Journal of Management History

Arthur Stinchcombe's “liability of newness”: contribution and impact of the construct

Gianpaolo Abatecola Roberto Cafferata Sara Poggesi
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Gianpaolo Abatecola Roberto Cafferata Sara Poggesi, (2012),"Arthur Stinchcombe's “liability of newness”:
contribution and impact of the construct", Journal of Management History, Vol. 18 Iss 4 pp. 402 - 418
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JMH
18,4 Arthur Stinchcombe’s “liability of
newness”: contribution and
impact of the construct
402
Gianpaolo Abatecola, Roberto Cafferata and Sara Poggesi
Department of Business Studies, University of Rome “Tor Vergata”,
Rome, Italy
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Abstract
Purpose – This conceptual paper aims at providing the readers of the Journal of Management
History with an evaluation of the overall impact of Arthur Stinchcombe’s liability of newness construct
on the management literature about organizational evolution over time.
Design/methodology/approach – The paper adopts an historical approach for discussing the
development of those theoretical and empirical trajectories which, drawing on Stinchcombe’s seminal
underpinnings, have been developed by scholars over the second half of the twentieth century. The
most recent enhancements on this topic are also discussed.
Findings – The analysis demonstrates that the impact of the liability of newness on the related
literature is great and twofold. On the one hand, it emerges that this concept has directly inspired a
number of subsequently formulated constructs, such as the liabilities of smallness, adolescence and
aging. On the other hand, it is evidenced that Stinchcombe’s seminal insights still constitute one of the
most fascinating bases for directing and positioning scholarly efforts within the organizational
evolution research domain to date.
Originality/value – The value of this paper is that it adopts a unique way for examining the
development of a number of theoretical frameworks and empirical inquiries variously associated with
the liability of newness over time. Three time decades are historically identified and the links among
them are deepened.
Keywords Liability, Management, Newness, Organizational evolution, Innovation,
Organizational structures, Management history
Paper type Conceptual paper

Journal of Management History
Vol. 18 No. 4, 2012
pp. 402-418
q Emerald Group Publishing Limited
1751-1348
DOI 10.1108/17511341211258747
Introduction
The outstanding American sociologist Arthur Stinchcombe has authored a number of
innovative and leading essays about organizational processes over the last four
decades. The ideas of this writer have played a pivotal role also for the development of
the management literature about organizational evolution (Cafferata, 2009; Hodgson,
2009; Hodgson and Knudsen, 2010; Breslin, 2011).
In providing a seminal explanation of the “struggle for survival” (Darwin, 1859)
between newborn and older organizations, Stinchcombe introduces the “liability of
newness” construct in 1965. Through this construct, he explains why organizations do
face the highest mortality rates within the earliest stages of their life cycle.
Although the originality and the potential of the liability stream of research
immediately emerge, it is only in the middle of the 1970s that this argument starts to be
systematically quoted and appreciated. In particular, much of the growing
organizational ecology literature refers to the liability of newness as one of the most
 significant theoretical bases for developing further conceptual and empirical Stinchcombe’s
trajectories on organizational development and mortality. “liability of
How has the liability stream of research evolved over time? What is the influence of
Stinchcombe’s seminal construct to date? Our conceptual article adopts an historical newness”
approach (e.g. Dagnino and Quattrone, 2006; Whiteley, 2006; van Fleet, 2008; Cafferata,
2010; Cummings and Bridgman, 2011) to provide the readers of the Journal of
Management History with an evaluation of the impact of the liability of newness on 403
research and practice about organizational evolution. In particular, the location of the
conceptual and empirical research reported in this paper is presented in its historical
context following a practice pioneered by Mayhew (1987)[1].
Thus, we divide our paper in three main sections. First, we trace the initial
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conceptualization of the liability of newness. Second, we identify three time decades

(1970s-1980s; 1990s; 2000s) to investigate what links exist between this construct and a
number of subsequently related constructs, such as the liabilities of smallness,
adolescence and aging. Third, we discuss the main implications of Stinchcombe’s
tenets for research and practice about organizational evolution to date. In particular,
we demonstrate that his seminal insights still constitute one of the most fascinating
bases for currently directing and positioning efforts within this field.

The 1960s: the liability of newness

Stinchcombe plays a pivotal role in management studies, with both his conceptual and
empirical studies ranging over school conflicts and police practices, craft organizations
and industrial efficiency, farm management, offshore oil exploration, financial
markets, and Caribbean slavery.
In his 1965 milestone essay, entitled Social Structure and Organizations,
Stinchcombe basically draws on the French structuralism of the 1950s and 1960s of
the twentieth century (e.g. Lévi-Strauss, 1949) to analyze why and how organizations
originate, evolve and die[2]. Within this essay, central role is assumed by
Stinchcombe’s formalization of the “liability of newness” construct.
The liability of newness predicts that, although monotonically declining with age,
failure rates are high in the first years of the organizations’ lifecycle[3]. This construct
tremendously expands the current thinking around organizational birth and mortality.
In fact, the liability of newness shifts the attention of both scholars and practitioners to
the understanding of not only why and how new business ideas can emerge, but also of
why and how new business ideas can fail (Bonazzi, 2008). In particular, Stinchcombe
argues that infant mortality is basically caused by the lack of “learning experience”
(Stinchcombe, 1965, p. 148):
New organizations, especially new types of organizations generally involve new roles, which
have to be learned; [. . .] The process of inventing new roles, the determination of their mutual
relations and of structuring the field of rewards and sanctions so as to get the maximum
performance, have high costs in time, worry, conflict, and temporary inefficiency.
Stinchcombe substantially maintains that newborn organizations generally suffer
from the low average quality of performance because they initially lack experience. If
they survive, their experience learning curve increases with time, thus fostering the
development of significant survival determinants, such as the exploration and
 JMH exploitation of successful “routines” (Nelson and Winter, 1982; Hodgson and Knudsen,
18,4 2004).
Stinchcombe also contends that new organizations possess minor survival chances
than older organizations because they must rely on the cooperation of “strangers”
(Stinchcombe, 1965, p. 150):
New organizations must rely heavily on social relations among strangers. This means that
404 relations of trust are much more precarious in new than old organizations; [. . .] one of the
main resources of old organizations is a set of stable ties to those who use organizational
services. Old customers know how to use the services of the organization, have built their
own social systems to use the old products or to influence the old type of government, are
familiar with the channels of ordering, with performance qualities of the product, with how
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the price compares, and know the people they have to deal with – whom to call up to get
action, for instance.
Stinchcombe argues that trust matters for building stable ties with other organizations
(e.g. potential suppliers and/or customers) within the firm’s specific task environment,
or with other important stakeholders in the more general social environment
(e.g. governmental regulators). In both these cases, he argues that time is needed for
trust to exploit into long-term formal relationships and this implies the negative age
dependence within mortality rates.
Moreover, Stinchcombe argues that trust matters also as far as the potential
building of organizational capabilities is concerned. According to his thought, trust
enhances collective action, thus its lack among the firm’s employees is problematic at
the very beginning of the organizational life cycle. As time passes, trust tends to
develop within the internal work groups. Therefore, the organizational capabilities
improve, because an important source of conflicts has been reduced.
Finally, Stinchcombe seminally stresses the importance of a series of external
factors, which may positively affect people’s capacity to form new organizations, as
well as the initial survival chances of their start-ups. Table I summarizes these factors.
As Table I illustrates, Stinchcombe firmly believes that social and economic
macro-structures can play a pivotal role in enhancing the survival chances of infant
firms.

The 1970s-1980s: newness and smallness

Stinchcombe asserts that, although conventionally applicable to the aging of
individual organizations, the liability of newness construct can also be associated with
entire populations of similar organizations. This issue represents one of the main
reasons why the liability of newness greatly influences various tenets related to the
theoretical and empirical research developed by the organizational ecology literature
(Hannan and Freeman, 1977) since the middle of the 1970s[4].
First, ecologists are strongly committed in testing the consistence of the liability of
newness. Despite minor exceptions (e.g. Carroll and Huo, 1986; Singh et al., 1986), its
existence finds support within a number of industries, such as newspaper firms
(e.g. Carroll and Delacroix, 1982; Freeman et al., 1983), labor unions and semiconductor
firms (Freeman et al., 1983), as well as retail, wholesale and manufacturing firms
(Carroll, 1983).
Second, ecologists put relevant attention to the understanding of what
macro-economic conditions can foster the initial founding of newborn enterprises,

General literacy and specialized
advanced schooling
Urbanization
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Stinchcombe’s
“It enables more alternatives to be posed to more people. It
facilitates learning new roles with no nearby role model. It “liability of
encourages impersonal contact with customer. It allows newness”
money and resources to be distributed more easily to
strangers and over distance. It provides records of
transactions so that they can be enforced later, making the
future more predictable” (pp. 150-151) 405
“Urban agglomeration is always made up of people who are
mutually strangers, and social devices for regularizing these
relations tend to be invented in cities [. . .] This facilitates the
formation of new organizations and eases the transfer of

customer from old to new suppliers and products” (p. 151)

Money economy
Political revolution
Density of social life, including an
already rich organizational life
Source: Stinchcombe (1965)
“It liberates resources so that they can be more easily
recruited by new organizations, facilitates the formation of
free markets so that customers can transfer loyalties,
depersonalizes economic social relations, simplifies
calculation of the advantage of alternative ways of doing
things, and allows more precise anticipation of the
consequences of future conditions on the organization”
(p. 152)
“It can drastically shift the relative advantage of vested
interests and new organizations by changing the normative
basis on which interests are vested and by redirecting the
armies and police that are the means of vesting” (p. 152)
“The level of organization experience of a population is a
main determinant of their capacity to form new
organizations [. . .] More generally, the richer the social life
of a group, the more likely it is to have the resources to build
new organizations” (p. 152) Table I.
The influence of external
factors

both at national (e.g. Wholey and Brittain, 1986) and community (e.g. Marrett, 1980)
level.
Most of their findings are consistent with Stinchcombe’s arguments. In particular,
some researchers evidence that those institution-based buffers which can attenuate the
liability of newness are somehow based on the acquisition of an adequate level of
“legitimacy” by the populations (e.g. Wievel and Hunter, 1985; Singh et al., 1986).
Third, ecologists are constantly engaged in implementing their analytical tools for
evaluating the liability of newness. For example, one of the major troubles with the
initial empirical research on this topic is the questioning of how the concept of
organizational death can be effectively measured (e.g. Freeman et al., 1983).
In the 1980s, testing the liability of newness starts to be mainly associated with
contemporarily considering the dimension of firms. This kind of ecological research
warrants additional discussion, as it historically plays a pivotal role among the most
relevant extensions to Stinchcombe’s seminal foundations (Baum, 1999).
One of the first empirical evidences about the relationship between age and size is
provided by Freeman et al. (1983), who interestingly find that the increasing of size can
somehow reduce – even if it cannot completely eliminate – the effects of the liability of
newness.
 JMH Thus, ecologists argue that, in order to fully understand the impact of the liability of
18,4 newness, further tests should also take into account the potentially
mediator/moderator role of size itself[5].
In 1986, Aldrich and Auster formulate the “liability of smallness” construct more
formally. This kind of liability mainly emerges from:
.
the lack of financial resources, that partially derives from the absence of
406 creditors’ strong financial support to small firms;
.
the impossibility for small firms to attract the same skilled work force that large
firms can, as the latter organizations are able to provide better perceived
long-term employments and career advancements; and
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.
the difficulty for small firms to meet high interest rate payments and to handle
the administrative costs pertaining to the compliance with governmental
regulations.

The liability of smallness becomes largely supported by empirical research in the

1980s (e.g. Carroll, 1983, 1984) and, over the years, its existence comes to be considered
by ecologists not only as a simple alternative to the liability of newness, but much more
as one of its most probable explanations. For example, evidence emerges that failure
rates decline with increased size as for wineries (Delacroix and Swaminathan, 1991),
day-care centers (Baum and Oliver, 1991), hotels (Baum and Mezias, 1992) and health
management organizations (Wholey et al., 1992).
It has also to be noticed that measuring separately the effects of age and size on
initial death rates presents some difficulties, as it is acknowledged (e.g. Wholey and
Brittain, 1986) that most of the newly established firms tend to be small at the very
beginning of their life cycle. Nonetheless, newness and smallness are generally found
to be contemporary existing, although the effect of newness on death rates results often
stronger (e.g. Halliday et al., 1987).

The 1990s: adolescence and aging

In the 1990s, the liability of smallness construct continues to find wide support. In this
decade, however, the scholarly debate about Stinchcombe’s foundations soon becomes
mostly dominated by the discussion around the “liability of adolescence” construct,
introduced by Fichman and Levinthal (1991).
In its first conceptualization, this kind of liability prospects a relationship between
age and mortality rates that turns to be partially diverging from that predicted by the
liability of newness. In particular, Fichman and Levinthal (1991, p. 448) assert that
newly established firms may have:
[. . .] an initial stock of assets, which (depending on the particular context) can include
favorable prior beliefs, trust, goodwill, financial resources, or psychological commitment (p.
442) [. . .] The greater the initial assets of the relationship or organization, the greater will be
the buffering from early selection pressures (p. 448).
The depicted initial buffering is defined as the “honeymoon” period, whose duration
may range from a few months to some years, according to the initial magnitude of the
firm’s assets. Later:
 [. . .] as environmental selection pressures on organizations are brought to bear or mismatches Stinchcombe’s
in relationships become evident, the “hazard rate” increases. As selection pressures continue
to weed out unfit organizations or poor matches dissolve, the viability of the surviving “liability of
matches and organizations increases. Furthermore, adaptation processes and the newness”
development of relationship-specific capital make relationships less vulnerable to threats
to their survival (England and Farkas, 1986; Levinthal and Fichman, 1988). As a result, the
hazard rate should decline with time (p. 447).
407
In this modified liability of newness construct, the risk of failure is quite constantly low
during the honeymoon phase; it then increases for a certain period (i.e. adolescence) of
the new ventures’ life cycle; having reached a peak, it starts to decline. It has to be
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stressed that this decline is assumed for the same reasons that underlie the liability of
newness construct.
The liability of adolescence concept raises a shift in the way the death rate is
associated with the age of newborn firms. In fact, while Stinchcombe’s seminal
propositions prospect a monotonic decline within failure rates, the liability of
adolescence predicts a non-monotonic inverted U-shaped pattern. Figure 1 summarizes
these differences.
One of the first supports to the liability of adolescence derives from the
well-regarded empirical research performed by Brüderl and Schüssler (1990) on a
sample of German firms in the area of Munich and Upper Bavaria during the years
between 1980 and 1989.
Over the decade, the comparison between newness and adolescence rapidly grows.
No winner formally emerges, as some findings support the former perspective
(e.g. Lehrman, 1994; Nass, 1994), while some others support the latter view (e.g. Kale
and Arditi, 1998). The tentative reconciliation of these perspectives arrives at the end of
the decade trough the brilliant viewpoint provided by Henderson (1999, p. 283):

Figure 1.
Newness versus
adolescence
 JMH Common to both the newness and the adolescence perspectives is that the early years of a
firm’s life are the most hazardous, and failure rates eventually decline with age. They differ
18,4 only about whether failure rates peak at founding or several years later.
Henderson recognizes that, taking the overall firm’s lifecycle into account, only minor
differences exist between newness and adolescence. In fact, both these views converge
in arguing that enterprises do face the significant risk of being selected out from their
408 competitive environment more in the first years of their existence, than later.
While adolescence can be interpreted as integrating, rather than opposing, newness,
both these views result in contrast to the “liability of aging”, which is another age
liability construct also predicted by some scholars (e.g. Barnett, 1990; Baum and Oliver,
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1991; Barron et al., 1994) in the first half of the 1990s.

The liability of aging basically assumes that the firm’s failure rate increases, rather
than decreases, with its age. This assertion finds support as for telephone companies
(Barnett and Amburgey, 1990), brewpubs (Carroll and Swaminathan, 1992) and credit
unions (Amburgey et al., 1994). “Senescence” and “obsolescence” constitute two
different, although related, forms that this kind of liability can assume (Barron et al.,
1994, p. 387):
Senescent processes cause internal decay that increases failure rates independent of
environmental conditions and this is a causal effect of aging [. . .] Obsolescent processes do
not directly increase failure rates and thus are not, strictly speaking, direct causal effects of
age. Instead, age serves as a proxy for the gap between relatively inert organizations and
changing environments (Meyer, 1990). Unlike senescence, obsolescence should not penalize
organizations unless they are stressed by changing or turbulent conditions. Senescence is
ubiquitous, while obsolescence occurs only during times of environmental upheaval.
While the observations within the first half of the 1990s consider aging, in terms of
both senescence and obsolescence, as openly contrasting to both newness and
adolescence, some works published in the second half of the decade prospect a more
convergent – and somehow adaptive – interpretation (e.g. Ranger-Moore, 1997). In
particular, it is assumed that the effect of age on failure rates mostly depends on
whether time increases the overall organizational learning or not. According to Baum
(1996, p. 83):
The liabilities of newness, adolescence, and obsolescence can be treated as complementary
rather than competing organizational processes if one is able to understand the contingency
factors that cause one, the other, or some combination of these models to predominate.
Among those scholars that follow Baum’s advice, Henderson (1999) produces the most
interesting research results. Studying the firms’ mortality rates within the US
computer industry between 1975 and 1992, he finds that the prevalence of
newness/adolescence or aging (obsolescence) is contingent to the kind of technological
strategy developed by the sampled firms. In his study, “proprietary” strategists exhibit
a liability of obsolescence in their failure rates, while “standard-based” strategists
exhibit a liability of adolescence[6].
Henderson draws on his results for prospecting that other factors, such as
reliability, reproducibility, social legitimacy and technological development, may
contingently affect the relationship between age and mortality rates. Somehow, he
enlarges Stinchcombe’s seminal investigation on what factors can contrast the liability
of newness, by suggesting what factors could direct the death rate of firms towards
 newness, adolescence or aging. Much of the research within the new century relies on Stinchcombe’s
this call for positioning its investigations. “liability of
newness”
The 2000s: the relationship between age and resources/capabilities
In the new century, the liabilities of newness, adolescence and aging continue to receive
relevant attention within the scientific community. Indeed, scholars partially shift their
studies from strictly verifying what kind of liability effectively exists (e.g. Michael and 409
Sung, 2005) to substantially understanding how to face with the problems associated
with each of these liabilities. In sum, research within this field takes different, but
related directions.
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A number of studies start to follow the call for research, which, launched by
Eisenhardt and Schoonhoven (1990), specifically regards the possible relationship
between the liability of newness and the resource based view of the firm. In particular,
trying to fill what they prospected as a specific literature gap, Eisenhardt and
Schoonhoven seminally discovered that some features of their sampled firms’ founding
team, as well as the characteristics of the market in which these firms competed, were
able to mitigate the liability of newness.
Following this call, Bruton and Rubanik (2002) analyze the death rates and survival
chances of high technology start-up firms in the Russian transitional economy. They
find that some factors, such as the firms’ top management team largeness and
capability to integrate internal resources, as well as the firms’ product innovativeness,
counteract the liability of newness within their investigated sample.
Thornhill and Amit (2003) study the determinants of death rates at different stages
of the life cycle within a sample of Canadian enterprises. Interesting results emerge. On
the one hand, the younger failures can be attributable to the deficiencies that often
regard the managerial knowledge and the financial management capabilities of the
newborn firms. On the other hand, the older failures can be attributable to a wider
misalignment between the resources and capabilities that the mature firms possess and
the environmental changes that eventually occur. This happens especially if these
changes are not somehow anticipated.
Choi and Shepherd (2005) focus on how the external and internal stakeholders’
perceptions of “newness as a liability” can play a pivotal role in enhancing the
start-ups’ survival chances. They find that these perceptions determine the level of the
stakeholders’ “support” to the start-ups. Defined as the likelihood that the stakeholders
will commit to a long-term relationship with the organization, thus enhancing its initial
stability, support turns to be very important in the earliest stages of the firm’s lifecycle.
Choi and Shepherd (2005) observe that the level up to which the support to the firms
is given is determined not only by the physiological age of the firms, but also – and
more relevantly – by the stakeholders’ perceptions about the firms’ capability to
appear “mature” while facing with their problems of initial founding.
Sørheim (2005) demonstrates that the maturity of the start-ups’ entrepreneurial
team counts also for its possibility of attracting those business angels that can properly
reduce the liability of newness. Furthermore, the overall “appealing” capabilities of the
founding entrepreneurial team, thus their potential impact on the start-ups’ survival
chances, are relevantly affected also by the previous entrepreneurial experiences of
both the team’s founder (Politis, 2008) and outside directors (e.g. Certo et al., 2001; Kor
and Misangyi, 2008).
 JMH Aspelund et al. (2005), as well as Esteve-Perez and Manez-Castillejo (2008), explore
18,4 the resource/capability determinants of new ventures’ survival within the
Scandinavian technology and Spanish manufacturing industries respectively. In
both these studies, the technological commitment through R&D expenditures comes to
be the most relevant survival factor, although the former study supports the liability of
newness, while the latter work finds higher support for the liabilities of adolescence
410 and aging.
Apart from testing the relationship between the liability of newness and the
resource based view of the firm, other specific, although still sparse, research directions
emerge.
For example, by associating the underpinnings of Burns and Stalker’s (1961)
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“contingent structural theory” with Stinchcombe’s arguments, Sine et al. (2006) focus
on the choice of specific organizational structures as capabilities for potentially
reducing the liability of newness. In particular, these scholars examine the effect that
choosing an “organic” or “mechanistic” organizational structure can have on the
performance of new ventures in the Internet industry during the years 1996-2001.
While Burns and Stalker (1961) argued that, in dynamic economic sectors, firms
with organic structures outperform firms with more mechanistic structures, Sine et al.
(2006) find opposite evidence. In fact, they discover that the new ventures with
mechanistic structures (i.e. with higher founding team formalization, specialization,
and administrative intensity) outperform the new ventures with organic structures.
Deeds and Rothaermel (2003) examine the relationship between the age of a
“strategic alliance” and its performance within the US bio-technology industry. They
detect a liability of adolescence, with the initial honeymoon period deriving from the
initial endowment of social capital or goodwill. Similarly, Mudambi and Zahra (2007)
study the connections between the liability of newness and the liability of
“foreignness”, when international strategic alliances are chosen as the specific entry
mode into foreign markets. Again, they find that those new ventures that are composed
of top management teams characterized by adequate international experience and
technological capabilities, are more likely to survive.

Discussion and implications for research and practice

Following Charles Darwin’s (1859) theory, studies on evolution have been developed
also by the scholars of social sciences and have influenced the management literature.
Still, the contribution of “Darwinism” to the understanding of how complex
organizations evolve remains controversial to us (Hodgson, 2009; Breslin, 2010;
Cafferata, 2010; Hodgson and Knudsen, 2010). On the one hand, Classical Darwinists
basically maintain that organizations are “object” of evolution. On the other hand,
Contemporary Unorthodox Darwinists argue that organizations can be both “object”
and “subject”.
This conceptual paper has demonstrated that Arthur Stinchcombe occupies an
important niche in our intellectual history, as it has shown that this writer’s
contribution to the management literature on organizational evolution has been great
over the last 50 years. In this section, we discuss the most relevant implications of
Stinchcombe’s ideas for both research and practice in this area.
First, it has been recently evidenced (e.g. Cafferata et al., 2009) that the liability of
newness construct is still widely accepted within the scientific community to date. Our
 work has pointed out that the number of subsequent theoretical constructs Stinchcombe’s
(e.g. smallness, adolescence and aging) directly related to Stinchcombe’s seminal “liability of
underpinnings is very significant too.
Second, 1965 also sees the publication of Campbell’s Variation and Selective newness”
Retention in Socio-cultural Evolution. Along with the works by Alchian (1950), Hawley
(1950) and Friedman (1953), this publication has provided a good deal of the intellectual
basis for the evolutionary agenda in both organizational ecology and evolutionary 411
economics (Malerba, 2006). In this regard, one of the most relevant values of the
liability stream of research is the capacity to be properly embedded within the
“variation-selection-retention” ecological approach to the studying of how
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socio-cultural evolution can work[7].

Third, in his 1965 work Stinchcombe also asserts that organizations founded in a
given external environment often maintain their founding “imprint” primarily because
“traditionalizing forces, the vesting of interests, and . . . ideologies may tend to preserve
the structure” (Stinchcombe, 1965, pp. 168-169). Although most of the subsequent
ecological studies quoted in this paper have supported this hypothesis, diffusely
labeled as “imprinting” (or “historical causation”), these studies have substantially
focused on resource and market/industry environments. Instead, despite some recent
attempts (e.g. Lounsbury and Ventresca, 2002; Johnson, 2007; Marquis and Huang,
2010), relatively little attention have been paid to the institutional components of firms’
environment, such as the public policy and cultural factors seminally introduced by
Stinchcombe. Thus, although the links between organizational ecology and
neo-institutionalism (Di Maggio and Powell, 1983) in sociology have grown
substantially, there is a need to discuss how institutions can grow as
“variation-selection-retention” related factors and how this impacts or relates to
liability issues (Mahony and Thelen, 2010).
Fourth, Stinchcombe’s “imprinting” hypothesis can more generally provide a
ground basis for our comprehension of how the mechanisms of “path dependence”
really work. Stemming from Darwin, we know that history counts in predicting how
living beings evolve. Management scholars have widely asserted that history plays a
pivotal role also for the explaining of how firms adapt. Thus, specific investigations on
organizational path dependence have been gaining momentum over the last 15 years.
Diffusely used as a synonym of historical pattern, path dependence has been mostly
referred to as a metaphor for showing all those types of imprinting effects of the past
on corporate behavior. Nevertheless, path dependence can still be considered, for many
aspects, as a “black box”. This is why specifically addressing its theoretical nature
from a decision making point-of-view constitutes an important call for research,
although it has recently received much more focused efforts (e.g. Sydow et al., 2009).
Fifth, the historical method used within this paper allows to maintain that while the
research commitment within the second half of the twentieth century has been mostly
devoted to testing – and eventually integrating or confuting – the consistence of the
liability of newness construct, the most recent research efforts have shifted their
attention towards the discovering of those capabilities that could counteract it. In this
regard, we have shown that the relationship between the liability stream of research
and the resource based/dynamic capabilities view of the firm is becoming rapidly
robust. Nonetheless, scholars who adopt the dynamic capabilities perspective
 JMH (e.g. Helfat et al., 2007; Teece, 2009) currently maintain that the exploring of this
18,4 relationship needs appropriate consolidation in the future.
All the insights from Stinchcombe presented above can be of great value also for
practice, in particular for current or prospective entrepreneurs.
First, it has been shown that newness, smallness, adolescence and aging have been
extensively explored using US data (e.g. Freeman et al., 1983; Henderson, 1999), while
412 empirical analyses drawing on data from European and transitional economies are still
limited (Cafferata et al., 2009). This seems to represent a possible limitation to the
practical extensions of the liability stream of research, especially if we take into
account the influence that nationality and culture generally have on those
entrepreneurial decisions regarding the earliest development of firms (Hofstede,
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2001). Thus, future research focusing on the relationship between the liability of
newness of non-US start-ups and the socio-cultural features of their founders looks
promising.
Second, the ever-growing interest by scholars and practitioners to the liabilities of
entrepreneurial start-ups is justified by the relevance that start-ups have for countries,
as they may represent an important source of employment. We know that some
governments encourage start-ups by means of a growing number of incentives, policies
and programs. In this regard, the founding and survival of new ventures has been
generally proven to be associated with a number of determinants, such as: extent of
communal business taxes, availability and price of trade areas, transport connections
of communities, closeness to universities and educational institutions, gross domestic
product per capita, average degree of education and endowment with infrastructure
(Diachon et al., 2007). Still, evidences about these factors seem currently fragmented
and their prospective systematization appears challenging. Moreover, differences
between US, European and transitional economies exist. Policy makers should
consider them when they evaluate governmental programs and policies aimed at
encouraging and sustaining new businesses.
In sum, it seems to us that Stinchcombe’s ideas still constitute a very relevant
standpoint in the research agenda of both scholars and practitioners to date.

Notes
1. Mayhew specifically chronicles the origins of the contemporary institutional theories in the
writings of Veblen and Commons about the US in the 1980s.
2. It has to be pointed out that, differently from Stinchcombe, interesting views in the 1980s
(e.g. Pondy and Boje, 1980) try to capture the mechanisms of organizational evolution also by
following the post-structural perspective (e.g. Derrida, 1967) on organizations.
3. It is worth-noting that, in 1965, Emery and Trist also publish their essay entitled The Causal
Texture of Organizational Environments. In this essay, the analysis of how evolution works
within those environments that these scholars qualify as “turbulent”, presents significant
linking pins with Stinchcombe’s general view of organizational infant mortality.
4. It is known that the organizational ecology literature primarily seeks to understand how and
why entire populations of firms come to life, prosper and ineluctably die.
5. Basically, the construct of “organizational inertia” (Hannan and Freeman, 1984) supports
this view.
 6. “Proprietary strategists offer products whose key technologies are internally developed and Stinchcombe’s
firm-specific . . . Standards-based strategists offer products whose key technologies conform
with open and publicly available specifications” (Henderson, 1999, p. 284).
“liability of
7. According to the ecological approach, evolutionary change involves essentially three key
newness”
processes (e.g. Hodgson, 2010; Hodgson and Knudsen, 2006; Breslin, 2008): i) variation of
genotypes; ii) selection of consequent phenotypes; and iii) retention of underlying genotypes.
413
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Further reading
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About the authors

Gianpaolo Abatecola, PhD, is Research Fellow in Business Management at the University of
Rome Tor Vergata. In 2010, he served in the Annual Conference of the European Academy of
Management as the organizational coordinator of the track on “Evolutionism, Darwinism and the
theory of the firm”. His research interests mainly lie in the field of organizational evolution,
corporate restructuring, decision making and management history. Gianpaolo Abatecola is the
corresponding author and can be contacted at: gianpaolo.abatecola@uniroma2.it
 JMH Roberto Cafferata is Professor of Management at the University of Rome Tor Vergata and the
Past President of the Accademia Italiana di Economia Aziendale (Italian Academy of Business
18,4 Administration and Management). Professor Cafferata has directed a number of national and
international research projects and currently serves in the editorial board of management and
organization theory journals. In 2010 and 2011, he chaired the track on “Evolutionism,
Darwinism and the theory of the firm” in the Annual Conference of the European Academy of
Management. His research interests mainly lie in the field of organizational evolution, strategic
418 and organizational change, firm’s lifecycle and internationalization.
Sara Poggesi (PhD) is Research Fellow in Business Management at the University of Rome
Tor Vergata. In 2010, she served the Annual Conference of the European Academy of
Management as member of the local organizing committee and as the organizational coordinator
of the track on “Evolutionism, Darwinism and the theory of the firm”. Her research interests
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mainly lie in the field of organizational behavior, corporate governance and service management.

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