Uber has been having a bad time. From reports that venture capital has been propping up a flawed business model, to evidence of racial bias in pickups, rate cuts during a New York taxi strike leading to the #DeleteUber movement, and recent accounts of sexual harassment alongside conflicts with drivers, the romance of Silicon Valley innovation and “disruption” in the company is on the decline. But while this may seem like a fall from grace, research shows these problems are tragically normal. They often plague a wide range of companies because of their organizational structures, and tech start-ups are no exception.
Classic research shows that when a founder also acts as the CEO, it can cause trouble for a company. While they may have a knack for developing innovative products or services, founders don’t always have the management skills to run a large, successful business as a complex organization.
- Josef Brüderl, Peter Preisendörfer, and Rolf Ziegler. 1992. “Survival Chances of Newly Founded Business Organizations.“ American Sociological Review 57(2): 227-242.
While teams of entrepreneurs can start a businesses together, they often choose who will ultimately run the company. This process is not neutral. Gender inequality in business leadership can emerge from these decisions because friends and family members in these teams often take gendered assumptions for granted.
- Tiantan Yang and Howard E. Aldrich. 2014. “Who’s the Boss? Explaining Gender Inequality in Entrepreneurial Teams.” American Sociological Review 79(2): 303-327.
Racial and gender discrimination in hiring and promotions plagues a wide range of organizations, especially because opportunities for promotion tend to favor homogeneous social networks. These problems also plague organizations and could indicate other organizational troubles, as firms that engage in hiring discrimination are more likely to go out of business.
- Trond Petersen and Ishak Saporta. 2004. “The Opportunity Structure for Discrimination.” American Journal of Sociology 109(4): 852-901.
- James R. Elliott and Ryan A. Smith. 2004. “Race, Gender, and Workplace Power.” American Sociological Review 69(3): 365-386.
- Devah Pager. 2016. “Are Firms That Discriminate More Likely to Go Out of Business?” Sociological Science 3: 849-859.