An investigation into organisational democracy in new ventures

Abstract

Organisational democracy resembles around structural and procedural aspects regarding decision-making, leadership, organisational structure and communication. Primarily, it is thought as an approach in which individual and organisational goals are balanced. Individuals primarily engage in entrepreneurial activity because of autonomy and flexibility; i.e., working in less mechanistic structures. Founders thereafter can create their organisational structure according to their individual values, goals and personality. Particularly in dynamic and more instable business environments organisational democracy appears to be a source of competitive advantage and positive performance. Our research question therefore asks: do entrepreneurs of new ventures follow principles of organisational democracy? Results from a comparative case-study among seven German high-tech start-ups reveal three distinct forms of ventures on the mechanistic-democratic continuum regarding leadership, decision-making, organisational structure and communication. This means that entrepreneurs do not necessarily impede democratic principles in their ventures but rather chose their strategic route in accordance with their self-perception as an entrepreneur, their growth aspirations and product/service offered.