Entrepreneurship
Santamaria, S. & Breschi, S. (2025).
On Resource Complementarity Among Startups, Accelerators, and Financial Investors: A Large-scale Analysis of Sorting and Value Creation. Organization Science.
​We propose a theoretical framework and provide empirical evidence on how resource complementarity or substitutability between entrepreneurs and seed investors drives selection and value creation in the context of high-tech startups. Specifically, we argue that seed investors specialized in training programs - startup accelerators - are the ideal match for entrepreneurial teams equipped with strong technological competencies but lacking business knowledge. On the other hand, when entrepreneurs with extensive business knowledge pair up with accelerators, the value created is typically less. Combining information from Crunchbase and LinkedIn, we provide robust empirical evidence based on the assortative matching of startups and investors and the ex-post analysis of joint value creation
Santamaria, S., Abolfathi, N., & Mahmood, I. P. (2024).
Demand Pull versus Resource Push Approaches to Entrepreneurship: A Field Experiment. Strategic Management Journal. 45(3), 564–587.
We compare the efficacy of two broad approaches to entrepreneurship training: a training prioritizing demand-side activities versus a training prioritizing resource-side activities. We do so by running a field experiment inside a 6-month entrepreneurship program involving 236 early-stage entrepreneurs. Inspired by our training, the first group invested more time interacting with potential customers and developing a deep understanding of customer needs and problems. The other group, in contrast, spent more time identifying and exploiting their core resources such as their network. Our results reveal that the training prioritizing demand-side activities is substantially more effective. At the end of the program, the group exposed to the demand-side training acquired more than twice the number of customers and generated revenues 65% higher than the other group.
Best Paper Award, wISE Scholarship in Oceania (Co-organized by Strategic Management Division of AOM), 2023
Hietaniemi, L., Santamaria, S., Kacperczyk, A., & Peltonen, J. (2024).
Human Resource Redeployability and Entrepreneurial Hiring Strategy. Strategic Management Journal, 45(2), 272–300.
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.
Santamaria, S. (2021).
Portfolio Entrepreneurs’ Behavior and Performance: A Resource Redeployment Perspective. Management Science, 68(1): 333–354.
Prior research suggests portfolio entrepreneurs—businesspeople who run more than one firm simultaneously—launch more successful ventures than their single-business counterparts. However, their ventures are less likely to survive. In an attempt to reconcile this paradox, this paper presents a framework in which portfolio entrepreneurs’ main advantage is not a superior ability to select the best business opportunities ex ante, but rather the ability to redeploy human and capital resources across businesses ex post, which reduces the sunkenness of their investments in new projects. This redeployment option facilitates their exit from new businesses that fail initial market tests. Thus, portfolio entrepreneurs’ heterogeneous termination decisions explain a greater portion of new firm performance differential than ex ante opportunity selection. We test these ideas using a longitudinal data set of more than 5,700 entrepreneurs and find consistent evidence. Portfolio companies do not show systematically higher performance at the time of entry; a performance difference emerges only over time, as the selection effect and resource redeployment occur.
Competitive Stategy
Abolfathi, N., Fosfuri, A., & Santamaria, S. (2022).
Out of the Trap: Conversion Funnel Business Model, Customer Switching Costs, and Industry Profitability. Strategic Management Journal, 43(9), 1872–1896.
Across many industries, firms employ a conversion funnel business model to attract customers with basic and affordable products, generate lock-in, and then sell them more advanced and expensive products. We argue that this business model, coupled with high customer switching costs, results in a market outcome characterized by aggressive pricing and reduced profits. A sudden reduction in customer switching costs disrupts the conversion funnel and can eventually increase industrywide prices and profitability, an outcome that contradicts conventional wisdom in strategy research. We develop a stylized model to formalize our ideas and provide supportive evidence using a difference-in-differences methodology with staggered treatment for a large, global sample of mobile telecommunications operators.
Best Paper Prize Honorable Mention, SMS Conference 2021
Media Coverage: iTWire, BIZBeat, SMS Explorer, Bocconi Knowledge
Abolfathi, N., Santamaria, S., & Williams, C. (2021).
How Does Firm Scope Depend on Customer Switching Costs? Evidence from Mobile Telecommunications Markets. Management Science. 68(1): 316–332.
This paper examines the relative advantages of single-product and multiproduct firms following changes in customer switching costs. Whereas a single-product firm can closely tailor offerings to customers’ needs, a multiproduct firm can create value for customers in the form of flexibility, allowing them to change between product varieties as preferences evolve without needing to switch providers. We argue that this value-creation mechanism is more effective when customers face high switching costs and explore this prediction in the mobile telecommunications sector, using an exogenous policy change (mobile number portability) that suddenly decreases customer switching costs. Our results reveal that when customer switching costs fall, multiproduct firms see lower growth than single-product firms, and entry with a multiproduct offering becomes less frequent than before. The study highlights how customer switching costs can enable or inhibit choices of firm scope.
Glueck Best Paper Award, Strategic Management Division, AOM Annual Conference 2020
Media Coverage: South China Morning Post, Via Sarfatti 25
Abolfathi, N., & Santamaria, S. (2020).
Dating Disruption-How Tinder Gamified an Industry.
MIT Sloan Management Review, 61(3), 7–11.
An analysis of the U.S. mobile dating app industry from its inception in 2007 to its phenomenal shakeout in 2013 demonstrates that Tinder changed the game — quite literally. As in other cases of industry disruption, dating app upheaval illustrates that newcomers need to compete by transforming noncustomers into customers rather than challenging incumbents for the established mainstream market. Although emerging technologies may allow newcomers the opportunity to overthrow incumbent competitors, our research shows that altering the user experience for an overlooked market segment, not technology, is the key success driver for industry disruption.