).

We suggest that disenchantment and dissonance with a field’s dominant template results

from two forms of evaluation. The first of these is a negative assessment of the template’s

pragmatic legitimacy; that is, disbelief in its efficacy (Aldrich and Fiol, 1994; Suchman,

1995). Institutionalized arrangements are not necessarily functionally superior and

therefore bnot invulnerable to re-evaluation or reconsideration in technical termsQ (Oliver,1992: 571). Oliver further proposed that when the utility of prevailing practices is called

into question, such practices face erosion or displacement as more and more organizations

resist conformity to them (Oliver, 1991, 1992). Several studies provide empirical support

for Oliver’s proposition (e.g., Suddaby and Greenwood, 2005; Kraatz and Moore, 2002;

Kraatz and Zajac, 1996). It follows, then, that entrepreneurs who question the pragmatic

legitimacy of dominant routines will introduce practices believed to be functionally

superior. Thus:

Hypothesis 4. Individuals who more strongly question the pragmatic legitimacy of a

field’s dominant template will be more likely to act as innovative entrepreneurs.

The second form of subjective valuation likely to provoke disenchantment and

dissonance with a dominant template is normative: doubt about whether prevailing

practices are appropriate from the perspective of the entrepreneur’s social values and

ethical principles (Aldrich and Fiol, 1994; Suchman, 1995). Some individuals may

question the moral legitimacy of dominant routines simply because they are committed to

ideas and values that run bcounter to those that have been historically prevalentQ (Kraatzand Moore, 2002: 125). Several institutional theorists have emphasized how commitment

to alternative values or convictions can precipitate organizational non-compliance and

institutional change (e.g., Greenwood and Hinings, 1996; Jennings and Zandbergen, 1995;

Oliver, 1991, 1992). Individuals who have been disadvantaged by dominant arrangements

are particularly likely to question their moral legitimacy (Martin, 1993). Several

institutionalists have identified dissatisfaction with the distribution of privilege as a

critical source of resistance and non-conformity (e.g., Greenwood and Hinings, 1996;

Oliver, 1991, 1992; Tolbert and Zucker, 1996). This body of work implies that

entrepreneurs who question the moral legitimacy of dominant routines will introduce

alternative practices. Thus:

Hypothesis 5. Individuals who more strongly question the moral legitimacy of a field’s

dominant template will be more likely to act as innovative entrepreneurs.


3.4. Exploring the interplay between organizational experiences and subjective valuations

Thus far, we have presented the knowledge corridor and subjective valuation theses as

complementary but separate explanations of innovative entrepreneurship. It is also

important to explore the interplay between them. Institutional theorists, for example, have

suggested that radical change occurs when factors that provoke such change interact with

factors that facilitate it (Greenwood and Hinings, 1996; Kraatz and Moore, 2002; Oliver,

1992). An implication consistent with the strong form of this argument is that a founder’s

negative evaluation of a dominant template’s legitimacy triggers the introduction of truly

novel organizational designs only in the absence of constraining prior experiences. It could

be, for example, that extensive core firm experience overrides the effects of

disenchantment. That is, founders with extensive core firm experience may be unable to

conceive of radically different practices (because of their entrenched cognitive frames),

even though they may be disenchanted with prevailing practices. Further, even when they

do perceive alternatives, they may be reluctant to implement them because of their

awareness of the risks of doing so. They may choose, therefore, to symbolically comply by

adopting socially important and highly visible elements of the dominant template. Thus:

Hypothesis 6. Individuals who question the legitimacy of prevailing practices will act as

innovative entrepreneurs only under conditions of low core firm experience.

Another implication that we derive from institutional theorizing about radical change is

that disenchantment can foster innovation only in the presence of enabling prior

experiences. It may be that only those disenchanted founders who also have extensive

experience in peripheral firms, or outside the field, will be innovative entrepreneurs. Why?

Because these founders are not only motivated to resolve their dissatisfaction with existing

conditions, but also have the ability to imagine different ways of doing things by virtue of

their experience with alternative possibilities. Thus:


innovative entrepreneurs only under conditions of extensive peripheral firm experience.


innovative entrepreneurs only under conditions of extensive experience outside the field.

4. Methods

4.1. Setting and sample

Instead of drawing a highly heterogeneous sample to test the above hypotheses, we

followed Baron et al.’s (1999) recommendation and deliberately selected one that was

more restricted yet theoretically relevant. Such an approach offers the advantage of greater

homogeneity, enabling us to provide contextually-grounded insights into both the factors

associated with innovative versus imitative entrepreneurship as well as the nature of

prevailing and novel organizational practices. We focused upon the legal profession as our

research setting. This setting is representative of other highly institutionalized and mature


fields, in which dominant templates for organizing are identifiable and clear demarcations

exist between core and peripheral firms (Cooper et al., 1996; Galanter and Palay, 1991). In

addition, recent research suggests that some of the field’s prevailing practices are no longer

invariably valued (Brockman, 1990; Hagan and Kay, 1995; Kay et al., 1997) and that

novel practices are starting to emerge (Cooper et al., 1996; Hagan and Kay, 1995; Sherer

and Lee, 2002). Moreover, law firms are representative of other professional service

organizations – such as accounting, engineering, and management consulting firms –

which are considered influential actors in today’s knowledge-based economy (Alvesson,

2004).

Our sampling frame consisted of all law firms founded between 1990 and 1998 in the

Greater Vancouver Regional District (GVRD) of British Columbia, Canada. We limited

our investigation to the largest metropolitan area of a single Canadian province to control

for possible regional differences in organizing methods (Stager, 1990: 8) and potential

effects attributable to a rural location (Stager, 1990: 169). We selected 1990 as the cut-off

year for three reasons. First, we wanted to minimize differences in the firms’ external

contexts at their time of founding. Research on the Canadian legal profession suggested

that law firms founded during the bmega-firm maniaQ of the 1980s faced a very different

operating environment than those founded during the 1990s (Ellis, 1993; Stock, 1996;

Stock and Leishman, 1998). Second, the selected cut-off year resulted in an 8-year

founding period consistent with other studies of new ventures (e.g., Baron et al., 1999;

McDougall and Robinson, 1990; Shrader, 2001). Finally, it ensured a sufficient number of

eligible new firms for statistical analysis.

We used the 1998 British Columbia Business to Business Directory to identify firms

meeting these initial screening criteria. Upon consulting this directory, two further

eligibility requirements were imposed. First, because we were interested in de novo start-

ups, we excluded firms listed as branch offices or mergers of existing firms. Second, we

excluded those in the directory’s smallest organizational size category (i.e., 1 to 4

employees) because, according to the 1998 British Columbia Lawyers Telephone, Fax,

and Services Directory, the vast majority of these listings were solo practitioners rather

than law firms per se. Self-employed lawyers do not represent newly established

organizations.

A total of 105 eligible firms met the final set of eligibility requirements. We sent an

introductory letter to each of these firms, requesting that it be directed to the founder who

played the lead role in decisions about the firm’s organization and management. Fifty-

seven percent of the founding partners who met this criterion agreed to participate,

resulting in a final sample size of 60 founders and their firms. Although modest, this

sample size is viable and consistent with recent studies of new ventures (e.g., Baron et al.,

1999; McGrath, 2001; Shrader, 2001). Further, a 57% response rate is very high for studies

utilizing primary data collected through upper echelon organizational members. The

modest sample size also enabled us to obtain rich qualitative data to deepen our

quantitative analyses. Checks on the sample’s representativeness revealed that participat-

ing firms were not significantly different from those that did not participate in terms of

year founded, number of employees, or office location.

The possibility of survivor bias is inherent in this type of left-censored research

design. One could speculate, for example, that individuals with extensive core firm


experienced were just as likely to start firms with unusual organizational arrangements,

but that they were unable to make those arrangements work because they were overly

influenced by their experience running firms with more traditional arrangements.3 The

severity of this potential sampling bias could not be assessed directly because data were

not available for those firms founded after 1990 that did not survive until the summer of

1998, when we conducted interviews with the founding partners. However, a follow-up

check on the status of the sampled firms revealed that only three failed to survive until

the end of 2001. This suggests that the failure rate for newly established law firms in the

study jurisdiction was extremely low during the study period. Moreover, the three non-

surviving firms were comparable to the survivors in terms of their degree of

innovativeness (avgfailures=6.58, avgsurvivors=7.91, t=�1.10, n.s.) and the amount of

core firm experience possessed by their founders (avgfailures=8.33, avgsurvivors=5.40,

t =0.68, n.s.). Together, these observations provide some assurance that the potential

survivor bias associated with a left-censored design was not a severe problem for our

analyses and results.

4.2. Identification of the field’s dominant template

Consistent with Greenwood and Hinings (1993), we defined organizational design as

the configuration of a firm’s structural features, decision systems, and human resource

practices, underpinned by its values. We determined the prevailing organizational design

within our setting – i.e., the dominant template – through three data sources: a

comprehensive literature review4, semi-structured interviews with three scholars of the

Canadian legal profession, and structured interviews with ten practicing lawyers in

prestigious law firms and one member of the provincial law society. These different data

sources were remarkably consistent in their description of the template prevalent within

the legal profession. Although encouraged by the consistency between these data sources,

we wanted to validate that the dominant set of organizational practices applied in our

study’s jurisdiction and time period. To do this, we administered a questionnaire to a

separate panel of six practitioners, each of whom had been practicing law for at least 5

years in the GVRD. The questionnaire asked the panellists to independently identify the

structural features, decision-making systems, human resource practices, and underpinning

values that characterized the dominant firms in the GVRD’s legal profession. The average

level of inter-rater agreement across these aspects of organizational design was 78%, thus

reflecting adequate reliability. The data obtained from the panellists corroborated that

obtained from the initial sources, providing evidence for the construct validity of the

following description of the field’s dominant template.

The structural features of the dominant template that existed in the GVRD legal

profession in 1998 included a partnership form of ownership and governance, a highly

leveraged personnel configuration, and internal differentiation based upon area of law

(e.g., corporate–commercial, personal injury). Decision-making systems were character-

3 We would like to thank one of the anonymous reviewers for suggesting this possibility.4 Main sources included Brockman (1990, 1991), Cooper et al. (1996), Daniels (1991), Galanter and Palay

(1991), Hagan and Kay (1995), Kay (1997), Kay and Hagan (1993), and Stager (1990).


ized by a centralization of authority at the partnership level and a collegial form of

interaction (i.e., extensive use of lateral structures such as partnership committees). Human

resource practices followed the Cravath system, with an apprenticeship recruitment model,

an up-or-out promotion system, and compensation based upon merit for partners yet

seniority for non-partners. Other dominant human resource practices included strict control

mechanisms (e.g., billable hour quotas), inflexible work arrangements, and distinct

privilege inequalities between different tiers of personnel. Underlying these structures and

practices were values emphasizing both commercialism and professionalism.

4.3. Measurement of the extent to which alternative practices differed from the dominant

template

To obtain measures of the degree to which alternative practices were perceived to

differ from those of the dominant template, we asked the same set of six panellists to

independently complete a second questionnaire. This questionnaire listed the dominant

practices described above and presented alternatives for each. The panellists rated each

alternative on a scale ranging from b0= identical to the dominant practiceQ to b5=verydifferent from the dominant practice.Q We assessed the extent of inter-rater agreement by

calculating the value of rwg for each alternative practice—a statistic deemed to represent

a meaningful indicator of perceptual convergence on a single-item measure of a given

construct (James et al., 1993). The average rwg was 0.58, representing a moderate to

high level of convergence for such a small number of raters (Kozlowski and Hattrup,

1992).

As a rough check of the construct validity of the ratings provided by the panellists, we

asked a prominent scholar of the Canadian legal profession to identify the most novel

alternative to the prevailing practice for each aspect of organizational design. In almost all

instances, his selection corresponded to the alternative with the highest mean score

assigned by the panellists. Thus, given the adequate level of inter-rater agreement and the

evidence of construct validity, we used the mean value assigned by the panellists as the

measure of the extent to which alternative practices differed from the field’s prevailing

practices.

4.4. Measurement of a new firm’s degree of imitation–innovation

We measured a new firm’s degree of imitation–innovation by the extent to which its

configuration of organizational design elements differed from those of the field’s dominant

template. Following other organizational scholars who have aggregated multidimensional

indicators into an overall measure of a firm’s difference from a specified referent (e.g.,

Doty et al., 1993; Fiegenbaum and Thomas, 1995), we used Cronbach and Gleser’s (1953)

profile analysis technique and calculated the Euclidian distance. The specific equation that

we used was:

If ¼Xjp¼1

Dj pð Þ2#1=2

:

24


In this equation, I refers to the extent to which a particular new firm, f, was

innovative relative to the field’s dominant template; j refers to the fifteen practices for

which data were collected; and Dj( p) represents the distance of each firm’s practice

from the field’s prevailing practice, as perceived by the panellists through the procedure

described above.

We identified the nature of each new firm’s practices through a structured personal

interview with the founding partner primarily responsible for decisions regarding the

organization and management of the firm, supplemented with a preliminary background

questionnaire faxed in advance of the interview. Our reliance on a single informant should

not be a severe problem for the majority of a firm’s practices, which were measured by

objective indicators (e.g., the firm’s governance structure, compensation policies, etc.).

Although some of the items were subjective, such as the extent to which the firm

emphasized underpinning values like commercialism versus professionalism, these items

constituted only 15% of the indicators incorporated into our aggregate measure of

imitation–innovation. The Appendix lists the indicators, many of which are similar to

those used by Pinnington and Morris (2002).

4.5. Measurement of the independent variables and controls

4.5.1. Organizational experiences

The core firms of an organizational field are those at the top of the status hierarchy

that other firms tend to mimic. In the legal profession, large law firms represent such

organizations (Cooper et al., 1996). As Galanter and Palay put it, large law firms

possess a bdistinctive institutional characterQ: they are the prominent organizations

through which most members obtain their on-the-job socialization; and they are

exemplars that other law firms tend to emulate (1991: 4). We thus measured core firm

experience by the number of years that a founder had worked in a large law firm prior

to starting his/her own firm. Following Stager’s (1990) work on the Canadian legal

profession, we defined a large law firm as one with at least 20 lawyers. Peripheral firm

experience was measured by the number of years that a founder had worked within the

legal profession but in other venues, such as being self-employed as a solo practitioner,

being employed by a small or medium-sized law firm, and/or working for a legal aid

organization. Other industry experience was measured by the number of years that a

founder had worked in fields other than law (i.e., in business, government, or

education).

4.5.2. Subjective valuations

We isolated founders’ valuations of the dominant template’s legitimacy from their

responses to a series of open-ended questions posed during the interview about why

they had designed their firms in a certain way. To ensure the informational

adequacy of this approach to data collection, we followed Potter and Wetherell’s

(1987) suggestion and posed seven sets of such probing questions at different points

during the interview process. A total of 484 interview excerpts regarding the

founders’ rationales for their organizational designs were isolated and content-

analyzed by the first author. A second coder was trained to independently classify a


subset of 323 randomly selected excerpts (two-thirds of the total). We achieved a

high level of inter-rater agreement – 86% – and resolved any discrepancies through

discussion.

On average, 78% of the founders’ statements challenged the dominant template’s

legitimacy.5 As a rough check on the construct validity of these statements, we compared

them to a measure of the founders’ overall satisfaction with the organizational practices

that they had experienced. Overall satisfaction was measured by an index of six items

(each measured on a scale ranging from 1=very dissatisfied to 5=very satisfied) posed

in the background questionnaire completed prior to the interview. The two measures

obtained from these different methods at different points in time were moderately yet

significantly correlated in the direction indicative of convergent validity (r=�0.60,p b0.01).

Given the high inter-rater agreement and the evidence of construct validity, we

measured the extent to which a founder questioned the pragmatic legitimacy of the

dominant template by the proportion of interview excerpts in which he or she expressed

doubt about the functionality of prevailing practices. For example, several founders were

skeptical of whether the dominant practice of striving for a high associate-to-partner

leverage ratio contributed to profitability. As one founder remarked: bThere’s no money in

it. There used to be leverage – you could make $50 on every $150 you billed out – but

nobody believes this is possible anymore.Q Others questioned the efficiency of tracking

billable hours:

5 In t

attempt

to cont

bAt large firms you must docket your time and account for every minute spent

working on a client’s file. This is wasted time because sometimes you don’t end up

charging the client the real amount. . . So all the time you spent recording is for

naught and a wasted practice.Q

We measured the extent to which a founder questioned the moral legitimacy of the

dominant template by the proportion of relevant interview excerpts in which he or she

expressed doubt about whether prevailing practices were ethically appropriate. Some

founders, for example, felt that the merit-based point system for compensating partners

violated principles of distributive justice because it over-rewarded those who brought in

new clients, and under-rewarded those who assumed responsibility for time-consuming yet

critical tasks such as administration and training. In contrast, one partner felt that the

prevailing partnership model fostered distributive injustice precisely because bpeoplebecome partners without the ability to bring in clients, which creates revenue splitting

problems.Q Another example of denied legitimacy was the dominant up-or-out promotion

system:

bThrough our friends in downtown offices we know that lots of large firms have

what’s analogous to your publish-or-perish system. Some of them have been

he remaining statements, founders indicated that their organizational design decisions reflected deliberate

s to replicate existing practices, unplanned reactions to idiosyncratic employee requests, or were responses

ingency factors such as the firm’s size or practice area.


released because they couldn’t meet their quotas. We didn’t want that sort of

stressful situation. We don’t think it’s very fair. As long as a person’s doing their

share, we don’t need to stand over them with a whip to produce.Q

4.6. Controls for alternative explanations

We controlled for a number of demographic differences that may be associated with a

founder’s experiences, beliefs, and likelihood of acting as an innovative entrepreneur.

Considerable differences, for example, have been noted in the career progressions of male

and female lawyers and in their reactions towards the legal profession (Hagan and Kay,

1995; Kay, 1997). We thus controlled for the founder’s gender. We also controlled for

educational era, measured by a dichotomous variable indicating whether the founder had

been called to the bar after 1989. As noted by several industry observers, the 1990s

represented a very different institutional era for the legal profession—one characterized by

increased disenchantment with prevailing practices (Anderson et al., 1991; Galanter and

Palay, 1991: 137–138; Hagan and Kay, 1995; Kay et al., 1997). As a result, those entering

the profession in this later period may have perceived themselves to have greater freedom

to experiment with novel practices. Finally, we controlled for the founder’s age, to ensure

that the results for core firm experience were not spurious, primarily attributable to the

potential negative association between this demographic variable and acts of innovative

entrepreneurship.

We also controlled for a number of factors at the organizational level of analysis. A

competing argument to our individual-level explanation of innovative entrepreneurship

is that the extent of novelty exhibited by a new firm is primarily attributable to

characteristics of the firm, not the founder. The legal profession’s dominant template,

for example, is based on the practices of large law firms (Galanter and Palay, 1991).

Most new firms, however, are small. Thus, it could be that departures from the

template are primarily a function of firm size. Following Hitt et al. (2001), Malos and

Campion (2000), and Sherer and Lee (2002), we measured firm size by the total

number of lawyers in the firm. Similarly, the competitiveness of a firm’s product-

market niche might influence the extent of its novelty, with greater competition

engendering greater innovation. We examined three indicators of niche competitiveness:

(1) whether the firm was pursuing a specialist or generalist strategy, (2) whether it

emphasized corporate–commercial law in particular, and (3) whether it was located in

the downtown core. Entering all three covariates simultaneously did not affect the

significant findings reported below; however, specialism was moderately correlated

with the other two (r =�0.43 and r =0.28, respectively). Thus, in the interest of

presenting the most parsimonious model, we report results with specialism entered as

the sole control for niche competitiveness, measured by whether the founder classified

the firm as a boutique rather than as a full service general practice. Finally, we added a

control for firm age, the number of years the firm had been in existence. While it is

common for studies of new ventures to sample foundings over a range of 5 to 8 years

(e.g., Baron et al., 1999; McDougall and Robinson, 1990; Shrader, 2001),

environmental conditions may have stimulated innovation more in some years than

others.


5. Results

Table 1 shows the means, standard deviations and correlations for all variables. The

observed scores for new firm novelty ranged from 4.81 to 12.43, with a mean of 7.84. The

absolute minimum value for this variable is zero, which would indicate complete

conformity to the field’s prevailing practices. Theoretically, the absolute maximum value

for this variable is 15.65, which would correspond to a firm that had implemented all of

the alternative practices identified by the panellists as most different from the dominant

template.

Notably, the most innovative firms were novel in very different ways, indicating that they

were not simply reproducing an alternative template of organizational practices already

existing in the field. For example, the highest scoring firm (a boutique real estate practice)

was governed as a solo-owned firm with leverage ratios almost triple those of the dominant

template. This firm employed associates who not only supervised divisions but also shared

in the firm’s profits. It emphasized what can perhaps best be described as bcrusadingQvalues; that is, a commitment to revolutionizing aspects of the legal profession. In contrast,

the firm with the second-highest score (a boutique criminal law practice) was governed as a

cost-sharing arrangement with an associate-to-partner leverage ratio of zero; i.e., the firm

had no associates whatsoever. A particularly distinctive features of the third most innovative

firm (a solo-owned general practice) was its policy of remunerating associates solely on a

percentage-of-revenue basis, an extreme manifestation of a commercialistic value

orientation. The fourth and fifth most innovative firms (a solo-owned general practice

and a solo-owned civil litigation boutique) were unusual primarily because of their

hourglass-shaped personnel configuration: these firms had associate-to-partner ratios well

below the norm yet support-to-lawyer ratios considerably above the norm.

The correlations reported in Table 1 indicate that none of the experience variables were

significantly related to doubts about the pragmatic or moral legitimacy of the dominant

template. Founders with more core firm experience did not necessarily accept the field’s

prevailing practices, nor were those with greater experience in the periphery or outside the

field of law more likely to doubt the legitimacy of dominant routines. This set of

correlations thus provides preliminary support for our argument that founders’ subjective

valuations of a field’s prevailing practices are distinct from the objective nature of their

prior organizational experiences and, as such, should be considered as separate

determinants of innovative entrepreneurship. Finally, none of the correlations among the

independent and control variables had an absolute value greater than 0.60, and diagnostic

checks on the variance inflation factor of each indicted that multicollinearity posed no

serious threat to the validity of our multivariate analyses.

Table 2 presents the hierarchical regression results for the hypothesized main effects.

Table 3 reports the moderated regression results for the hypothesized interaction effects.6

Both tables were used to determine the level of support for the eight hypotheses.

6 To create the interaction terms reported in Table 3, we followed the advice of Jaccard et al. (1990) and

centered the relevant independent variables around a mean of zero before multiplying them together. Centering

involves subtracting the respective sample mean from each of the relevant variables, reducing the multi-

collinearity associated with interaction terms derived from continuous variables.

Table 1

Means, standard deviations, and correlations

Variable Mean S.D. 1 2 3 4 5 6 7 8 9 10 11

1 New firm novelty 7.84 1.60

2 Core firm experience

(years)

5.55 6.17 �0.44***

3 Peripheral firm

experience (years)

4.58 4.95 0.26* �0.59***

4 Other industry

experience (years)

1.23 2.88 0.01 �0.19 �0.07

5 Doubts about pragmatic

legitimacy

31.13 15.65 �0.12 0.04 0.08 �0.08

6 Doubts about

moral legitimacy

47.40 19.12 0.31* �0.08 0.04 0.12 �0.50***

7 Female founder 0.12 0.32 �0.00 �0.13 0.06 0.18 0.00 0.12

8 Educated in 1990s 0.13 0.34 �0.01 �0.16 �0.10 �0.02 �0.07 0.06 �0.149 Founder age 42.92 5.72 �0.12 0.29* 0.20 0.20 �0.01 0.03 0.01 �0.37**10 Firm size 5.05 3.63 �0.34** 0.40** �0.21 �0.13 0.13 �0.30* �0.27* 0.15 0.04

11 Specialist firm 0.65 0.48 �0.06 0.18 �0.14 0.18 �0.11 0.10 0.05 �0.12 �0.08 0.01

12 Firm age 4.83 2.28 0.20 �0.10 0.01 �0.04 0.02 �0.12 �0.01 �0.18 0.14 0.00 �0.23y

Values represent Pearson correlations when both variables are continuous and Spearman correlations when at least one is categorical.yp V0.10, *pV0.05, **p V0.01, ***p V0.001 (two-tailed).

J.E.Cliff

etal./JournalofBusin

essVenturin

g21(2006)633–663

649

Table 2

The relationship between founders’ experiences and beliefs and the extent of novelty exhibited by their firmsa

Variables Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7

Core firm experience

(years)

�0.087** (0.037) �0.080y (0.062)

Peripheral firm

experience (years)

0.086* (0.042) 0.020 (0.068)

Other industry

experience (years)

�0.003 (0.074) �0.036 (0.082)

Doubts about

pragmatic legitimacy

�0.007 (0.013) 0.006 (0.014)

Doubts about

moral legitimacy

0.023* (0.011) 0.026* (0.012)

Female founder �0.265 (0.636) �0.415 (0.614) �0.288 (0.618) �0.271 (0.654) �0.269 (0.641) �0.367 (0.619) �0.463 (0.616)

Educated in 1990s 0.286 (0.688) 0.088 (0.666) 0.275 (0.668) 0.285 (0.696) 0.231 (0.700) 0.060 (0.676) �0.098 (0.672)

Founder age �0.031 (0.039) �0.007 (0.039) �0.046 (.038) �0.031 (0.040) �0.033 (0.039) �0.041 (0.038) �0.018 (0.050)

Firm size �0.157** (0.056) �0.101* (0.057) �0.134** (0.056) �0.156** (0.057) �0.152** (0.057) �0.122* (0.057) �0.067 (0.062)

Specialist firm 0.148 (0.444) 0.258 (0.429) 0.321 (0.439) 0.146 (0.452) 0.105 (0.454) 0.076 (0.432) 0.271 (0.435)

Firm age 0.176* (0.093) 0.139 (0.091) 0.192* (0.091) 0.176* (0.094) 0.174* (0.094) 0.195* (0.091) 0.167y (0.097)

F 2.017y 2.646* 2.438* 1.696 1.747 2.457* 2.234*

R2 0.19 0.27 0.25 0.19 0.19 0.25 0.34

Adjusted R2 0.10 0.17 0.15 0.08 0.08 0.15 0.19

DR2 (versus Model 1) 0.08* 0.06* 0.00 0.00 0.06* 0.15y

yp V0.10, *p V0.05, **p V0.01, ***p V0.001 (one-tailed tests for hypothesized effects and directional control variables).a Values in the table represent unstandardized coefficients (standard errors are in parentheses).

J.E.Cliff


essVenturin

g21(2006)633–663

650

Table 3

The interaction effects of founders’ experiences and beliefs on the extent of novelty exhibited by their firmsa

Variables Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

Core firm experience (years) �0.085** (0.037) �0.090** (0.036)

Peripheral firm experience (years) 0.090* (0.040) 0.097** (0.041)

Other industry experience (years) �0.032 (0.085) 0.013 (0.089)

Doubts about pragmatic legitimacy �0.001 (0.013) �0.006 (0.012) �0.004 (0.014)

Doubts about moral legitimacy 0.025** (0.011) 0.022* (0.011) 0.024* (0.012)

Core firm exp�pragmatic legit �0.003* (0.002)

Core firm exp�moral legit 0.002 (0.002)

Peripheral firm exp�pragmatic legit 0.550** (0.213)

Peripheral firm exp�moral legit �0.324 (0.255)

Other industry exp�pragmatic legit �0.154 (0.175)

Other industry exp�moral legit �0.060 (0.191)

Female founder �0.377 (0.607) �0.415 (0.606) �0.222 (0.589) �0.389 (0.593) �0.103 (0.688) �0.404 (0.656)

Educated in 1990s 0.255 (0.678) �0.056 (0.659) 0.401 (0.647) 0.310 (0.682) 0.211 (0.710) 0.051 (0.690)

Founder age 0.018 (0.042) �0.007 (0.039) �0.024 (0.038) �0.046 (0.038) �0.039 (0.042) �0.039 (0.040)

Firm size �0.080y (0.060) �0.037 (0.066) �0.121* (0.054) 0.086y (0.057) �0.157** (0.059) �0.117* (0.061)

Specialist firm 0.240 (0.430) 0.128 (0.420) 0.395 (0.426) 0.354 (0.429) 0.200 (0.476) 0.040 (0.460)

Firm age 0.160y (0.091) 0.165y (0.088) 0.235** (0.088) 0.241** (0.090) 0.148 (0.100) 0.202* (0.095)

F 2.477* 2.856** 2.905** 2.803** 1.412 1.851y

R2 0.31 0.34 0.35 0.34 0.21 0.25

Adjusted R2 0.19 0.22 0.23 0.22 0.06 0.12

DR2 (versus Model 1 in Table 2) 0.12* 0.15* 0.16** 0.15* 0.02 0.06

ypV0.10, *pV0.05, **p V0.01, ***p V0.001 (one-tailed tests for hypothesized effects and directional control variables).a Values in the table represent unstandardized coefficients (standard errors are in parentheses).

J.E.Cliff


essVenturin

g21(2006)633–663

651


The first model reported in Table 2 represents the baseline model of controls for

alternative explanations. None of the individual-level controls (i.e., founder’s gender,

education, and age) was significantly associated with the extent of novelty exhibited by the

firms. Of the organizational-level controls, firm size and firm age were significant, but not

specialism. As expected, the smaller firms exhibited a greater degree of departure from the

field’s template. So, too, did the older firms. As a whole, the baseline model accounted for

19% of the variation in new firm novelty.

Hypothesis 1 predicted that founders with more extensive experience in the field’s core

firms would be less likely to act as innovative entrepreneurs; instead, they would establish

firms that conformed more closely to the field’s dominant template. This hypothesis was

solidly supported. In every model in which it was entered, core firm experience was

significantly and negatively related to new firm novelty. The constraining effect of core

firm experience was particularly apparent when we compared the extremes of the most

imitative and most innovative firms. Founders of the five firms that conformed most

closely to prevailing practices had worked, on average, for 13.4 years core firms. In

contrast, none of the founders of the five most innovative firms had any experience at all in

core firms.

Hypothesis 2 predicted that founders with more extensive experience in the

peripheral firms of an organizational field would be more likely to act as innovative

entrepreneurs, heading firms exhibiting greater departure from the field’s dominant

template. This hypothesis was also supported. In all but one of the models in which it

was entered, peripheral firm experience was significantly and positively related to new

firm novelty. The exception is the full main effects model reported in Model 7 of Table

2, in which this variable did not retain its level of statistical significance. This could,

however, be attributable to the relatively small size of the sample, which reduces

statistical power.

Hypothesis 3 predicted that founders with more extensive experience in industries

outside of the organizational field would also be more likely to act as innovative

entrepreneurs, establishing firms that departed more dramatically from the field’s

dominant template. Our analyses did not provide any support for this hypothesis.

In Hypotheses 4 and 5, we proposed that founders’ subjective beliefs about a field’s

prevailing practices affect their likelihood of acting as imitative or innovative

entrepreneurs. We found no support for Hypothesis 4. Doubt about the pragmatic

legitimacy of prevailing practices was not significantly associated with new firm novelty

in any of the models in which this variable was entered. Strong associational support,

however, was found for Hypotheses 5. Doubt about the dominant template’s moral

legitimacy was significantly and positively associated with new firm novelty, across all of

the models in which this variable was entered. Individuals who strongly questioned the

ethicality of prevailing practices tended to avoid incorporating these morally offensive

practices in their own firms.

Hypotheses 6 through 8 explored the interaction effects of founders’ experiences and

beliefs. As indicated in Table 3, only two of the six interaction terms were significant: that

for core firm experience with pragmatic legitimacy concerns and that for peripheral firm

experience with pragmatic legitimacy concerns. To further investigate these significant

interactions, we plotted the relationship for different levels of core firm experience (see

5

6

7

8

9

-2 -1 0 1 2

Doubts about Pragmatic Legitimacy(standard deviations from mean)

Degr

ee o

f Nov

elty low core firm experience

(1 s.d.<mean=0 yrs)

average core firmexperience (mean=5.6 yrs)

high core firm experience (1 s.d.>mean=11.7 yrs)

Fig. 1. The relationship between founders’ doubts about pragmatic legitimacy and new firm novelty at different

levels of core firm experience.


Fig. 1) and peripheral firm experience (see Fig. 2). Following Jaccard et al. (1990), we let

a low level of experience be defined as one standard deviation below the respective mean

and a high level of experience be defined as one standard deviation above the respective

mean.

The findings reported in Fig. 1 provide partial support for Hypothesis 6, which posited

that doubts about the legitimacy of prevailing practices would trigger acts of innovative

entrepreneurship only under conditions of low core firm experience. The interaction effect

of core firm employment and pragmatic legitimacy concerns, however, was even stronger

than expected. The relationship between pragmatic legitimacy concerns and new firm

5

6

7

8

9

-2 -1 0 1 2

Doubts about Pragmatic Legitimacy (standard deviations from mean)

Degr

ee o

f Nov

elty low peripheral firm experience

(1 s.d.<mean=0 yrs)

average peripheral firmexperience (mean=4.58 yrs)

high peripheral firm experience(1 s.d.>mean=10.75 yrs)

Fig. 2. The relationship between founders’ doubts about pragmatic legitimacy and new firm novelty at different

levels of peripheral firm experience.


novelty was positive for founders with minimal or no experience in core firms but was

negative for those who had a high level of experience in them. That being said, core firm

experience did not moderate the relationship between moral legitimacy concerns and new

firm novelty; thus, Hypothesis 6 was only partially supported.

The findings reported in Fig. 2 provide partial support for Hypothesis 7, which

predicted that doubts about the legitimacy of prevailing practices would trigger the

creation of innovative new firms only under conditions of extensive peripheral firm

experience. Again, the interaction effect of peripheral firm employment and pragmatic

legitimacy concerns was stronger than expected. The relationship between pragmatic

legitimacy concerns and new firm novelty was positive for founders who had a high level

of experience in the field’s peripheral firms but was negative for founders with minimal or

no experience in them. However, peripheral firm experience did not moderate the

relationship between moral legitimacy concerns and new firm novelty; thus, Hypothesis 7

was only partially supported.

Combined, these interaction effects help explain why we did not find a significant

main effect for founders’ pragmatic legitimacy assessments. On their own, strong

reservations about the functionality of prevailing practices may have motivated the

founders in our sample to be innovative entrepreneurs, but such views did not trigger

innovative actions unless certain employment experiences (or lack of them) confirmed or

encouraged those reservations. That is, the innovative entrepreneurs had avoided

exposure to the constraining influence of the field’s core firms and/or had experienced

the work practices of peripheral firms, and thus were able to translate their doubt about

the dominant template’s pragmatic legitimacy into novel practices within their own

firms.

Finally, experience outside the legal profession did not moderate the relationship

between subjective valuations and innovative entrepreneurship. Thus, Hypothesis 8 was

not supported.

6. Discussion

We began this paper by asking why it is that some individuals are more likely to act as

innovative entrepreneurs, creating firms that depart significantly from prevailing practices

in an industry, whereas others are more likely to act as imitative entrepreneurs, establishing

firms that essentially reproduce widely used routines. Building on the general argument

that individual founders shape the nature of their firms, and the more specific argument

that knowledge and beliefs are important considerations, we examined the influence of

prior work experiences and subjective valuations of a field’s dominant template. Our

investigation of newly established firms in the legal profession found that the more

innovative firms tended to be headed by entrepreneurs possessing little experience in the

field’s core organizations, extensive experience in peripheral firms, or strong doubts about

the moral legitimacy of prevailing practices. Disbelief in the pragmatic legitimacy of

dominant routines was not associated with innovative entrepreneurship, unless the founder

also possessed either minimal experience in the field’s core or extensive experience on its

periphery.


6.1. Implications and contributions

A number of important implications can be derived from these results (assuming they

are valid and generalizable). By explicating the types of prior organizational experiences

that facilitate innovation, those that do not, and those that actually lead to imitation, our

research gives greater specificity to the intuitively compelling yet underdeveloped

knowledge corridor thesis (Ardichvili et al., 2003; Kirtzner, 1997; Ronstadt, 1988;

Samuelsson, 2001; Shane, 2000; Shane and Venkataraman, 2000; Venkataraman, 1997).

Our results clearly demonstrate the constraining effect of experience in the core knowledge

corridors of an organizational field. Founders with extensive experience in core firms tend

to emerge as imitative entrepreneurs, unable to depart dramatically from the dominant

template—even though they might consider prevailing practices to be of dubious

legitimacy. In contrast, founders with minimal core firm experience tend to emerge as

innovative entrepreneurs, doing things differently even though they do not question the

legitimacy of dominant routines. This finding could therefore be interpreted as support for

the view of innovative entrepreneurship as an often unintentional, almost random process

in which bblind variationsQ result from unwitting errors in individuals’ attempts to

reproduce dominant routines (Aldrich, 1999; Aldrich and Kenworthy, 1999). That is,

innovative entrepreneurship may be a consequence of founders simply not knowing well

enough the dominant routines of the industry, because of their lack of exposure to them.

Notably, we found no support for the hypothesized enabling effect of experience in

knowledge corridors outside of the focal organizational field, which prompts us to

question the portrayal of bindustry outsidersQ as innovative entrepreneurs (e.g., Aldrich,

1999; Kraatz and Moore, 2002). We did, however, find support for the enabling effect of

experience in knowledge corridors at the periphery of an organizational field. Assuming

that alternative practices are more prevalent in such corridors (Greenwood and Hinings,

1996), this finding could be interpreted as supporting the view of innovative

entrepreneurship as bricolage; i.e., as a process of combining existing alternatives in

unusual ways (Schumpeter, 1934; Shane and Venkataraman, 2000; Venkataraman, 1997).

In sum, the collection of results that we found for the knowledge corridor perspective

highlights the importance, in subsequent research, of more carefully specifying the nature

of founders’ prior industry experience as a determinant of innovative versus imitative

entrepreneurship.

Our findings also show that innovative entrepreneurship is not driven solely by

ignorance of the prevailing brules of the gameQ or by experience with alternatives. Rather,

our results illustrating the effect of founders’ disbelief in the moral legitimacy of prevailing

practices, and the effect of pragmatic legitimacy concerns when combined with certain

types of experience, suggest that innovative entrepreneurship is also a function of how

entrepreneurs evaluate prevailing practices. By demonstrating how disenchantment with

dominant routines tends to be associated with greater novelty, we confirm Shepherd and

DeTienne’s observation that individuals who bhave reached a threshold of sufficient

dissatisfaction are more motivated to discover opportunities to resolve this dissatisfactionQ(2001: 145). Our results also provide empirical support for Shane and Venkataraman’s

(2000: 222) more general argument that the beliefs of individuals, and not just their

knowledge and experience, should receive attention in explanations of entrepreneurial


behaviour. Our analysis has responded to this call by delineating two types of beliefs

associated with innovative entrepreneurship: dissatisfaction with the pragmatic legitimacy

of prevailing practices and disenchantment with their moral legitimacy.

Interestingly, our results indicate that a founder’s questioning of a template’s pragmatic

legitimacy is not a sufficient determinant of innovative entrepreneurship. Being highly

motivated to do things more efficiently and effectively does not lead, on its own, to the

creation of innovative firms. Instead, such a motivation is associated with novelty only in

the presence of other enabling conditions, such as below-average experience in the core of

an organizational field or above-average experience in its periphery. Shepherd and

DeTienne (2001) observed a similar effect, noting that the promise of increased financial

reward did not directly influence the innovativeness of opportunities discovered; rather, it

acted as an incentive only for individuals who had little prior knowledge of customer

problems. Together, the findings from these studies offer additional empirical grounding

for work that questions the imagery of the brational economic actorQ often contained in

depictions of entrepreneurial processes (e.g., de Bruin and Dupuis, 2003). Our findings

raise the intriguing possibility that innovative entrepreneurs (at least those in highly

institutionalized settings such as the legal profession) are driven by ethical principles as

well as by economic self-interest. As such, they support Low and Abrahamson’s claim

that: bIn mature industries. . . stakeholders [tend to be] motivated by a combination of

social and instrumental reasonsQ (1997: 449).In addition to these theoretical contributions, we suggest that this study makes a

methodological contribution by presenting a unique approach for operationalizing a key

construct in theories of innovative versus imitative entrepreneurship; namely, the degree of

novelty exhibited by a new venture. Building upon Aldrich (1999: 80), we proposed that

novelty can be measured by the extent to which the configuration of a new firm’s practices

differs from the set of prevailing practices within a particular organizational field. We

described a multisource–multimethod procedure for measuring this construct, involving

(1) interviews with different types of industry experts – such as practitioners, scholars and

industry association officials – to determine the nature of the field’s prevailing practices;

(2) questionnaires administered to multiple credible evaluators, to determine the extent to

which alternative practices were perceived to differ from the dominant routines; and (3)

interviews with the founders of the new ventures, to determine the set of practices

implemented in their firms. We provided evidence of the reliability and validity of the

resulting measures and described how they can be aggregated into an overall indicator of

imitation–innovation. In sum, we believe that we have developed a useful and valid

approach for operationalizing new firm novelty that allows researchers to examine a range

of innovative foundings—not just those that ultimately transform a field. Using such

measures should enable entrepreneurship research to better distinguish between factors

that lead to greater novelty and those that enable only a subset of the innovative firms to

subsequently revolutionize an industry.

6.2. Limitations

The implications and contributions discussed above need to be interpreted appropri-

ately. As Baron et al. aptly point out that: battempts to trace the evolution of organizations


from their infancy forward are fraught with difficulties, especially when the researcher

seeks to understand the conceptions of key actorsQ (1999: 542). Our study was no

exception. As such, we echo the need to treat our findings not as definitive but rather as

suggestive of promising directions for theoretical development and methodological

refinement (Baron et al., 1999: 542).

We examined new ventures in a setting that is not commonly selected for investigations

of entrepreneurial phenomena (although see Sherer and Lee, 2002). The unusual setting

can be viewed as a potential strength, extending entrepreneurship research, but raises the

generalizability of the results. As with all single-industry studies, it would be inappropriate

to claim that newly established law firms are representative of all new ventures. That being

said, they are typical of other professional service organizations, such as accounting,

engineering, and management consulting firms, that constitute a sizeable, growing and

influential economic sector. Further, they are examples of knowledge-based organizations,

which, despite their acknowledged importance to the contemporary economy, are under-

studied (Alvesson, 2004). We also believe that our results will likely generalize to other

mature, highly institutionalized professional fields, such as healthcare, in which certain

organizational practices dominate yet have not gone unchallenged in terms of their

legitimacy (D’Aunno et al., 2000).

Our study also looks at only one aspect of innovative entrepreneurship—the creation of

novel organizational designs. Although an important type of innovation (Aldrich, 1999;

Davidsson and Wiklund, 2001; Low and Abrahamson, 1997; Schumpeter, 1934; Shepherd

et al., 2000; Shane and Venkataraman, 2000), the creation of novel organizational designs

is not necessarily representative of other types of innovation. It could be, for example, that

founders with extensive core firm experience are innovative in other ways: e.g., in how

they approach the market.7 This possibility could help reconcile our findings with those of

Samuelsson (2001), who found a positive relationship between industry experience and

the pursuit of innovative opportunities, and Shepherd and DeTienne (2001), who found a

positive relationship between prior knowledge of customer problems and the innovative-

ness of proposed solutions. Indeed, an intriguing line for further work would be to

examine whether different types of innovative entrepreneurship have the same

antecedents.

The retrospective design of our study restricts our ability to derive strong causal

inferences for some of the findings. This is not problematic for the experience variables

because, although the data for these measures were collected after the firm was founded,

the experiences themselves were clearly accumulated prior to founding. Thus, we are

confident that a temporal sequence exists from the founder to the firm for the effects of

prior experience. We cannot be as confident when making assertions about the founders’

subjective valuations. These beliefs were derived from responses to open-ended questions

asking founders to discuss why they had designed their firms in a certain way; hence, the

measures may reflect retrospective reconstructions considered socially acceptable (Miller

et al., 1997). For this reason, the observed relationships between subjective valuations and

innovative entrepreneurship should be interpreted as associational rather than causal.

Some entrepreneurship research does indicate, however, that a desire to be innovative and

7 We thank one of this journal’s anonymous reviewers for raising this interesting speculation.


do things differently often motivates individuals to found firms (Carter et al., 2003). Thus,

it is plausible that a desire to create practices with greater perceived pragmatic or moral

legitimacy genuinely did factor into the founders’ decisions about organizational design.

Moreover, Miller et al.’s work suggests that bretrospective reporting is a viable research

methodologyQ when breasonable efforts to demonstrate reliability and validity can be

reportedQ (1997: 200), as we have done in this study.

6.3. Future directions and conclusion

The results presented in this paper are encouraging and suggest several interesting

avenues for further research. First, there is a need to bcompleteQ the story, connecting

innovative entrepreneurship to performance outcomes. We need to know whether

innovative entrepreneurship is more or less successful than imitative entrepreneurship.

One could argue that by conforming to prevailing practices, founders secure early

legitimacy for their firms (Zimmerman and Zeitz, 2002), thereby more quickly

overcoming liabilities of newness and increasing their probability of survival (Henderson,

1999). But when innovative firms do survive, do they tend to outperform others, as

suggested by Corbett and Koberg (2001)? It may be that the innovations that prevail are

those that are beneficial at the aggregate level of analysis, while at the micro-level of the

individual firm, the most likely consequence of innovating is negative. These questions are

clearly important and worthy of future research.

We also suggest the need to further unpick the complex relationship between the

knowledge corridor thesis and the subjective valuation thesis. Although our work suggests

that founders who lack core firm experience, who possess greater peripheral firm

experience, or who strongly doubt the ethicality of prevailing practices tend to be

innovative entrepreneurs, this does not imply that they will be equally successful. Does

only a small subset of innovative entrepreneurs tend to succeed? If so, which ones and

why? Our findings for the significant interactions between legitimacy doubts and core and

peripheral experience raise further questions. Why were not pragmatic legitimacy

concerns, on their own, significantly associated with innovative entrepreneurship? It

would also be interesting to examine the conditions under which the motivation to create

more functional practices results in greater innovativeness than the motivation to create

more ethical practices (and vice versa).

Finally, as noted above, we need to better understand the antecedents of different

expressions of innovative entrepreneurship. We have focused upon innovative organiza-

tional designs. To what extent do other forms of innovation, such as new market strategies,

new product/service offerings or new technological processes, arise from the same

antecedents? All of these questions deserve further exploration and are consistent with

Shane and Venkataraman’s (2000) defining questions for the future of entrepreneurship

research.

In conclusion, this paper contributes to the entrepreneurship literature by (1)

demonstrating that the nature of individuals’ prior work experiences influences the

extent to which they act as imitative versus innovative entrepreneurs when launching

their own firms; (2) demonstrating that individuals’ disbelief in the legitimacy of

prevailing practices also shapes the innovativeness of their firms; and (3) providing a


reliable and valid methodology for operationalizing the fundamental construct of new

firm novelty. We have shown that individuals who are bnew to the gameQ and those who

strongly bquestion its rulesQ tend to create more innovative firms. A critical next step is

to determine whether, when, why and how such firms are more (or less) successful than

imitative foundings.

Acknowledgements

We would like to thank Howard Aldrich, Bob Hinings, Michael Lounsbury, Don

Palmer, the anonymous reviewers, and participants in the 2003 Professional Service

Firms conference held at Oxford for their helpful comments on earlier versions of this

paper. We are very grateful for the research assistance provided by Jennifer Shecter and

for the financial support provided by the Social Sciences and Humanities Research

Council of Canada doctoral fellowship awarded to the first author. Jennifer Cliff (now

Jennifer Jennings) would also like to acknowledge the supportive dissertation

supervision provided by Nancy Langton.

Appendix A. Operationalizing the organizational practices of new law firms

Structural aspects: (1) Form of governance was measured by whether the firm was

governed as a partnership, cost-sharing arrangement, or solo-owned practice. (2)

Personnel configuration was measured by (a) the number of lawyers per partner and

(b) the number of support staff per professional. (3) Divisionalization criteria were

measured by whether lawyers were grouped into divisions based on their area of legal

specialization or some other criterion (e.g., by client, geographic region).

Decision systems: (4) Centralization was measured by (a) whether any non-partners

attended partnership meeting or were responsible for key operating decisions (e.g., hiring

or firing) and (b) whether any non-lawyers were responsible for supervising divisions. (5)

Decision-making interaction was measured by whether major decisions tended to be made

by only one partner, individual partners in some cases yet jointly in other cases,

committees of partners, or all partners.

Human resource practices: (6) Apprenticeship recruitment model was measured by

(a) whether the firm preferred to hire associates straight out of their articling period or

preferred those with prior associate experience and (b) whether the hiring of associates was

based on legal ability, business ability, and/or personal compatibility. (7) Up-or-out

promotion system was measured by (a) whether the firm preferred to promote partners

from within or preferred to admit partners from outside, (b) whether partnership decisions

were based on legal ability, business ability, and/or personal compatibility, (c) the

existence of positions not on the partnership track, and (d) the existence of different tiers of

associates and partners. (8) Compensation system was measured by the extent to which the

compensation system for (a) partners and (b) associates was based on merit, seniority, or

equality. (9) Control mechanism severity was measured by (a) the type of quantitative

targets set by the firm, (b) the level at which the targets were set, (c) the frequency with


which the targets were monitored, and (d) the firm’s tolerance level. (10) Work

arrangement flexibility was measured by the existence of alternative work arrangements

available for (a) lawyers only and (b) all personnel. (11) Privilege equality was measured

by (a) whether the firm implemented a profit-sharing system for non-partners and (b)

whether certain perks were available for support staff.

Underlying values: (12) Emphasis on commercialism was measured by the percentage

of the participating founder’s relevant interview excerpts emphasizing values such as

efficiency, productivity, and competitiveness. (13) Emphasis on professionalism was

measured by the percentage of the participating founder’s relevant interview excerpts

emphasizing values such as autonomy, collegiality, and democracy or the corresponding

view of lawyers as professionals who possess esoteric knowledge and represent public

interests to ensure that justice prevails. (14) Emphasis on lifestyle promotion was

measured by the percentage of the participating founder’s relevant interview excerpts

values such as creating a more flexible and supportive work environment. (15) Emphasis

on crusading was measured by the percentage of the participating founder’s relevant

interview excerpts values such as revolutionizing aspects of the legal profession or

society in general. Relevant interview excerpts reflecting a firm’s underlying values were

content-analyzed by two independent coders, with discrepancies resolved through

discussion.

References

Aldrich, H.E., 1999. Organizations Evolving. Sage, London.

Aldrich, H.E., Fiol, C.M., 1994. Fools rush in? The institutional context of industry creation. Academy of

Management Review 19, 645–670.

Aldrich, H.E., Kenworthy, A., 1999. The accidental entrepreneur: Campbellian antinomies and organizational

foundings. In: Baum, J.A.C., McKelvey, B. (Eds.), Variations in Organization Science: In Honor of Donald T.

Campbell. Sage, Newbury Park, CA.

Aldrich, H.E., Zimmer, C., 1986. Entrepreneurship through social networks. In: Sexton, D., Smilor, R. (Eds.), The

Art and Science of Entrepreneurship. Ballinger, New York.

Alvesson, M., 2004. Knowledge Work and Knowledge-Intensive Firms. Oxford University Press, Oxford.

Anderson, M., Penner, L., Ryan, M.J., 1991. Partnership compensation and law firm structuring. Paper Presented

at a Continuing Legal Education Seminar of the Continuing Legal Education Society of B.C.

Ardichvili, A., Cardozo, R., Ray, S., 2003. A theory of entrepreneurial opportunity identification and

development. Journal of Business Venturing 18, 105–124.

Barney, J.B., 1991. Firm resources and sustained competitive advantage. Journal of Management 17, 99–120.

Baron, J.N., Hannan, M.T., Burton, M.D., 1999. Building the bars of the iron cage: determinants of managerial

intensity in the early years of organizations. American Sociological Review 64, 527–547.

Bhave, M.P., 1994. A process model of entrepreneurial venture creation. Journal of Business Venturing 9,

223–242.

Brockman, J., 1990. Encountering Barriers and/or Moving on: A Survey of Former Members of the Law Society

of British Columbia. A Report Prepared for the Law Society of British Columbia’s Subcommittee on Women

in the Legal Profession.

Brockman, J., 1991. Identifying Barriers: a survey of members of the Law Society of British Columbia. A report

prepared for the Law Society of British Columbia’s Subcommittee on Women in the Legal Profession.

Carter, N.M., Gartner, W.B., Shaver, K.G., Gatewood, E.J., 2003. The career reasons of nascent entrepreneurs.

Journal of Business Venturing 18, 13–40.

Cooper, A.C., Dunkelberg, W., Woo, C., 1988. Entrepreneur’s perceived chances for success. Journal of Business

Venturing 3, 97–108.


Cooper, D.J., Hinings, R., Greenwood, R., Brown, J.L., 1996. Sedimentation and transformation in organizational

change: the case of Canadian law firms. Organization Studies 17, 623–647.

Corbett, A.C., Koberg, C.S., 2001. Patterns of opportunity recognition and growth in technology firms.

In: Bygrave, W.D., et al. (Eds.), Frontiers of Entrepreneurship Research. Babson College, Babson Park, MA.

Cronbach, L.J., Gleser, G.C., 1953. Assessing similarity between profiles. Psychological Bulletin 50,

456–473.

Daniels, R.J., 1991. Growing pains: the why and how of law firm expansion. Law and Economics Working Paper

Series WPS-6, Law and Economics Program. University of Toronto Faculty of Law, Toronto.

D’Aunno, T., Succi, M., Alexander, T.A., 2000. The role of institutional and market forces in divergent

organizational change. Administrative Science Quarterly 45 (4), 679–704.

Davidsson, P., Wiklund, J., 2001. Levels of analysis in entrepreneurship research: current research practice and

suggestions for the future. Entrepreneurship Theory and Practice 25, 81–99.

de Bruin, A., Dupuis, A., 2003. Introduction: concepts and themes. In: de Bruin, A., Dupuis, A. (Eds.),

Entrepreneurship: New Perspectives in a Global Age. Ashgate, pp. 1–24.

DiMaggio, P., Powell, W.W., 1983. The iron cage revisited: institutional isomorphism and collective rationality in

organizational field. American Sociological Review 48, 147–160.

DiMaggio, P., Powell, W.W., 1991. The New Institutionalism in Organizational Analysis. University of Chicago

Press, Chicago.

Doty, D.H., Glick, W.H., Huber, G.P., 1993. Fit, equifinality, and organizational effectiveness: a test of two

configurational theories. Academy of Management Journal 36, 1196–1250.

Dutton, J.E., Dukerich, J.M., 1991. Keeping an eye on the mirror: the role of image and identity in organizational

adaptation. Academy of Management Journal 34, 517–554.

Ellis, L., 1993. Small is beautiful, even in the law. Profit 12, 14.

Fiegenbaum, A., Thomas, H., 1995. Strategic groups as reference groups: theory, modelling and empirical

examination of industry and competitive strategy. Strategic Management Journal 16, 461–476.

Ford, C.M., 1996. A theory of individual creative action in multiple social domains. Academy of Management

Review 21, 1112–1142.

Galanter, M., Palay, T., 1991. Tournament of Lawyers: The Transformation of the Big Law Firm. University of

Chicago Press, Chicago.

Granovetter, M., 1985. Economic action and social structure: the problem of embeddedness. American Journal of

Sociology 91, 481–510.

Greenwood, R., Hinings, C.R., 1993. Understanding strategic change: the contribution of archetypes. Academy of

Management Journal 36, 1052–1081.

Greenwood, R., Hinings, C.R., 1996. Understanding radical organizational change: bringing together the old and

new institutionalism. Academy of Management Review 21, 1022–1054.

Greenwood, R., Suddaby, R., Hinings, C.R., 2002. Theorizing change: the role of professional associations in the

transformation of institutionalized fields. Academy of Management Journal 45, 58–80.

Hagan, J., Kay, F.M., 1995. Gender in Practice: A Study of Lawyers’ Lives. Oxford University Press, New York.

Haveman, H.A., 1993. Follow the leader: mimetic isomorphism and entry into new markets. Administrative

Science Quarterly 38, 593–627.

Henderson, A.D., 1999. Firm strategy and age dependence: a contingent view of the liabilities of newness,

adolescence, and obsolescence. Administrative Science Quarterly 44 (2), 281–314.

Hitt, M.A., Bierman, L., Shimizu, K., Kochlar, R., 2001. Direct and moderating effects of human capital on

strategy and performance in professional service firms: a resource-based perspective. Academy of

Management Journal 44, 13–28.

Jaccard, J., Turrisi, R., Wan, C.K., 1990. Interaction Effects in Multiple Regression. Sage, Newbury Park, CA.

James, L.R., Demaree, R.G., Wolf, G., 1993. rwg: an assessment of within-group interrater agreement. Applied

Psychology 78, 306–309.

Jennings, P.D., Zandbergen, P.A., 1995. Ecologically sustainable organizations: an institutional approach.

Academy of Management Review 20, 1015–1052.

Kahneman, D., Lovallo, D., 1994. Timid choices and bold forecasts: a cognitive perspective on risk taking. In:

Rumelt, R.P., Schendel, D.E., Teece, D.J. (Eds.), Fundamental Issues in Strategy: A Research Agenda.

Harvard College, Boston, MA.


Kay, F.M., 1997. Flight from law: a competing risks model of departures from law firms. Law and Society

Review 31, 301–335.

Kay, F.M., Hagan, J., 1993. The Structural Dynamics of the Law Firm. Appendix 13 to the Report of the

Canadian Bar Association Task Force on Gender Equality in the Legal Profession.

Kay, F., Dautovich, N., Marlor, C., 1997. Barriers and opportunities within law: women in a changing legal

profession. A Report to the Law Society of Upper Canada.

Kirtzner, I.M., 1973. Competition and Entrepreneurship. University of Chicago Press, Chicago, IL.

Kirtzner, I.M., 1997. Entrepreneurial discovery and the competitive market process: an Austrian approach.

Journal of Economic Literature 35, 60–85.

Kozlowski, S.W., Hattrup, K., 1992. A disagreement about within-group agreement: disentangling issues of

consistency versus consensus. Journal of Applied Psychology 77, 161–167.

Kraatz, M.S., Moore, J.H., 2002. Executive migration and institutional change. Academy of Management Journal

45, 120–143.

Kraatz, M.S., Zajac, E.J., 1996. Exploring the limits of the new institutionalism: the causes and consequences of

illegitimate organizational change. American Sociological Review 61, 812–836.

Lawrence, T.B., Winn, M.I., Jennings, P.D., 2001. The temporal dynamics of institutionalization. Academy of


Leblebici, H., Salancik, G.R., Copay, A., King, T., 1991. Institutional change and the transformation of

interorganizational fields: an organizational history of the U.S. radio broadcasting industry. Administrative

Science Quarterly 36, 333–363.

Low, M.B., Abrahamson, E., 1997. Movements, bandwagons, and clones: industry, evolution and the

entrepreneurial process. Journal of Business Venturing 12 (6), 435–457.

Malos, S.B., Campion, M., 2000. Human resource strategy and career mobility in professional service firms: a test

of an options-based model. Academy of Management Journal 43, 749–760.

Martin, J., 1993. Inequality, distributive justice, and organizational illegitimacy. In: Murnighan, J.K. (Ed.), Social

Psychology in Organizations. Prentice Hall, Englewood Cliffs, NJ, pp. 296–321.

McDougall, P., Robinson, R.B., 1990. New venture strategies: an empirical identification of eight archetypes of

competitive strategies for entry. Strategic Management Journal 11, 447–467.

McGrath, R.G., 2001. Exploratory learning, innovative capacity, and managerial oversight. Academy of

Management Journal 44 (1), 118–133.

Meyer, J.W., Rowan, B., 1977. Institutional organizations: formal structures as myth and ceremony. American

Journal of Sociology 83, 340–363.

Meyerson, D.E., Scully, M.A., 1995. Tempered radicalism and the politics of ambivalence and change.

Organization Science 6, 585–600.

Miller, C.C., Cardinal, L.B., Glick, W.H., 1997. Retrospective reports in organizational research: a reexamination

of recent evidence. Academy of Management Journal 40 (1), 189–204.

North, D.C., 1990. Institutions, Institutional Change and Economic Performance. Cambridge University Press,

Cambridge.

Oliver, C., 1991. Strategic responses to institutional processes. Academy of Management Review 16, 145–179.

Oliver, C., 1992. The antecedents of deinstitutionalization. Organization Studies 13, 563–588.

Perry-Smith, J.E., Shalley, C.E., 2003. The social side of creativity: a static and dynamic social network

perspective. Academy of Management Review 28, 89–106.

Pinnington, A., Morris, T., 2002. Transforming the architect: ownership form and archetype change. Organization

Studies 23 (2), 189–210.

Porter, M.E., 1980. Competitive Strategy. Free Press, New York NY.

Porter, M.E., 1991. Toward a dynamic theory of strategy. Strategic Management Journal 12, 95–117.

Potter, J., Wetherell, M., 1987. Discourse and Social Psychology: Beyond Attitudes and Behaviour. Sage,

London.

Ronstadt, R., 1988. The corridor principle. Journal of Business Venturing 3, 31–40.

Samuelsson, M., 2001. Modelling the nascent venture opportunity exploitation process across time. In: Bygrave,

W.D., et al. (Eds.), Frontiers of Entrepreneurship ResearchBabson College, Babson Park, MA.

Schein, E.H., 1983. The role of the founder in creating organizational culture. Organizational Dynamics, 13–28.

Schumpeter, J.A., 1934. The Theory of Economic Development. Harvard University Press, Cambridge.


Scott, W.R., 1994. Institutions and organizations: toward a theoretical synthesis. In: Scott, W.R., Meyer, J.W.

(Eds.), Institutional Environments and Organizations. Sage, Thousand Oaks, CA.

Seo, M.G., Creed, W.E.D., 2002. Institutional contradictions, praxis, and institutional change: a dialectical

perspective. Academy of Management Review 27, 222–247.

Shane, S., 2000. Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science 11 (4),

448–469.

Shane, S., Venkataraman, S., 2000. The promise of entrepreneurship as a field of research. Academy of


Shaver, K.G., Scott, L.R., 1991. Person, process, choice: the psychology of new venture creation.

Entrepreneurship Theory and Practice, Winter, 23–42.

Shepherd, D.A., DeTienne, D.R., 2001. Discovery of opportunities: anomalies, accumulation and alertness. In:

Bygrave, W.D., et al. (Eds.), Frontiers of Entrepreneurship Research. Babson College, Babson Park, MA.

Shepherd, D.A., Douglas, E.A., Shanley, M., 2000. New venture survival: ignorance, external shocks, and risk

reduction strategies. Journal of Business Venturing 15, 393–410.

Sherer, P.D., Lee, K., 2002. Institutional change in large law firms: a resource dependency and institutional

perspective. Academy of Management Journal 45 (1), 102–119.

Shrader, R.C., 2001. Collaboration and performance in foreign markets: the case of young high-technology

manufacturing firms. Academy of Management Journal 44, 45–60.

Stager, D.A.A., 1990. Lawyers in Canada. University of Toronto Press, Toronto.

Staw, B.M., Sutton, R.I., 1993. Macro organizational psychology. In: Murnighan, J.K. (Ed.), Social Psychology in

Organizations. Prentice-Hall, Englewood Cliffs, NJ.

Stock, R.G., 1996. Leadership and Management in the Law Firm. Paper presented at the Calgary Association of

Legal Administrators General Meeting, Calgary.

Stock, R.G., Leishman, T.G., 1998. High Yield Legal Services. Continuing Legal Education Seminar Held in

Vancouver.

Stoner, C.R., Fry, F.L., 1982. The entrepreneurial decision: dissatisfaction or opportunity? Journal of Small

Business Management 20, 39–44.

Suchman, M., 1995. Managing legitimacy: strategic and institutional approaches. Academy of Management

Review 20, 571–610.

Suddaby, R., Greenwood, R., 2005. Rhetorical strategies of legitimacy. Administrative Science Quarterly 50 (1),

35–67.

Thornton, P., 2002. The rise of the corporation in a craft industry: conflict and conformity in institutional logics.

Academy of Management Journal 45 (1), 81–101.

Tolbert, P.S., Zucker, L., 1996. The institutionalization of institutional theory. In: Clegg, S.R., Hardy, C., Nord,

W.R. (Eds.), Handbook of Organization Studies. Sage, Thousand Oaks, CA, pp. 175–190.

Tushman, M.L., Anderson, P., 1986. Technological discontinuities and organizational environments. Adminis-

trative Science Quarterly 31 (3), 439–476.

Van de Ven, A.H., 1993. The development of an infrastructure for entrepreneurship. Journal of Business

Venturing 8 (3), 211–230.

Venkataraman, S., 1997. The distinctive domain of entrepreneurship research. In: Kaatz, J.A. (Ed.), Advances in

Entrepreneurship, Firm Emergence, and Growth. JAI, Greenwich, CT.

Weick, K.E., 1995. Sensemaking in Organizations. Sage, Thousand Oaks, CA.

Wernerfelt, B., 1984. A resource-based view of the firm. Strategic Management Journal 5, 171–180.

Zimmerman, M.A., Zeitz, G.J., 2002. Beyond survival: achieving new venture growth by building legitimacy.

Academy of Management Review 27 (3), 414.

New to the game and questioning the rules: The experiences .../media/... · New to the game and...

Documents

Transcript of New to the game and questioning the rules: The experiences .../media/... · New to the game and...