When startups expand at speed, founders often make rushed recruitment decisions that can unintentionally disadvantage women, according to new research from a leading Swedish business school. The study shows that the intense pressure created by rapid growth increases the likelihood that leaders rely on instinct rather than structured evaluation, opening the door to biased choices even when there is no conscious intent to discriminate.

Drawing on large-scale national data from Sweden, the researchers define scaling as periods when firms hire far more employees than their usual growth pattern would predict. These moments of accelerated expansion force founders to decide quickly, encouraging the use of mental shortcuts. In such conditions, gender stereotypes can become activated, shaping who is hired and who is viewed as suitable for leadership roles.

“During periods of rapid expansion, even well-intentioned leaders may fall back on familiar assumptions about who they believe fits a role,” says Mohamed Genedy, a co-author of the study and Postdoctoral Fellow at the House of Innovation. His comments underline how bias often emerges not from hostility, but from cognitive strain and time pressure.

The research analysed more than 31,000 new ventures founded in Sweden between 2004 and 2018. In male-led startups, rapid scaling reduced the likelihood of hiring a woman by around 18 per cent. In comparison, the chance of appointing a woman to a managerial position fell by roughly 22 per cent. These effects appeared despite Sweden’s strong reputation for gender equality, making the findings particularly striking.

Crucially, the study also highlights ways to counteract these gaps. Founders with education in human resources were significantly less likely to show biased outcomes during growth phases. In ventures led by founders with HR training, the odds of hiring women increased by more than 30 per cent, and the likelihood of promoting women into management rose by 14 per cent. Prior experience in companies with established HR systems helped with hiring, too, though it had little effect on leadership appointments.

The patterns were not limited to male founders or male-dominated sectors. Female-led startups displayed similar tendencies when scaling, though to a slightly lesser degree, and even in industries where women made up most employees, rapid growth still reduced the chances of women moving into managerial roles. Together, the findings suggest that cognitive bias under pressure affects everyone, reinforcing the importance of structured hiring practices as startups grow.

More information: Mohamed Genedy et al, Scaling With Bias? The Role of Founders’ HR Knowledge and Experience in Hiring and Managerial Appointments, Human Resource Management. DOI: 10.1002/hrm.70056

Journal information: Human Resource Management Provided by Stockholm School of Economics