Boundary Formation in Emergent Organizations
An extensive literature in organizational theory discusses how established organizations shape and maintain their boundaries but offers little guidance as to how organizational boundaries emerge in the first place. This paper examines boundary formation in business startups using a nationally representative dataset of U.S. nascent entrepreneurs. We propose several distinct roles for individuals entering into entrepreneurial activity, distinguishing between "insiders" (owner-managers) who commit both time and financial resources to these startups and "outsiders" (including passive investors and advisors) who offer more limited resource commitments. Two important criteria demarcating organizational insiders and outsiders in emergent organizations are functionality and perceived trustworthiness. Our results suggest that boundary formation is more often based on a potential member's trustworthiness, as perceived by peers, than functionality, emphasizing considerations such as transaction cost minimization and uniqueness of resource contributions. We propose several mechanisms that may account for this result among nascent entrepreneurs, including a lack of economic sophistication, calculative trust, and the importance of social solidarity for founder recruitment. © 2007 Elsevier Ltd. All rights reserved.
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Related Subject Headings
- Business & Management
- 4410 Sociology
- 3507 Strategy, management and organisational behaviour
- 1608 Sociology
- 1503 Business and Management
Citation
Published In
DOI
ISSN
Publication Date
Volume
Start / End Page
Related Subject Headings
- Business & Management
- 4410 Sociology
- 3507 Strategy, management and organisational behaviour
- 1608 Sociology
- 1503 Business and Management