Hiring in Entrepreneurial Firms: Pre-founding Affiliations & the Origins of Organizational Diversity

Rhett Andrew Brymer, Vera Rocha

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Abstract

New ventures typically have few resources and rarely have formal human resource processes, calling into question how these entrepreneurial firms find early employees critical to their success. Additionally, entrepreneurial hiring practices set the trajectory of how workforce composition is built in a growing organization. A common, informal tactic in young firms for finding workers is the use of incumbent workers’ prior affiliations (employment and educational), an expedient practice though one that may limit a new venture’s workforce diversity. Our study examines when young firms engage in such affiliation-based hiring and its implications for demographic diversity. Using a representative sample of new ventures drawn from Danish matched employer-employee data, we find that larger founding teams with greater internal social tie depth are more likely to hire from founders’ prior affiliations. Our results further suggest that affiliation-based hiring reinforces demographic homophily, contrasting with diversity imperatives as firms grow. Our work provides insights to hiring processes in entrepreneurial firms and the enigmatic origins of diversity differences between firms.
Original languageEnglish
Title of host publicationProceedings of the Eighty-first Annual Meeting of the Academy of Management
EditorsSonia Taneja
Number of pages1
Place of PublicationBriarcliff Manor, NY
PublisherAcademy of Management
Publication date2021
DOIs
Publication statusPublished - 2021
EventThe Academy of Management Annual Meeting 2021: Bringing the Manager Back in Management - Online
Duration: 29 Jul 20214 Aug 2021
Conference number: 81
https://aom.org/events/annual-meeting

Conference

ConferenceThe Academy of Management Annual Meeting 2021
Number81
LocationOnline
Period29/07/202104/08/2021
Internet address
SeriesAcademy of Management Proceedings
ISSN2151-6561

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