Tristan Botelho, Yale University
Tristan Botelho, Yale University
OB Seminar
OB Seminar
The Effect of Founder Experience on Labor Market Outcomes: A Field Experiment
Abstract:
Founding one’s own venture is often seen as desirable; however, most entrepreneurs must subsequently enter wage employment. Although a transition to wage employment is common, it remains unclear how founder experience is perceived and evaluated by recruiters at hiring firms. We argue that current theory can be used to make a strong case for founder experience as an asset as well as a liability to hiring firms. We first discuss the advantages and disadvantages of founder experience for wage employment and then test these theories through a field experiment, namely a resume audit study. Specifically, we test how those who started their career as founders fare relative to those who started their career as wage employees at the initial evaluation stage of the hiring process: receiving a callback for an interview. We find that former founders receive fewer callbacks than non-founders; however, all founders are not disadvantaged similarly. Former founders of successful ventures receive even fewer callbacks than former founders of failed ventures. Through 20 interviews with technical recruiters, we highlight the mechanisms driving this founder experience discount: concerns related to the applicant’s capability and ability to fit into and remain committed to the wage employment and the hiring firm. We also investigate three sources of heterogeneity: applicant gender, hiring firm age, and job location.