The Wharton School, U. of Pennsylvania, United States
Organizations in their infancy are more likely to adopt features driven by the social and technical needs of the environment around them, which then can become persistent imprints. While most work in this vein has looked at how these imprints are hard to change later, we argue that organizations that encounter exogenous crises and adaptation needs at the time of founding are imprinted with greater capabilities for future change of other kinds. We test this in the context of US startups in the period 1985-2014, and find that organizations that encountered a local natural disaster in the year post founding are associated with greater chances of technological and organizational pivots later in their lifetime. Yet such enhanced capability for change is a double-edged sword, also enhancing the organization’s failure chances long after the crisis itself has subsided. We discuss implications for literatures in organizational adaptation, imprinting, entrepreneurial geography, and exogenous crises and organizations, while offering insights for startups and investors that find themselves in such conditions.
