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Legacy of key employees in startups and SMEs: a microfoundational theory of knowledge-based legacy realization
[L'héritage des employés clés dans les start-ups et les PME : une théorie micro-fondationnelle de la réalisation de l'héritage fondé sur la connaissance]

Author

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  • Bernardo de Melo Pimentel

    (University of Roehampton)

Abstract

The microfoundations perspective has significantly advanced strategic management by elucidating how individual actions aggregate to form organizational capabilities. However, current research largely privileges the cognition of top executives, overlooking the microlevel antecedents provided by non-executive key employees. In the resource-constrained context of Small and Medium-sized Enterprises (SMEs), the specific knowledge-based legacy left by these departing individuals constitutes a vital, yet precarious, stock of potential strategic value. This theoretical paper investigates the aggregation processes linking this individual-level legacy to macro-level strategic outcomes, asking: How does the interplay between a key employee's accumulated legacy and the micro-processes of their successor (the custodian) determine the realization of dynamic capabilities?Integrating the microfoundations of dynamic capabilities with a legacy-as-process perspective, I conceptualize legacy not merely as a static asset to be transferred, but as active sensemaking material that frames future strategic choices. I argue that the custodian acts as a critical micro-level filter who engages in cognitive work to either discard, maintain, or reconfigure this legacy. I propose a theoretical framework identifying three contingent trajectories of legacy realization: (1) legacy decay, resulting from cognitive dissonance between the legacy's complexity and the custodian's absorptive capacity; (2) legacy dormancy, resulting from structural inertia that inhibits the activation of legacy knowledge; and (3) legacy amplification, where custodians leverage recombinative capabilities to transform the legacy into new strategic innovation. This study answers the call to link microbehaviors to macro-outcomes by demonstrating how the cognitive integration of past knowledge (legacy) and present agency (custodianship) serves as a fundamental mechanism for strategic renewal.

Suggested Citation

  • Bernardo de Melo Pimentel, 2026. "Legacy of key employees in startups and SMEs: a microfoundational theory of knowledge-based legacy realization [L'héritage des employés clés dans les start-ups et les PME : une théorie micro-fondationnelle de la réalisation de l'héritage fondé sur," Working Papers hal-05516876, HAL.
    • Handle: RePEc:hal:wpaper:hal-05516876
    Note: View the original document on HAL open archive server: https://hal.science/hal-05516876v2
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