Organizational Learning of Cultures: The Spawned Culture Effects in the U.S. IT Industry

Abstract

Scholars often compare new ventures to babies, but most founders are experienced and enculturated even if their startups are young—a paradox of new ventures. New ventures start in a cultural void, but their founders are often already encultured to the parent organization’s cultural codes. This study investigates whether founders fill the cultural void with the cultural repertoires of their parent organization. Founders enculturated in prior employment are more likely to adopt familiar cultural repertoires, resulting in a spawned startup becoming culturally similar to its parent. This spawned culture effect is stronger when founders are more socialized (have longer tenure), when the parent culture is more legitimate (less atypical) and coherent (has high cultural congruency). Finally, this study explores which cultural repertoires predict better performance and whether those are more likely to be inherited by spawned startups. If less likely to be inherited, this implies that organizational culture can be a source of a firm’s competitive advantage. These ideas are examined in a longitudinal analysis of 3,570 startups in the U.S. IT industry from 2008 through 2019. Implications for the study of organizational learning, organizational culture, and entrepreneurship are discussed.