One of the challenges of organizational scholarship is defining when an organization begins to exist. Although the literature often borrows analogies from the biological realm, there is growing recognition that firm conception, gestation, and birth are complex constructs when applied to organizations. In this paper we take advantage of the rich data collected as part of the Panel Study of Entrepreneurial Dynamics II (PSED II) project to empirically examine the organizational gestation process and its outcomes. While there is agreement on the abstract meaning of both firm conception and firm birth, there is little agreement on the operational definitions of either. Drawing from the extant literature, we demonstrate how competing alternative operational definitions of “conception” and “birth” lead to very different conclusions about the duration of the gestation process and the overall rate of new firm births. We evaluate how four scholarly communities have conceptualized firm births: 1) entrepreneurship researchers who study the start-up process; 2) organizational ecologists who study the dynamics of organizational populations; 3) industrial organizational economists who are interested in economic transactions; and 4) labor market economists who are interested in employment. We review the relevant literature from these fields and demonstrate how their different operational definitions of firm birth lead to substantially different conclusions regarding the duration of the gestation period and the proportion of nascent ventures that achieve that status of a new firm.
Schoonhoven, Claudia B.; Burton, M. Diane; and Reynolds, Paul D.
"RECONCEIVING THE GESTATION WINDOW: THE CONSEQUENCES OF COMPETING DEFINITIONS OF FIRM CONCEPTION AND BIRTH,"
Frontiers of Entrepreneurship Research: Vol. 29
, Article 4.
Available at: http://digitalknowledge.babson.edu/fer/vol29/iss22/4