California Management Review

Abstract

Many startup companies go through the so-called “entrepreneurial crisis” when they reach a headcount somewhere between 50 and 100 employees. At this point, the CEO and her team have to transition from a personal to a professional management style. Management systems play a critical role in managing this transition effectively. Contrary to the popular belief that the development of such systems kills the entrepreneurial spirit, startups that implement these systems are associated with faster growth, larger size, and a lower turnover of their CEOs. Venture capital backed startups are more likely to implement these systems faster. This article also examines why these systems are adopted and the different roles they play in high-growth companies.

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