The Hidden Cost of Startup Growth

Startups are meant to grow, and as fast as possible. At least that’s the conventional wisdom—one that Johan Wiklund, Al Berg Chair and Distinguished Professor of Entrepreneurship, and two colleagues hope to challenge in a new paper in Strategic Management Journal.  

“There’s a lot of positive bias,” Wiklund said. “The assumption is that scaling is great, that you’re bringing new innovations into the market and creating the jobs of the future. But what we show is that it might not be great for everybody, particularly for the employees.” 

Wiklund credits first author James Bort ’14 MBA, ’20 Ph.D., assistant professor in the department of management and entrepreneurship at DePaul University with devising a clever method for the study. The third co-author, Wei Yu ’13 M.S., ’18 Ph.D., is assistant professor in the department of industrial systems engineering and management at the National University of Singapore. 

The researchers linked two sets of data—evaluations of job satisfaction from 7,692 employees rating their current or former employers on Glassdoor.com and information on 263 startups drawn from a private company database. 

They found that job satisfaction followed an inverted U-shaped curve in relation to company growth. It rose at first but declined when new ventures expanded too quickly.  

“A growing firm is seen as a sign of success, it gives you new opportunities for jobs and promotions if you work there,” Wiklund explained. “But once you get into really high growth rates, there are negative consequences for job satisfaction.” 

Rapid sales growth, for instance, can expose weaknesses in leadership, while surging employment numbers may strain workplace dynamics—introducing challenges around diversity, eroding trust, and intensifying office politics. In fact, employee satisfaction peaked at around 138% annual employment growth. 

The findings suggest that startups should scale with intention, aiming to build businesses that sustain their success and keep employees satisfied so that they stay. 

“It’s important to realize that we have different kinds of stakeholders and that not all benefit to the same extent from scaling,” Wiklund said. “Moderate growth isn’t a failure—it can be a strategic choice.” 

Bort, J., Wiklund, J. and Yu, W. (2025). Firm Growth and the Job Satisfaction of the Startup Workforce. Strategic Management Journal.