Affiliation‐based hiring in startups and the origins of organizational diversity

Abstract

Multiple imperatives call for more diversity in organizations, yet we know surprisingly little about why some organizations become more diverse than others. We focus on the early stages of organizations—the composition of founding teams (FTs) and the evolution of subsequent hiring practices, namely the prominence of finding new employees via founders’ prior employer and educational affiliations. Drawing upon theories of entrepreneurial resource mobilization and attraction–selection–attrition (ASA), we argue that FTs with common professional ties imprint post‐founding hiring routines by making affiliation‐based hiring (ABH) a more prominent practice to select new personnel. We posit that, although ABH fades quickly after founding, using this hiring strategy in the early stages of an organization shapes its trajectory for diversity and contributes to workforce homogenization in several dimensions as new firms mature. Using a mixed‐methods approach combining large‐scale employer–employee linked data from Denmark and in‐depth surveys with founders from the US and UK, we find robust support for our theory and provide novel insights to the hiring processes in entrepreneurial firms. Our work advances our understanding of the enigmatic origins of within‐organization homogeneity progression and offers important contributions to both theory and practice.

Organizational behavior and human resource management perspectives on entrepreneurship: Lessons learned and new directions

“…In this special issue, Brymer and Rocha (2023) leverage longitudinal data to offer new insight into the early origins of certain HRM practices. Specifically, founder team homogeneity and affiliation-based hiring imprint homogeneity (vs.…”

Early-stage start-up hiring: the interplay between start-ups’ initial resources and innovation orientation

“…In this regard, past research documents the importance of founders' human capital (Colombo & Grilli, 2005, 2010Criaco et al, 2014;Kato et al, 2015), but founders can hardly succeed on their own. Indeed, attracting employees at an early stage shapes a start-up's longterm performance (Agarwal et al, 2016;Gjerløv-Juel & Guenther, 2019;Rocha et al, 2018) and diversity trajectories (Brymer & Rocha, 2023), and failing to recruit and retain employees with the necessary skills and fit with the firm may lead to an organization's demise, regardless of its business strategy (Phillips & Gully, 2015). Hiring can, however, be disproportionately difficult for young and small firms due to various supply and demand side constraints (Cardon & Stevens, 2004;Lancker et al, 2022).…”

“…The importance of mobilizing employees in the early stages of a firm is not anecdotal and has been echoed by several studies (e.g., Coad et al, 2017;Honoré & Ganco, 2023;Roach & Sauermann, 2023). Indeed, a growing research stream shows that early hires can affect the future outcomes of a start-up (e.g., Agarwal et al, 2016;Brymer & Rocha, 2023;Rocha et al, 2018;Siepel et al, 2017). Thus, even if early hiring may not guarantee long-term success, it is often a milestone towards survival and sustained growth (DeSantola & Gulati, 2017;Gjerløv-Juel & Guenther, 2019).…”

“…All these hurdles may prevent start-ups from offering competitive wages or attractive work conditions and affect prospective employees' perceptions about the quality of the jobs available in those firms (Burton et al, 2018;Ouimet & Zarutskie, 2014;Sauermann, 2018;Sorenson et al, 2021). 1 Several demand-and supply-side constraints are, thus, at the center of start-ups' disadvantages when hiring their first employees (Brymer & Rocha, 2023;Chung & Parker, 2023;Honoré & Ganco, 2023).…”

“…Our theory and findings offer several contributions to the literature. Firstly, we contribute to the understanding of how new-born companies can mitigate their several liabilities and mobilize human resources in nascent stages, an enquiry that remains largely unaddressed despite the relevance of early hiring for long-term start-up outcomes (Brymer & Rocha, 2023;Gjerløv-Juel & Guenther, 2019). Secondly, by adopting a resource-(and competence-) based view of human resource mobilization in entrepreneurial contexts, we identify a set of resources and competences assembled at founding that, under particular circumstances, can activate both the supply and the demand of human capital and facilitate early-stage hiring by start-ups.…”