The Impact of Communicating Strategy on Employee Ideas: Evidence from a Global Startup Field Experiment

Abstract

What is the impact of communicating strategy to employees in scaling ventures? As entrepreneurial ventures grow and add headcount, misalignment among employees can emerge, leading to inefficient and potentially detrimental decisions. Communicating strategy can realign employees' ideas to the firm's core framework but divert them from more distant and potentially optimal possibilities, constraining flexibility. Through a pre-registered field experiment involving 480 employees across 25 companies in 14 countries, we analyze the effects of a simple strategy communication intervention. We find that sharing the company's strategy increases the alignment of employees' ideas with company goals by 6% and enhances their differentiation from other firms by 2%. These effects are more pronounced in firms operating in lower-income contexts and non-regulated sectors where flexibility might be critical. Together, our findings suggest that communicating strategy presents a key trade-off for ventures, boosting efficiency, but at the potential expense of flexibility.

Keywords: Entrepreneurial Strategy, Entrepreneurial Scaling, International Entrepreneurship, Strategy, Emerging Markets

JEL Classification: L21, L22, L25, L26, M13, M16