A Cloud’s Silver Lining? The Impact of Policy Interventions on New and Maturing Technology Ventures’ Online Recruitment

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Author Information : David S. Lucas, Assistant Professor of Entrepreneurship, Whitman School of Management, Syracuse University
Cristiano Bellavitis, Assistant Professor of Entrepreneurship, Whitman School of Management, Syracuse University
U. David Park, Assistant Professor of Entrepreneurship, Whitman School of Management, Syracuse University

Year of Publication : Strategic Entrepreneurship Journal (2023)

Summary of Findings : We find that restrictive policy interventions alter the technology venture labor market, deterring some firms from recruiting while making others more successful in their hiring efforts, especially in recruiting employees with more entrepreneurial characteristics.

Research Questions : In this paper, we extend the EE framework to the labor market, asking three related research questions. First, how do policy interventions affect technology ventures’ recruitment efforts? Second, how do they affect these ventures’ ability to recruit entrepreneurial employees specifically? Third, how do strategic recruiting responses to policy interventions differ for young versus maturing technology firms?

What we know : Hiring is a critical task for technology venture firms, and environmental disruptions can impinge heavily on recruiting processes. However, few studies have considered how firms’ recruiting strategies and outcomes change in the face of policy interventions (i.e., restrictive policies that substantively curtail economic activity and/or constrain civil liberties). Moreover, while policy changes would seem to increase the need for entrepreneurial employees and the opportunity to capitalize on a changing competitive landscape, recruiting during such periods requires firms to ‘go against the grain.’ Despite the importance of recruiting, the value of entrepreneurial employees, and the prevalence of policy intervention, few studies have explored their interplay.

Novel Findings : We engaged in a quantitative study of over 220,000 recruiting interactions between technology ventures and candidates on a prominent digital networking platform surrounding the early COVID-19 pandemic policy responses. We find that firms’ recruitment declined significantly while candidates’ responsiveness increased during the early COVID-19 policy interventions. In turn, young technology ventures were enabled to hire more during the interventions, whereas maturing ventures were enabled to hire differently—acquiring candidates with greater entrepreneurial orientation.

Novel Methodology : We leverage a rich, proprietary dataset of recruiting interactions, analyzing 234,575 recruitment conversations between 1,769 firms and 25,267 job candidates from March 2016 through August 2020. Our data provide the unique opportunity to observe the complete recruitment process following firm-initiated direct messages to candidates, including: the firm’s initial solicitation; whether the candidate responds; whether the firm extends an offer; and whether the conversation results in a new hire. This enables us to holistically analyze the recruitment process—capturing a rich sequence of decisions by both technology firms and candidates. We thus consider the ‘two-sided’ labor market dynamics that are rarely accounted for in employee recruitment studies, clarifying the relationship between external change and recruitment considering the agency among both firms and job seekers.

Implications for Practice : Firms’ online recruitment was more successful during the early COVID-19 policy period than before. This suggests that the contrarian ventures that ‘went against the grain’ to continue recruiting despite stringent policy interventions were rewarded for doing so. One reason for this was that candidates were more responsive to recruiting efforts during the policy intervention period—giving firms greater success and flexibility in their selection of candidates. Hence, even as many firms struggled to survive amidst the health and policy disruptions of the pandemic, it is also evident that some firms leveraged these adverse circumstances to bring on new employees and change their workforce.

Implications for Policy: One subtle policy implication of our paper is that maturing technology firms responded differently to the policy interventions than did the youngest firms. Specifically, firms older than five years adapted their hiring strategies to increasingly select candidates with greater entrepreneurial orientation—a pattern we did not observe for young firms. This is consistent with a growing body of evidence that the early COVID-19 policy interventions benefited more established firms relative to younger ones via a ‘labor reallocation shock’—an unintended consequence of these policies.

Implications on Research: Our study offers two main contributions. First, we offer several advances to the growing EE literature by using the labor economics concept of labor market tightness to theorize how policy interventions enable (some) technology firms’ acquisition of human capital and highlighting the value of theorizing in relation to the specific resources affected by external enablers—here, human resources. Second, we advance a growing literature at the nexus of strategic human capital and entrepreneurship by studying firm recruitment via online platforms. Our work applies the EE framework to address how early pandemic policies influenced both sides of the labor market when previous studies typically have focused on one side. Furthermore, we theorize and observe a rich sequence of decisions leading to the ultimate hiring outcome. Also, our work advances the IEO literature by revealing the role of IEO prior to joining the firm.

Full Citations : David S. Lucas, Cristiano Bellavitis, and U. David Park. A Cloud’s Silver Lining? The Impact of Policy Interventions on New and Maturing Technology Ventures’ Online Recruitment. Strategic Entrepreneurship Journal (Forthcoming).

Abstract : We synthesize the external enablement (EE) framework with insights from labor economics and strategic human capital to theorize how restrictive policy interventions shape technology ventures’ employee recruitment, attending to both sides of the hiring dyad. We engage in a quantitative study of over 220,000 recruiting interactions between technology ventures and candidates on a prominent digital networking platform surrounding the early COVID-19 pandemic policy responses. We find that firms’ recruitment declined significantly while candidates’ responsiveness increased during the early COVID-19 policy interventions. In turn, young technology ventures were enabled to hire more during the interventions, whereas maturing ventures were enabled to hire differently—acquiring candidates with greater entrepreneurial orientation. Our work extends the EE framework to human resource strategies and to heterogeneous enablement across firm age.

David Lucas
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