Jesper B. Sørensen

The strength of corporate culture and the reliability of firm performance

Prevailing research claims that strong corporate cultures improve firm performance by facilitating internal behavioral consistency. This paper addresses an unexamined implication of this argument by analyzing the effect of strong corporate cultures on the variability of firm performance. This relationship depends on how strong cultures affect organizational learning in response to internal and external change. I hypothesize that strong-culture firms excel at incremental change but encounter difficulties in more volatile environments. Results of analyses of a sample of firms from a broad variety of industries show that in relatively stable environments, strong-culture firms have more reliable (less variable) performance. In volatile environments, however, the reliability benefits of strong cultures disappear.

Coming From Good Stock: Career Histories and New Venture Formation

We examine how the social structure of existing organizations influences entrepreneurship and suggest that resources accrue to entrepreneurs based on the structural position of their prior employers. We argue that information advantages allow individuals from entrepreneurially prominent prior firms to identify new opportunities. Entrepreneurial prominence also reduces the perceived uncertainty of a new venture. Using a sample of Silicon Valley start-ups, we demonstrate that entrepreneurial prominence is associated with initial strategy and the probability of attracting external financing. New ventures with high prominence are more likely to be innovators; furthermore, innovators with high prominence are more likely to obtain financing.

Can class analysis be salvaged

The ongoing retreat from class analysis can be attributed to the declining appeal of aggregate representations of class coupled with the virtual absence of any disaggregate alternatives. When local solidarities are ignored, the weakness of conventional aggregate models is easily misinterpreted as evidence of generic destructuration, and standard postmodernist formulations are accordingly difficult to resist. Although local structuration is often regarded as sociologically trivial, the available evidence suggests that such class analytic processes as closure, exploitation, and collective action emerge more clearly at the level of disaggregate occupations than conventional aggregate classes.

Bureaucracy and Entrepreneurship: Workplace Effects on Entrepreneurial Entry

Using a study of the relationship between bureaucratic work environments and individual rates of entrepreneurship, I revisit a fundamental premise of sociological approaches to entrepreneurship, namely, that the social context shapes the likelihood of entrepreneurial activity, above and beyond any effects of individual characteristics. Establishing such contextual effects empirically is complicated by the possibility that unobserved individual traits influence both the contexts in which people are observed and their likelihood of becoming entrepreneurs. This paper presents the first systematic study of the effects of bureaucracy on entrepreneurship that accounts for such unobserved sorting processes. Analyses of data on labor market attachments and transitions to entrepreneurship in Denmark between 1990 and 1997 show that people who work for large and old firms are less likely to become entrepreneurs, net of a host of observable individual characteristics. Moreover, there is strong evidence to suggest that this negative effect of bureaucracy does not spuriously reflect self-selection by nascent entrepreneurs into different types of firms. An important implication of this finding is that the structure of organizational populations affects the supply of nascent entrepreneurs, as well as the availability of entrepreneurial opportunities.

Closure and Exposure: Mechanisms in the Intergenerational Transmission of Self-employment

Insights into the origins of entrepreneurial activity are gained through a study of alternative mechanisms implicated in the tendency for children of the self-employed to be substantially more likely than other children to enter into self-employment themselves. I use unique life history data to examine the impact of parental self-employment on the transition to self-employment in Denmark and assess the different mechanisms identified in the literature. The results suggest that parental role modeling is an important source of the transmission of self-employment. However, there is little evidence to suggest that children of the self-employed enter self-employment because they have privileged access to their parents financial or social capital, or because their parents’ self-employment allows them to develop superior entrepreneurial abilities.

Organizations as Fonts of Entrepreneurship

Most entrepreneurs emanate from established organizations, yet systematic theorizing about the ways in which organizations shape the entrepreneurial process has only recently begun to emerge. We provide a framework for organizing this emerging literature. We focus on four different metaphors in the literature for how organizations matter in the entrepreneurial process and suggest promising avenues for future research.

FROM CONCEPTION TO BIRTH: OPPORTUNITY PERCEPTION AND RESOURCE MOBILIZATION IN ENTREPRENEURSHIP

Studies consistently find regions dense in concentrations of similar firms to be fecund sources of new firms of the same kind. This pattern persists even in industries with negative returns to geographic concentration. Why do these patterns persist? On the one hand, social networks may constrain entrepreneurs’ opportunities, making it difficult to mobilize resources in more attractive locations. On the other hand, nascent entrepreneurs may systematically misperceive opportunities in such a way as to lead them to continue founding attempts in overcrowded regions. To distinguish between these two processes, we analyze a unique set of data on television stations that contains information on both attempts to start new stations, as well as successful foundings. Our exploratory analysis suggests that nascent entrepreneurs do consistently misinterpret information related to population dynamics. These patterns could easily contribute both to industrial agglomeration and to the fragility of Red Queen dynamics. We discuss the implications of these results both for future research and for public policy.

The organizational demography of racial employment segregation

This article examines how workers respond to changes in the racial composition of their workplaces. An analysis of the job histories of new hires into multiple workgroups within a single firm reveals path dependence in the effects of group composition on turnover. Exit rates are inversely related to the level of same-race representation at the time of organizational entry, and increase when workers experience declines in representation. However, turnover rates do not decline in response to increases in representation. The challenge of workplace racial integration therefore lies not simply in eliminating discrimination in hiring, but also in managing the post-hire dynamics of changes in group composition. Implications of the asymmetric effects of compositional change for the literature on organizational demography are also discussed.

Corporate Demography and Income Inequality

We examine the relationship between income inequality and corporate demography in regional labor markets and specify two mechanisms through which the number and diversity of employers in a labor market affect wage dispersion. Vertical differentiation, or variation in the ability of organizations of a particular kind to benefit from labor inputs, amplifies inequality through quality sorting, as the most productive employees in a particular domain pair with the most productive employers. Increasing horizontal differentiation—variation in the kinds of organizations—reduces inequality as individuals can more easily find firms interested in their distinctive attributes and talents. Our analysis of Danish census data provides support for each thesis. Increased numbers of organizations operating within an industry in a region, a proxy for vertical differentiation, increases wage dispersion in that industry-region. Variation in wages, however, declines with increased horizontal differentiation among employers; this is measured by the diversity of industries offering employment within a region and the variance in firm sizes in an industry-region.

The Use and Misuse of the Coefficient of Variation in Organizational Demography Research

Demographic heterogeneity is a central theoretical construct in organizational demography research. The most commonly used measure of demographic heterogeneity is the coefficient of variation. The author critically evaluates the rationale for using this measure and shows that the use of the coefficient of variation raises a number of methodological and interpretive problems. Empirical analyses of turnover suggest that using the coefficient of variation may lead to incorrect conclusions about the effects of demographic heterogeneity.Demographic heterogeneity is a central theoretical construct in organizational demography research. The most commonly used measure of demographic heterogeneity is the coefficient of variation. The author critically evaluates the rationale for using this measure and shows that the use of the coefficient of variation raises a number of methodological and interpretive problems. Empirical analyses of turnover suggest that using the coefficient of variation may lead to incorrect conclusions about the effects of demographic heterogeneity.