The evolution of organizational design: the case of digital startups

Abstract

PurposeAlong their journey to achieve exponential growth, startups must process a vast amount of information and make quick decisions, reevaluate and adjust strategies and simultaneously redesign their organization along with the venture lifecycle. This paper delineates the evolution of startups' organizational design and identifies the influencing factors in every phase of the lifecycle.Design/methodology/approachThis study adopts an explorative qualitative approach using a multiple case study methodology for six Indonesian startups. Indonesia is chosen as an emerging country in Southeast Asia with tremendous growth in digital startup businesses.FindingsThe research findings suggest that, as they experience exponential growth, startups strive to manage the tension between being structured and being flexible and hence remain innovative by combining management-centric and employee-centric approaches. In particular, this study identified three main factors that potentially influence the evolution of startups' organizational design: founders, investors and the characteristics of business and market.Research limitations/implicationsThe present study focuses mainly on Indonesian digital startups and does not fully explain how the influencing factors work in each phase of the venture journey.Practical implicationsThis study offers practical contributions for startups pursuing business growth by focusing on the importance of balancing the tension between structured and flexible organizational design and placing more attention on founders, investors and business-market characteristics.Originality/valueThis empirical study is among the first to delineate nuances of organizational design evolution during the startup lifecycle by adopting an explorative qualitative method.