New Venture Pipeline Hiring and its Performance Implications

The human capital of the founding team provides a basis for how the organization is designed and structured, and this founding team imprint influences future resource acquisition due to the path dependency inherent in such decisions. Extending this logic, a founding team’s imprint will partially determine how a firm orchestrates the accumulation of one of its most critical resources – its human capital. However, research to date has not considered the effect of founding team characteristics on staffing strategies specifically, neither has prior literature advanced our knowledge on how (certain) early hiring choices affect new venture performance. This gap is surprising, since hiring soon after a firm founding is especially critical to sustained success. We propose that pipeline hiring – i.e., repeated hiring from various source organizations – might be a strategy considered by startups, with important implications for their future performance. In this paper, we investigate the antecedents and consequences of pipeline hiring in new ventures. We theorize that founding teams with higher shared (employment and educational) affiliations will engage in more pipeline hiring, and that the benefits of this hiring practice will beget improved firm performance. Using a sample of about 8,300 new ventures founded in Denmark, and over 150,000 employees joining these firms, we find broad support for our theory. We then explore the underlying mechanisms and boundary conditions for the positive relationship between new venture pipeline hiring and future performance.