Knowledge that Transforms

Research Summary The conventional wisdom both in research and in practice is that entrepreneurs need co‐founders, as they bring crucial resources to new ventures. Yet, this same work also suggests that co‐founders introduce destructive conflict, potentially creating as many problems as they solve. Surprisingly, little work examines the counterfactual—that is, the conditions under which solo‐founding is a viable approach. In this paper, we address this gap. We perform two studies; one using data from Y Combinator's renowned accelerator program, and another using large‐scale data from Crunchbase. Across these studies, we find that the solo founder disadvantage is partially attenuated when the founder has either broad or deep experience, or both (i.e., “T‐shaped skills”). Overall, our paper contributes to the literatures on founding teams and strategic human capital. Managerial Summary Co‐founders are beneficial to startups because they bring needed skillsets, knowledge, connections, and other resources. At the same time, however, co‐founders also introduce the potential for interpersonal conflict between the entrepreneur and co‐founders. Thus, in some cases, co‐founders may create as many or more problems as they solve. Surprisingly, very little research examines solo founders. In this paper, we examine the conditions under which solo founding is a viable approach. We find evidence of multiple ways in which solo founders can begin to overcome their performance disadvantages and achieve performance closer to that of co‐founded ventures.

Research Summary Do multinational enterprises from developed (DMNEs) and emerging (EMNEs) economies differ in their price discrimination strategies in Sub‐Saharan Africa? Using an abductive approach, we analyze novel data from laundry detergent markets in Cameroon, Ghana, and Ivory Coast, where frugal products are widely consumed. We find that, compared to EMNEs, DMNEs charge smaller price premia for frugal relative to non‐frugal products by 21%–28%. We examine several plausible explanations and find suggestive evidence that the greater visibility of DMNEs motivates them to exercise caution in setting greater price premia for their frugal relative to non‐frugal products. Even within DMNEs, more visible firms charge smaller price premia than less visible firms. Managerial Summary Our investigation reveals an intriguing difference in the pricing strategies of multinational enterprises selling basic consumer goods in Africa. We analyze laundry detergent products sold in Cameroon, Ghana, and Ivory Coast. We find that, compared to multinational enterprises from developed economies (DMNEs), those from emerging economies (EMNEs) charge materially higher price premium on small packs relative to large packs. A key driver appears to be differences in exposure to reputational risk. DMNEs are more cautious about pricing small packs in ways that could be perceived as exploiting resource‐constrained consumers. Even within DMNEs, more visible firms charge smaller price premium than less visible ones. These findings highlight that pricing decisions for frugal products entail social considerations, as firms differ in their exposure to stakeholder scrutiny.

Research Summary What role do collaborations with a target's partners play in an acquisition, and how do these collaborations evolve post‐acquisition? Research suggests that these collaborations are an important reason to acquire but often diminish post‐acquisition. But if they tend to diminish, why are they a reason to acquire? Our analysis of acquirers’ motives of 143 acquisitions of firms that collaborate with partners on 298 open‐source projects resolves the outlined puzzle and reveals two types of acquisition motives: protection‐motivated acquisitions—where acquirers focus on protecting the complementarity with the technology and the partners, and extraction‐motivated acquisitions—where acquirers focus on extracting technology and employees. We find that protection‐motivated acquisitions are associated with an intensification of collaborations, meanwhile extraction‐motivated acquisitions are associated with a diminishment of the collaboration. We contribute to research on acquisitions, collaboration, and OSS. Managerial Summary Acquisitions don’t just change ownership—they reshape collaboration with the target's partners. We studied 143 acquisitions of firms that sponsor and collaborate with partners on 298 open‐source software projects. We track contributions before and after the acquisition. We find that the motives of the acquirers are associated with different outcomes. When acquirers aim to protect complementarities, contributions from the acquired target and its partners tend to rise. When they aim to extract resources—redeploying code or talent—contributions typically decline. Managerial takeaway: when you are a stakeholder in a particular OSS, examine how likely the acquisition of its sponsors is, and what the acquirers’ motives are.

Research Summary This paper examines how firms' adoption of artificial intelligence (AI) relates to the demand for managers and managerial skills. Using a skills‐based measure of AI adoption derived from Lightcast job postings, we show that firms with greater AI adoption post more managerial vacancies and a higher share of such vacancies than less intensive adopters. These relationships are strongest in manufacturing and among firms with higher research & development intensity. Greater AI adoption is also associated with shifts in managerial skill requirements toward interpersonal and growth‐oriented skills, including stakeholder management, creativity, and sales management, and away from routine administrative skills such as budgeting, planning, staff management, and customer service. Overall, the results suggest a reconfiguration of managerial roles toward capabilities facilitating scaling, coordination, and adaptation in AI‐enabled environments. Managerial Summary As artificial intelligence (AI) becomes more prevalent within firms, managers and executives face a practical question about how managerial roles may change. Using US job postings data from 2010 to 2022, we find that firms with higher AI adoption exhibit relatively greater demand for managerial roles, especially in manufacturing and among more innovative firms. We also find that more intensive AI adoption is associated with changes in what managers are expected to do. Demand shifts away from routine administrative skills such as budgeting and planning and toward growth‐related skills such as sales, creativity, and stakeholder management. Overall, the evidence suggests a growing emphasis on managerial roles that relate to scaling, coordination, and organizational adaptation.

Research Summary How should organizations manage learning dynamics? Strategy theories suggest “more‐is‐better”—fast, frictionless sharing enhances performance—while organizational learning theory warns that “less‐is‐more,” as fast learning causes premature convergence. We reconcile this tension by showing that the “less‐is‐more” prediction depends critically on a key assumption in classic computational models: that information about agents' performance is not continuously updated. When performance information is timely, fast learning enhances exploration. The mechanism is Target Diversity: fast learning allows many individuals to rapidly reach the performance frontier, increasing the set of imitation targets. Organizations thus learn from a diverse, shifting set of targets. The implication is that organizations achieve superior performance not by restricting information or slowing learning, but by making data on choices and performance available more quickly. Managerial Summary Innovation relies on recombining diverse knowledge, yet facilitating this is challenging. Organizations often encourage copying stars with established track records or reputations, but this can lead to suboptimal results. We demonstrate a superior approach: provide up‐to‐date performance data and spotlight emergent top performers, regardless of their history. When feedback is timely, rapid learning allows “underdogs”—employees starting from lower positions—to quickly catch up to the frontier via unique knowledge combinations. Spotlighting these emergent successes creates “Target Diversity,” providing the organization with a continually renewed and diverse set of imitation targets. Such a design enhances the exploitation of diverse knowledge and improves long‐run performance.

Research Summary Acquisitions can create synergies by combining an acquirer's and a target's pre‐existing relationships with nonmarket stakeholders. We introduce the “reset effect” as a novel mechanism that occurs when a firm with cooperative stakeholder relationships combines with a firm that has conflictual relationships, prompting the affected stakeholders to re‐evaluate their pre‐acquisition strategies. We argue that post‐acquisition conflict with nonmarket stakeholders will decline when the cooperative and conflictual stakeholders brought together by an acquisition are aligned on one or more of the three elements that characterize stakeholder fields: (1) issues stakeholders care about, (2) relationships between stakeholders, and (3) preferences for how issues should be addressed. We find support for these arguments by studying changes in Fortune 500 firms' conflict with environmental movement organizations after acquisitions. Managerial Summary Acquisitions can create synergies by resetting a firm's relationships with external stakeholders. Studying 25 years of Fortune 500 acquisitions and environmental stakeholder interactions, we find that acquisitions can reduce stakeholder conflict when one firm's cooperative stakeholder relationships complement the other firm's conflictual ones. Complementary relationships exist when cooperative and conflictual stakeholders are aligned on issues or have pre‐existing relationships with one another. Simply combining conflictual‐cooperative stakeholder relationships is not enough, however, and post‐acquisition conflict can increase when stakeholder groups are divided over how issues should be addressed. These findings can help managers understand when an acquisition will ease or exacerbate external conflict with stakeholders.

Research Summary Regulatory anticipation is a nonmarket response whereby firms, foreseeing future penalties, adjust their behavior when peers are targeted by regulators. Prior research defines peers using broad jurisdictional boundaries. Instead, I argue that regulatory anticipation may emerge locally, driven by two channels: proximity to peer scrutiny and firms' perceived sanction risks. Examining U.S. facilities' GHG emissions, I exploit variation in local‐peer scrutiny arising from a change in the EPA's High‐Priority‐Violation policy. Difference‐in‐differences estimates show that heightened scrutiny of county peers is associated with 7% lower emissions among non‐targeted firms, driven by those facing higher sanction risks. Distance‐decay analyses indicate that these anticipation patterns weaken with geographic separation. The findings encourage managerial attention to local regulatory conditions and suggest that avoiding regulatory deserts could improve policy effectiveness. Managerial Summary This paper examines how stricter regulatory scrutiny of one firm can prompt nearby, non‐targeted firms to reduce their emissions. Using U.S. data on facilities' greenhouse gas (GHG) emissions, I find that when a county peer faces heightened oversight, non‐targeted firms are associated with about 7% lower GHG emissions on average. These patterns are stronger for firms already at higher risk of environmental penalties, declining as geographic distance from scrutinized peers increases. For managers, the findings highlight the importance of monitoring local regulatory activity and the behavior of nearby peers, as local comparisons can shape stakeholder expectations. For policymakers, the results suggest that avoiding regulatory ‘deserts’ may enhance the effectiveness of climate‐related and environmental regulation.

Research summary Organizations are increasingly using large language models (LLMs) to support strategic evaluations. We examine whether and how these systems rely on gender and race. We asked GPT to evaluate identical startup pitches varying only the founder's name, shaping gender and race perceptions. Across 26,000 evaluations, GPT did not systematically assign lower scores to underrepresented minorities but avoided ranking them last without increasing winning likelihoods. To explain these patterns, we conducted “Second Opinion” experiments where GPT evaluated pitches alongside inputs simulating human bias. GPT more readily corrected explicit, identity‐based bias than bias framed as neutral business critiques, with corrections limited in magnitude. We theorize these findings reflect symbolic compliance : LLMs suppress overt discrimination without substantively altering evaluative logic, allowing inequality to persist in AI‐supported strategic evaluations. Managerial summary Large language models (LLMs), like OpenAI's ChatGPT, are increasingly used in strategic evaluations (e.g., hiring, pitches). We examine whether and how these models exhibit gender and racial biases in their evaluations of startup pitches, where we only varied founder names (shaping gender and race perceptions). Across multiple experiments, we find that GPT evaluators did not systematically assign lower scores to underrepresented minorities, primarily by reducing their likelihood of being ranked last. However, this behavior reflects a symbolic effort to avoid overt discrimination rather than a deeper fairness commitment. While LLMs may not reproduce historical and societal biases in overt form, their ability to correct them remains limited. These results highlight the need for implementing bias mitigation measures before integrating LLMs into high‐stakes strategic evaluation processes.

Research Summary Many new employees leave their firms before realizing the returns to experience. One reason is that they cannot see how performance evolves with tenure. We study whether making performance trajectories visible improves retention and firm performance. In a randomized controlled trial at a multinational spa chain in China, workers received twice‐weekly information for 28 weeks about the performance path of a high‐performing senior coworker. The intervention reduces new‐worker attrition by 11–12% and increases revenue by 15% in stores with more new workers. These effects are largely driven by reduced stress and improved mental health, as the information lowers their beliefs about how well senior coworkers performed early in their careers. By contrast, showing only the current performance of a similar‐tenure peer has no detectable effect. Managerial Summary In many firms, new employees leave before realizing the returns to experience because they lack information about how performance evolves with tenure. We examine whether making senior workers’ performance trajectories visible improves retention and firm performance. In a randomized controlled trial involving over 7,000 workers at a multinational spa chain in China, employees received twice‐weekly information for 28 weeks about the performance trajectory of a high‐performing senior coworker. The intervention reduces new‐worker attrition by 11–12% and increases revenue by 15% in stores with more new workers. These effects are driven by reduced stress and improved mental health, as the information lowers beliefs about senior coworkers’ early‐career performance. Overall, our findings show that making senior workers’ performance trajectories visible can mitigate social comparison costs within firms.

Research Summary We adopt a network‐based perspective to examine the effects of hiring strategies in terms of the diversity of hiring sources. Considering the transferability of general and firm‐specific skills, we propose that firms can reduce integration costs while gaining diversity benefits when they hire from a focused set of firms that themselves hire broadly. We suggest that occupying this position in the mobility network enhances both innovation and productivity outcomes. Moreover, we posit that a strong cultural orientation, characterized by high intensity and consistency, further amplifies these benefits. Our analysis of mobility data from US public firms between 2005 and 2021 uncovers the pathways through which firms attain this position. Evidence from the panel matching method and fixed‐effects regressions provides support for our hypotheses. Managerial Summary We take a network perspective to understand how firms' hiring choices—particularly the range of companies they recruit from—shape their performance. We argue that firms can benefit when they hire from a small, consistent group of companies that themselves draw talent from many different firms. This approach allows firms to gain a wide variety of skills and experiences while keeping integration and onboarding challenges low, leading to more innovation and higher productivity. We also suggest that firms with a strong and consistent culture are even better positioned to take advantage of these benefits. Using data on employee movements among US public firms from 2005 to 2021, we show how firms attain this position, and find evidence in support of our hypotheses using panel matching and fixed effects models.