Saerom (Ronnie) Lee

Saerom Lee and Reuben Hurst (Work In Progress), When Autonomy Backfires: Adverse Selection in Startup Recruitment.

Abstract: While prior entrepreneurship research highlights strong preferences for autonomy among founders and early joiners of startups, little is known about how explicitly emphasizing autonomy in startup recruitment affects the composition of the applicant pool. We propose that such emphasis may inadvertently reduce applicant quality by disproportionately attracting lower-ability candidates while deterring higher-ability job seekers. This adverse selection may arise because individuals with varying cognitive abilities may interpret autonomy-related signals in systematically different ways. Specifically, lower-ability candidates may perceive autonomy at face value as desirable freedom from managerial oversight, whereas higher-ability individuals may infer potential organizational dysfunction, including ill-defined roles, insufficient managerial oversight, and unclear performance evaluation. Using large-scale job posting data, we first document that startups increasingly highlight autonomy in recruitment, particularly when targeting higher-ability talent. We then provide causal evidence for the proposed adverse selection through a field experiment conducted in partnership with a U.S.-based startup. Our findings reveal that, although autonomy is widely considered a desirable attribute that distinguishes new ventures from established firms, its explicit emphasis in startup recruitment may backfire—paradoxically deterring the high-ability candidates most critical to entrepreneurial success.

J. Daniel Kim and Saerom Lee, Research: When Should Startups Scale? in Harvard Business Review (Online),.

Abstract: Silicon Valley often touts rapid scaling as the best strategy for achieving startup success. However, new research reveals that scaling early, particularly within the first 12 months, significantly raises the risk of startup failure, especially for two-sided platforms. The key takeaway for entrepreneurs: Be cautious with early scaling and prioritize a culture of experimentation. Taking a “slow-and-steady” approach to scaling may provide a more sustainable path to long-term success.

Reuben Hurst, Saerom Lee, Justin Frake, Research: Flat Hierarchies Can Discourage Women Applicants in Harvard Business Review,.

Abstract: Many firms struggle to attract a diverse talent pool, particularly women. To stand out, companies often tout flatter organizational structures in their recruitment materials, assuming these unique features will appeal to a more diverse group of prospective employees. However, new research uncovers a surprising finding: highlighting a flatter hierarchy may, instead, diminish women’s representation in the applicant pool. Additional findings suggest that women tend to perceive flatter organizations as more difficult to fit into, burdening them with a heavier workload, and offering fewer career advancement opportunities. This research indicates that companies should carefully consider how they present their organizational structure to job seekers to avoid unintentionally discouraging women from applying.

Reuben Hurst and Saerom Lee (Under Review), Filtering the Right: Diversity Commitments and Political Sorting.

Abstract: Despite growing evidence that the political composition of the workforce shapes key organizational outcomes, the processes by which workers with different personal politics sort into different employers remain underexplored. This study addresses this gap by examining how diversity commitments—an increasingly ubiquitous feature of firms' recruiting efforts—may cause political sorting in the labor market. We theorize that this sorting occurs through mechanisms based on political ideology (i.e., job seekers' perceptions of alignment with a firm's political values) and political identity (i.e., job seekers' expectations about the representation and treatment of individuals with specific political identities). In a field experiment conducted in partnership with an actual employer, we find that diversity commitments distinctly reduce attraction among job seekers furthest to the political right. Our follow-up survey experiment provides evidence consistent with our proposed mechanisms, showing that these commitments lead partisans to form divergent perceptions about an organization's political values, political demographics, and likelihood of politics-based discrimination. We discuss how this political filtering effect may complement organizational efforts to cultivate gender and racial diversity, while potentially reducing political diversity—with potential downstream implications for organizational culture, performance, and broader societal polarization.

J. Daniel Kim and Saerom Lee (Under Review), Target Startup’s Organizational Structure and Acquirer’s Integration-Separation Decision.

Abstract: To reap the benefits of startup acquisition, acquirers strategically choose whether to integrate or separate their targets. This study examines how this post-acquisition organization design choice between integration and separation depends on the target startup's pre-acquisition organizational structure. Leveraging employee-employer-matched data to construct a novel measure of post-acquisition separation based on employee mobility patterns, we find that acquirers are more likely to separate more structurally complex target startups. Additional analyses are consistent with the view that, as the target firm's structural complexity can increase the disruptive costs of integrating the two firms but reduce coordination costs when kept separate, post-acquisition separation becomes more suitable. Our results shed light on an important organizational antecedent that shapes the relative appeal of integration versus separation in startup acquisitions.

Jaeho Choi and Saerom Lee (Under Review), Span of Control as a Dynamic Strategic Lever for Early-stage Firm Growth.

Abstract: The literature on organization design has traditionally viewed the span of control as a static constraint on scalability. This study revisits this perspective by developing a computational model that formalizes how the span of control dynamically shapes early-stage firm growth through two fundamental trade-offs inherent in organizational information processing: (1) between individual-level and organizational-level bottlenecks (arising from cognitive constraint on attention) and (2) between commission and omission errors (arising from cognitive constraint on evaluation). We find that, when either cognitive constraint—and its associated trade-off—operates in isolation, the widest span of control may maximize growth. However, when both constraints are present, an intermediate span of control emerges as optimal. Crucially, this optimum progressively decreases as firms grow over time, reflecting a fundamental shift in growth constraints from a scarcity of ideas to a scarcity of time. This gradual narrowing proves particularly beneficial when firms operate in highly uncertain or more munificent environments or when their employees are more capable of generating or screening ideas. Overall, these findings reconceptualize the span of control as a dynamic strategic instrument for navigating evolving information-processing trade-offs and accelerating firm growth.

Saerom Lee and J. Daniel Kim (2024), When Do Startups Scale? Large-scale Evidence from Job Postings, Strategic Management Journal, 45 (9), pp. 1633-1669. https://doi.org/10.1002/smj.3596

Abstract: Scaling at the right time is a crucial challenge for startups. Conceptualizing “scaling” as the entrepreneurial process of acquiring and committing resources to implement the core business idea and expand the customer base, this study examines how scaling early may decrease imitation risk at the expense of increasing commitment risk. As startups typically hire managers and sales personnel when they begin to scale, we propose that this timing can be empirically measured by when startups first post these jobs. Leveraging a dataset of job postings, we find that early scalers are more likely to fail, but no evidence of a countervailing benefit in terms of successful exit. Additional analyses suggest that the commitment risk in scaling early outweighs the benefit of reducing imitation risk.

Reuben Hurst, Saerom Lee, Justin Frake (2024), The effect of flatter hierarchy on applicant pool gender diversity: Evidence from experiments, Strategic Management Journal, 45 (8), pp. 1446-1484. https://doi.org/10.1002/smj.3590

Abstract: This article investigates how job seekers' perceptions of an employer's formal hierarchy affect the size and gender composition of its applicant pool. Building on the literature on gendered organizations and organizational design, we develop opposing perspectives on these relationships. To arbitrate between these perspectives, we first conduct a field experiment in partnership with a hiring firm. We find that featuring a flatter hierarchy in recruiting materials does not significantly affect the size of the applicant pool, but significantly decreases women's representation within it. Our follow-up survey experiment identifies several potential mechanisms (e.g., perceptions of career progression, informality, workload, and fit). Our findings imply that firms' growing tendency to adopt flatter hierarchies could inadvertently undermine efforts to attract a greater proportion of women applicants.

Saerom Lee and Britta Glennon (Under Review), The Effect of Immigration Policy on Founding Location Choice: Evidence from Canada’s Start-up Visa Program.

Abstract: To spur entrepreneurship and economic growth, an increasing number of countries have introduced immigration policies that provide visas to skilled entrepreneurs. This paper investigates whether these policies influence the founding location choice of immigrant founders, by leveraging the introduction of Canada's Start-up Visa Program in 2013. We demonstrate that this immigration policy increased the likelihood that U.S.-based immigrants have a start-up in Canada by 69%. Our results show that Asian immigrants (who have a higher representation in Canada than in the U.S.) are disproportionately more likely to migrate to Canada to start their businesses, whereas Hispanic immigrants (who have a smaller representation in Canada than in the U.S.) are less inclined to do so. We also find that this propensity varies with the size of co-ethnic immigrant communities in the origin location. Overall, our study unveils the importance of immigration policies in determining founding location choice and has important implications for countries competing for global talent.

Saerom Lee (2022), The Myth of the Flat Start-up: Reconsidering the Organizational Structure of Start-ups, Strategic Management Journal, 43 (1), pp. 58-92. https://doi.org/10.1002/smj.3333

Abstract: There has been an ongoing debate over whether start-ups should be "flat" with minimal hierarchical layers. To reconcile this debate, this paper distinguishes between creative and commercial success (i.e., product novelty vs. profitability), and examines how these outcomes are variously influenced by a start-up’s hierarchy. This study suggests that while a flatter hierarchy can improve ideation and creative success, it can result in haphazard execution and commercial failure by overwhelming managers with the burden of direction and causing subordinates to drift into power struggles and aimless idea explorations. I find empirical support for this trade-off using a large sample of game development start-ups. These findings offer one resolution to the debate by sorting out the conditions under which hierarchy can be conducive or detrimental to start-ups.