Do Hiring Strategies Change in Successive Entrepreneurial Stints?

Research Summary
Most key decisions in startups are linked to their founders, but what entrepreneurs do differently as they launch successive ventures remains poorly understood. Using Danish register data, we investigate how hiring strategies change in successive entrepreneurial stints. We compare the employee sourcing practices of serial entrepreneurs running knowledge-based startups with those of novice founders in similar industries, who later transition into serial entrepreneurship. We find that serial entrepreneurs, particularly after experiencing a prior failure, engage in pipeline hiring practices (i.e., hiring repeatedly from some external sources) more than their novice counterparts. This finding is robust to different sampling, measurement, and estimation choices. Further investigation into the underlying mechanisms supports the roles of experiential learning and improved employee-firm matching quality, while excluding alternative explanations.

Managerial Summary
How do hiring strategies evolve across successive entrepreneurial stints? Using employer–employee linked data from Denmark, we investigate the changes in employee sourcing strategies employed by entrepreneurs as they launch successive ventures. We compare the practices of experienced and first-time founders of knowledge-based startups and observe a greater tendency to repeatedly hire from some external source organizations (reflected by an increased concentration of hiring sources) among entrepreneurs who have discontinued an underperforming venture. This hiring strategy—known as pipeline hiring—correlates with both higher-quality hires and improved venture performance. This change in hiring strategy is suggestive of experiential learning. We rule out several alternative explanations and pave the way for future research to further explore the complex impact of entrepreneurial experience on key entrepreneurial strategies.