Coming from Good Stock: Career Histories and New Venture Formation

Coming from Good Stock: Career Histories and New Venture Formation

By
M. Diane Burton, Jesper B. Sørensen, Christine Beckman
Research in the Sociology of Organizations.
2002, Vol. 19

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.