Mathematical modeling

The timing of talent acquisition is a central decision for new ventures. On one hand, hiring after demand is proven minimizes losses. On the other hand, hiring before demand is proven allows new ventures to start developing unique capabilities. We resolve this tension by proposing that the timing depends on human resource redeployability. We test our theory with the population of Finnish ventures, showing that portfolio entrepreneurs hire more employees early on because of higher redeployment potential and that they hire employees with more transferable skills in order to benefit from the redeployment option. To probe our mechanisms, we examine how talent acquisition strategies in portfolio and standalone ventures vary with external conditions that reduce or amplify the benefits of redeployment.

Paper · Forbes summary

Strategy research treats performance heterogeneity as a central puzzle, but most evidence on its sources is assembled only after outcomes have already diverged. This paper asks whether founders’ entry decisions reveal, before outcomes materialize, how widely those outcomes will later spread. Building on occupational-choice models and the options logic of entrepreneurial entry, I recover the payoff-dispersion threshold at which a founder is just indifferent between continued paid employment and founding, given the founder’s forgone wage, wealth, and the scale of the opportunity. I call this revealed-preference threshold entry-implied dispersion. Using Finnish linked employer–employee and business-registry data for 2001–2022 on the founders of limited-liability firms, I aggregate founder-level thresholds to three-digit industry-years and validate them against realized revenue-growth dispersion for two non-overlapping groups: the entering cohort of new firms and incumbent firms fixed before entry. Entry-implied dispersion predicts entrant-cohort dispersion immediately and incumbent dispersion with delay. A serial-founder test that removes each founder’s own prior entry hurdle attenuates the cohort-level relationship but leaves the delayed incumbent relationship intact, suggesting that the cohort result partly reflects persistent founder-level heterogeneity while the incumbent result reflects a broader industry-level signal. Two further checks sharpen this reading: an expected-payoff version of the same entry inputs shows no comparable link to realized dispersion, and entry-implied dispersion shows no comparable link to average realized returns. Together, the results suggest that a founding decision carries information about how unevenly a competitive arena’s future outcomes will be spread, and how much of that spread traces to the founders themselves versus the arena they enter.

Paper available upon request.

How do binding wage constraints reshape ownership allocation in startups, and what are the consequences for workforce outcomes? Using population-wide administrative data on Finnish startups (2006–2022), we study how mandated wage floors affect employee equity and worker mobility. We exploit staggered introductions and removals of collective bargaining agreement extensions that impose binding wage floors on previously uncovered firms, generating plausibly exogenous variation in wages and equity compensation. Extensions reduce individual employee equity stakes by 10–11%. Instrumental variables estimates show that a 10% increase in employee equity reduces one-year exit by 2.5–3% and increases internal advancement by 10–12%, with weaker effects in high-technology industries.

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