Saerom (Ronnie) Lee is an Assistant Professor of Management at the Wharton School of the University of Pennsylvania. Saerom studies why start-ups succeed or fail to capture entrepreneurial opportunities. To address this question, his work focuses on two antecedents of a firm’s strategic decision-making process: organizational structure and managerial cognition. His dissertation was recognized as the winner of the INFORMS/Organization Science Dissertation Proposal Competition (2019), the winner of the Strategic Management Society Best Conference Ph.D. Paper Prize (2019), the runner-up of the Industry Studies Association Dissertation Award (2021), and the finalist of the Academy of Management’s Technology and Innovation Management (TIM) Division Dissertation Award (2022).
Before joining the Wharton School, he received a Ph.D. in Strategy from the University of Michigan’s Ross School of Business, and both a B.B.A. and an M.S. in Strategy & International Management from Seoul National University.
Reuben Hurst, Saerom Lee, Justin Frake (Under Review), The Hidden Cost of Flat Hierarchies on Applicant Pool Diversity: Evidence from Experiments.
Abstract: Research on organizational design suggests that, by removing managerial layers, flatter hierarchies can help motivate employees and improve firm performance. Despite these potential benefits, we argue that these organizational structures have an unintended cost of decreasing gender diversity in the applicant pool. Using a field experiment, we show that a flatter hierarchy does not significantly increase the size of the applicant pool but decreases its female representation. Our follow-up survey experiment suggests that this decrease occurs because, compared to men, women perceive flatter hierarchies to offer fewer career opportunities, to be more difficult for them to fit into, and to disproportionately burden them with more work. These findings imply that flatter hierarchies could inadvertently undermine firm performance by curtailing employee diversity.
Saerom Lee and J. Daniel Kim (Under Revision), When Do Startups Scale? Large-scale Evidence from Job Postings.
Abstract: Scaling at the right time is a critical challenge for high-growth startups, but little is known about this timing due to a lack of empirical measurement. As startups formally hire professional managers and sales personnel to accommodate for exponential growth in employees and customers, we propose that the timing of scaling can be measured using the first manager and sales job postings. Leveraging a dataset of online job postings, we show that startups, on average, begin scaling four years after founding. We also find that, despite potential first-mover advantages, early scalers are more likely to fail but not more likely to achieve an IPO or a large acquisition. We theorize that this increase in failure occurs because scaling early can curtail experimentation on product-market fit.
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.
This course encourages students to analyze the problems of managing the total enterprise in the domestic and international setting. The focus is on the competitive strategy of the firm, examining issues central to its long- and short-term competitive position. Students act in the roles of key decision-makers or their advisors and solve problems related to the development or maintenance of the competitive advantage of the firm in a given market. The first module of the course develops an understanding of key strategic frameworks using theoretical readings and case-based discussions. Students will learn concepts and tools for analyzing the competitive environment, strategic position and firm-specific capabilities in order to understand the sources of a firm's competitive advantage. In addition, students will address corporate strategy issues such as the economic logic and administrative challenges associated with diversification choices about horizontal and vertical integration. The second module will be conducted as a multi-session, computer-based simulation in which students will have the opportunity to apply the concepts and tools from module 1 to make strategic decisions. The goal of the course is for students to develop an analytical tool kit for understanding strategic issues and to enrich their appreciation for the thought processes essential to incisive strategic analysis. This course offers students the opportunity to develop a general management perspective by combining their knowledge of specific functional areas with an appreciation for the requirements posed by the need to integrate all functions into a coherent whole. Students will develop skills in structuring and solving complex business problems. In addition to prerequisites, enrollment is limited to seniors and juniors that have completed introductory courses in finance, marketing, and accounting.
This course is about managing during the early stages of an enterprise, when the firm faces the strategic challenge of being a new entrant in the market and the organizational challenge of needing to scale rapidly. The enterprises of interest in this course have moved past the purely entrepreneurial phase and need to systematically formalize strategies and organizational processes to reach maturity and stability, but they still lack the resources of a mature firm. The class is organized around three distinct but related topics that managers of emerging firms must consider: strategy, human and social capital, and global strategy.
This half-semester course examines one of the foundational questions in strategy: the role of organizational structure in both supporting and shaping strategy. As Winston Churchill famously said: "We shape our buildings, and afterwards our buildings shape us." This course examines this proposition from two traditions, the "institutional economics" and "information processing" schools of organizational design. We will examine foundational works from both schools, such as Coase, Williamson, Simon, March, and others, and then proceed to recent work in the area. Some of the questions that we will explore in the class are: why do firms exist? What determines their boundaries? What determines formal and informal structures within firms? How does the strategic context shape the answers to these questions? How might the nature of the firm and its boundaries relate to innovation, human capital, and knowledge creation? The aim of this class is to provide students with a grounding in the fundamental questions and contributions in this area, and to spark ideas for research in their own graduate work.
This upcoming academic year, the Wharton School will welcome 20 new faculty members. These brilliant minds are leading experts in a wide range of fields, including business, social science, finance, economics, public policy, management, marketing, statistics, real estate, and operations. One of the most exciting additions to the Wharton community…Wharton Stories - 08/17/2020