Saerom (Ronnie) Lee

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

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), Do Diversity Claims Cause Labor Market Sorting by Political Partisanship? Evidence from Experiments.

Abstract: This study investigates how diversity claims may cause labor market sorting by political partisanship. In a field experiment conducted in partnership with a U.S. software company, we show that diversity claims are disproportionately unattractive to Republican job seekers. Our follow-up survey experiment suggests that this decreased attraction is driven by not only taste-based (i.e., ideological misalignment) but also statistical mechanisms (i.e., inferences about what diversity claims signal regarding unobservable employer characteristics). Notably, while previous studies have demonstrated that diversity claims lower expectations of discrimination for women and people of color, we find that these claims can, in fact, raise expectations of discrimination (while also reducing expectations of meritocracy) for workers on the political right. Overall, our findings imply that efforts to improve gender or racial diversity through diversity claims may create a more homogeneous workplace in terms of political partisanship.

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 and Firm Growth.

Abstract: The literature on organizational design has offered opposing arguments about how a firm's span of control affects its growth. This study reconciles these inconsistencies by employing a computational model of organizational information processing. Our simulation results demonstrate that an intermediate value of the span of control is desired for firm growth, as this structural dimension tunes the balance between individual-level and organizational-level information bottlenecks. That is, narrowing the span of control confers the benefit of alleviating its managers' cognitive burden, but bears the disadvantage of adding hierarchical layers that can prematurely filter out or delay the execution of ideas. Additional analyses suggest that the desired span of control decreases with the task environment's uncertainty and munificence and the employees' capabilities in idea generation and screening.

Saerom Lee and J. Daniel Kim (2024), When Do Startups Scale? Large-scale Evidence from Job Postings, Strategic Management Journal. 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.

Saerom Lee and Felipe Csaszar (2020), Cognitive and Structural Antecedents of Innovation: A Large-Sample Study, Strategy Science, 5 (2), pp. 71-79. https://doi.org/10.1287/stsc.2020.0107

Abstract: This paper studies how cognitive and structural antecedents affect adaptation to disruptive innovations. We do so by analyzing how video game firms adapted to the free-to-play business model around the period of disruption (2012–2015). Our data set (which contains 461 firms, collectively employing 83,157 individuals) allows us to characterize each firm’s organizational structure and each employee’s experience profile; it also captures the performance of firms under the existing and new technological regimes (that is, firms that do and do not adopt the disruptive innovation). We show that adoption, implementation under the existing regime, and implementation under the new regime are affected by cognitive and structural antecedents in different and often opposite ways. We also point out conditions under which cognitive and structural antecedents can compensate for each other. Overall, our study contributes to a better understanding of how firms should organize to face disruptive innovations.