Abstract
The transition from a founder-led start-up to a professionally managed firm entails significant change in the firm’s organizational design. This often constitutes a critical juncture for employee morale, with the risk of losing key talent. We posit that limiting the disruptive effect of changing organizational structures requires organizational members to not only adopt new roles and procedures but also change their cognitive representations regarding how the firm operates. We use an inductive multi-case study to explore changes in interpretive schemes of key organizational logics and the presence of catalysts that guide cognitive change during a founder-CEO succession. By contrasting our case material with exogenous employee satisfaction data, we develop testable propositions about key conditions that allow maintaining company morale during structural change of entrepreneurial organizations.
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