Events

Prof. Olav Sorenson
Professor of Strategy
Faculty Research Director
University of California

Entrepreneurs rely heavily on their social networks to recruit employees to their startups. On the one hand, these hiring patterns may stem from the fact that the information flowing through these relationships helps to resolve uncertainty on the part of both parties. On the other hand, it might reflect bias or favoritism in favor of the familiar. Using Danish registry data, we explore who most frequently hires through social connections, who gets hired, the probable mechanisms underlying these processes, and the implications of this network-based hiring for firm performance. On average, startup employees hired through connections appear to be of higher quality than those hired without them. Startups with more early employees hired through these channels perform better.