UCL School of Management is delighted to welcome Saerom (Ronnie) Lee, University of Michigan, to host a research seminar discussing ‘The Myth of the Flat Start-up: Reconsidering the Organizational Structure of Start-ups’
How start-ups design their organizational structure is an important question that every entrepreneur must answer, but is one that has received relatively little attention in the literature. As a step towards addressing this gap, I first conduct an exploratory analysis of 6,234 start-ups established between 1971 and 2015 in the video game industry. In contrast to the conventional wisdom that start-ups are “flat” with one or two hierarchical levels, I find that a substantial number of these start-ups are actually “tall” with more than two levels. Moreover, contrary to the widespread notion of “flattening,” these start-ups at entry have become taller over the past four decades. To explain this variation and trend, I use this unique dataset of game development start-ups to explore the question of how the hierarchy of start-ups may influence their performance in terms of creative and commercial success. The results suggest that a taller hierarchy can be (substantially) benecial for a start-up’s commercial success, albeit at the (potentially marginal) expense of its creative success. Overall, this study unveils surprising patterns that challenge the myth of the flat start-up, and makes signicant headway in understanding how start-ups organize to capture entrepreneurial opportunities.