Rebuilding Startups: An Empirical Study on Remote Work and Skill Complementarity

Abstract

Remote work is a common practice of workplace flexibility enabled by digital infrastructure, yet its implications for firms' talent composition and organizational structure remain underexplored. This question is especially important for startups, which often operate with constraints in accessing talent through local labor markets. We focus on skill complementarity, a dimension of talent composition that is critical to startups' early-stage development. By integrating LinkedIn job postings, worker skills, and worker mobility data, we study the impact of remote work on skill complementarity in startups. We find that higher remote work intensity increases firm-level skill complementarity, primarily by helping startups recruit new workers whose skills better match the firms' hiring needs and diversify from the skill sets of existing employees. We further show that this shift in workforce composition carries organizational consequences: remote work is associated with greater organizational hierarchy through increased skill complementarity. These findings suggest that, for startups, remote work is not merely a flexibility policy but a hiring mechanism that helps young firms assemble complementary talent despite resource constraints. At the same time, this may push startups toward more hierarchical structures, which serve as formalized coordination mechanisms to effectively achieve the value of a more complementary workforce.