Getting off to a good start.

This article examines the origins of interorganizational endorsements in the context of firms undergoing an initial public offering (IPO). We propose that the affiliations associated with the career histories of a firm’s upper echelon, including its managing officers and board members, send important signals to external parties who are evaluating the quality of young firms. Such signals are critical to the matching process between firms and endorsing organizations, since young firms lack well-established networks and a favorable reputation at the time they are being considered for endorsement. We introduce a three-way typology of upper echelon affiliations and hypothesize that each of the three types of upper echelon affiliations with prominent organizations enhances the perceived quality of the young firm in terms of the personal and social resources that such ties afford. We test our assertions on a sample of public and private biotechnology firms that were founded between 1961 and 1994 and that went public between 1979 and 1996. Analyses of the five-year career histories of the over 3200 executives and directors that make up the upper echelons of these firms show that the prestige of a firm’s lead underwriter depends on the upper echelon as a whole having affiliations with prominent downstream organizations (i.e., pharmaceutical and/or healthcare companies) and with prominent horizontal organizations (i.e., biotechnology companies). Additionally, we find that the success of a firm’s IPO depends on specific types and combinations of upper echelon affiliations. Our analysis has implications for the study of organizational endorsements, embeddedness, and entrepreneurship.