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.

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Past Courses

• INSP4999 - Honors Thesis

  The senior thesis course is a capstone for seniors in the Huntsman Program in International Studies and Business. Students in the Huntsman Program should consult with the Huntsman Program advisors for more information.

• MGMT2230 - Business Strategy

  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.

• MGMT6120 - Managing Emerg Entrprse

  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.

• MGMT9260 - Sem Strat & Org Des

  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.

• Wharton Teaching Excellence Award, 2023
• Wharton Teaching Excellence Award, 2022
• Strategic Management Society Conference Strategic Human Capital Interest Group Best Paper Award, 2022
• Finalist, Strategic Management Society Conference Responsible Research Paper Prize, 2022
• Finalist, Academy of Management TIM Division Dissertation Award, 2022
• Strategy Science Conference Best Paper Award, 2022
• Runner-up, Industry Studies Association Dissertation Award, 2022
• Academy of Management OMT Division Best Paper Award, 2022
• Wharton Teaching Excellence Award, 2021
• Winner, INFORMS/Organization Science Dissertation Proposal Competition, 2019
• Strategic Management Society Best Conference Ph.D. Paper Award, 2019
• Michigan Ross E. G. Flamholtz Award for Academic Excellence, 2018
• Michigan Ross T. W. Leabo Memorial Award for Teaching Excellence, 2018
• Michigan Ross W. A. Spivey/Valerie and W. Hall Award for Academic and Research Excellence, 2018
• Michigan Ross Emeritus Award for the Best Second-year Paper, 2017

Knowledge @ Wharton

• Building Stronger Family Offices by Sharing Knowledge and Securing the Future, Knowledge @ Wharton - 11/21/2024
• State of the NBA with Seth Partnow, Knowledge @ Wharton - 11/20/2024
• How Are Companies Really Using AI? A New Report Has Answers, Knowledge @ Wharton - 11/19/2024
• Impact vs. Time: A Leader’s Guide to Slow Productivity, Knowledge @ Wharton - 11/19/2024
• Kevin O’Leary Illustrates the Benefits of Tariffs for U.S. Businesses, Knowledge @ Wharton - 11/19/2024
• Boosting Donations Through Self-expressive Choices | Jonah Berger, Knowledge @ Wharton - 11/19/2024
• Why Are Hospitals So Expensive?, Knowledge @ Wharton - 11/18/2024
• New Phenomena in Behavioral and Social Investing, Knowledge @ Wharton - 11/18/2024
• Bigger Hospitals, Better Care? Wharton Research Finds Benefits Are Only at the Operational Level, Knowledge @ Wharton - 11/14/2024
• Linda Dow Cash, CEO, Two Chicks Cocktails, Knowledge @ Wharton - 11/14/2024