Does the timing of integrating new skills affect start‐up growth?

Abstract

Research Summary: Growth often requires start-ups to recruit new skills not present in the founding team. We analyze if the relationship between integrating new skills and growth depends on timing. Should new skills be recruited as early as possible, or can start-ups add them as needed along the way? Using a unique panel dataset covering Sweden's population of start-ups from 1997 to 2012, our analysis shows that (a) start-ups' growth rate is positively correlated with integrating novel skills early in their life, while adding novel skills later is associated with lower growth and (b) corporate spin-offs profit less from recruiting novel skills than de novo start-ups. We mirror our results against existing theories and develop theoretical perspectives for future research.

After the startup: A collection to spur research about entrepreneurial growth

“…The authors find that internationalizing faster relates to growth (supporting liability of aging) and does so without increasing failure risks (not supporting liability of newness). To an extent, these results echo Grillitsch and Schubert's (2021) findings regarding the timing of new hires—speed seems to be of the essence in facilitating growth once a business model is established.…”

“…Over time, entrepreneurs must move beyond founding conditions, often by bringing new people into the venture and organizing them appropriately. Grillitsch and Schubert (2021) focus on the timing of new hires. Should new people be brought in early when forward‐looking entrepreneurs can see a potential future need, or should hiring wait until new hires can be fully leveraged?…”

Toward a Multidimensional and Multilevel Approach to Studying Gender Diversity in Upper Echelons and Firm Innovation

“…But firms exhibiting deep-level diversity, which is not visible to others on the surface level, are likely to attract diverse employees through another, non-visible mechanism, such as their networks (e.g., Fernandez, Castilla, & Moore, 2000). Diversity at the individual employee level will, in turn, increase the organization’s ability to develop novel solutions to problems (Grillitsch & Schubert, 2021, Østergaard et al, 2011; Sauermann, 2018).…”

Recruiting strategic human capital from MNCs—Does hiring MNC managers enable exporting in domestic firms?

“…Typically, the startup stage of young firms ends when they have reached a certain threshold of increasingly stable and predictable business conditions which allows them to professionalize decision making [ 72 ]. While being organizationally young is certainly a qualitative assignment differing between firms, there are some indications that the early-startup phases may last between four to seven years after founding [ 76 ]. Our definition of domestic firms is that they are neither owners of foreign subsidiaries nor themselves owned by a foreign parent company.…”

“…Only as the start-ups grows, it moves to increasing internal division of labor with a need to professionalize [ 85 ], e.g. by relegating managerial tasks from the founding team to professional managers [ 76 , 86 ]. In contrast, MNC managers are more likely to apply skills that are shaped by specialization in which certain subsidiaries are responsible for specific tasks while relying on other subsidiaries or headquarters for others [ 87 ].…”