Great oaks from little acorns grow: Strategies for new venture growth
This dissertation addresses a critical issue in organizational studies---new venture growth. Although large size confers many advantages, young firms find it difficult to grow because they face severe financial constraints and their founders are so crucial to their operations that founder-exit often threatens firm survival. Building on arguments about social embeddedness, I propose that new ventures overcome growth constraints and compensate for their meager financial resources by acquiring social resources such as legitimacy and status by mimicking the structures and activities of established firms, and by affiliating with high-status customers. I seek to answer three questions: How do social resources acquired by new ventures affect their growth rates? How do social resources moderate the impact of founder departure on new venture growth? What is the relative importance of social resources to new and established firms---that is, are social resources substitutes for financial resources? I answer these questions by analyzing firms in the New York and Chicago advertising industry. I acquired longitudinal data on advertising agencies and their customers from The Standard Directory of Advertising Agencies and The Standard Directory of National Advertisers and Ad $ Summary , respectively. Data on industry awards come from the Cannes Advertising Festival. Interviews with industry participants qualitatively augmented my analysis of these archival data.