When Do Startups Scale? Large-scale Evidence from Job Postings

Strategic Management Journal, Forthcoming

75 Pages Posted: 28 Jan 2022 Last revised: 26 Feb 2024

See all articles by Saerom (Ronnie) Lee

Saerom (Ronnie) Lee

Wharton School, University of Pennsylvania

J. Daniel Kim

University of Pennsylvania - Management Department; The Wharton School

Date Written: August 1, 2023

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.

Keywords: venture scaling, timing, entrepreneurship, human capital, organization design

JEL Classification: D22, L26, M10, M13, O15, O32

Suggested Citation

Lee, Saerom (Ronnie) and Kim, J. Daniel, When Do Startups Scale? Large-scale Evidence from Job Postings (August 1, 2023). Strategic Management Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4015530 or http://dx.doi.org/10.2139/ssrn.4015530

Saerom (Ronnie) Lee (Contact Author)

Wharton School, University of Pennsylvania ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

HOME PAGE: http://www.saeromlee.com

J. Daniel Kim

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
2,261
Abstract Views
7,478
Rank
12,410
PlumX Metrics