Christine Moser (VU Amsterdam) interviewing Tristan Botelho and Melody Chang (Yale), Winners of the OMT Best Entrepreneurship Paper, for “The Perception and Evaluation of Founder Experience by Hiring Firms: A Field Experiment”
Sponsored by the Journal, Innovation: Organization and Management
@IOM_journal; @Routledge_Econ
Christine Moser (CM): What is your paper about?
Tristan Botelho (TB): At a broad level, what the paper is interested in is an understanding of how firms that are hiring respond to applicants who have founder experience in their background. We know that most founders’ ventures fail and they have to re-enter employment or become an entrepreneur again. But most are going to fall into the first bucket, and apply for more traditional employment. Even those that have some success, while it is rare to have that success, there is evidence that they also return to the traditional labor market. So what we were curious about is if someone who is screening resumes, for example a recruiter, would respond positively or negatively to this experience, to founder experience.
CM: If you now had to explain again the most important point to a stranger, what would you say in a few sentences?
TB: From the entrepreneurs' perspective, you know, one thing that I have often received in my career but especially since I have been teaching in front of a classroom on the topic of entrepreneurship, people have asked me this exact question: “I have been offered to go work in firm X or firm Y; I am able to start this company with a friend, and we have this idea. What would happen if things don't work out?” So I think this is a gap in our knowledge, and the paper answers this gap in our understanding with regards to the possible trade-off for starting a company early in your career, and whether recruiters see this experience positively or a negatively. There's a lot of exciting work to be done around this exact question actually, in different industries, different age ranges, different experiences.
At the organizational level, one of the most interesting points relates to the fact that many firms are expressing their want and their interest to have their employees be more entrepreneurial or even become innovators or entrepreneurs within the company. With Goldman Sachs for example, they are starting programs around this exact point. And what that makes you think is that maybe these firms want big thinkers, the next entrepreneur to join their firm. We also know that those CEOs or chief strategy officers who are discussing this want, they're not necessarily the ones, of course, making the day-to-day hiring decisions. So do recruiters also share this want for entrepreneurial innovator talent, or do they think that there are risks with these individuals? And they might actually do something that is different from the larger message. But I think that the takeaway that's important for organizations is basically, do they practice what they preach, or is there reason to believe that there might be different actions than we would expect around this topic.
CM: Was there at any point a crossroads that you encountered, where the article could have gone in a very different direction?
TB: This is a great question, because I think with every paper I've ever written there are choices to be made around what's the exact sample, what's the exact theoretical direction, and any of these choices will shape not only how a paper is written but how it's interpreted. In our experiment, for example, instead of making them a founder once, we could have made them a founder three times over. Instead of making them a college graduate who starts a firm, let's make them 45 years old. So I would use that as crossroads in a very positive sense. I think there's a lot of richness left in this question for scholars to spend lots of time on, because any one of these decisions, like any experiment or any setting could take you down a different path. I see that as an opportunity which is exciting.
Melody Chang (MC): We also preregistered our question and study design. There was also an ethical concern that we had to consider in not shifting our direction completely.
CM: What surprised you while working on this project?
MC: I don't think we had any strong conviction about how the founder would be advantaged or disadvantaged, because there hasn't been much literature that has been discussing this. So it was quite surprising to see our results, that these founders are disadvantaged. And also, our results about the successful founder versus the failed founder were also interesting and somewhat counterintuitive.
TB: When we wrote this article, we really wanted to be true the state of the current literature in theory. And you could make convincing cases either way, and what we saw as a neat opportunity to state that. You could write the paper in a more traditional way, where you know exactly the theory, there's one prediction or a boundary condition that you're testing. But here, while we could have done that and just taken a stance, we thought it was an interesting take that would be a little more true to the literature.
CM: Which academic audience do you want to reach?
TB: There's both a phenomenological and a theoretical contribution. I think, theoretically, recruiters are gatekeepers to firms. We can talk about how lots of firms use referrals and other processes. I agree that it's very prevalent especially for older workers to use their network. But I have a lot of recruiter HR friends, who basically say unless a very, very senior person at the firm says we must hire this person, they could basically end any applicant because they are respected in their company, because they too have social capital. So I think while audit studies try to understand the interplay between applicants and recruiters, and have done a really nice job in various areas, I think that theoretically, there are some really rich concepts around, commitment and fit for example, where we don't fully understand the multitude of ways that that can be defined. And how people could be thinking about how an applicant could fit into the organization. If we think about our article, if we just remove the phenomenological point, entrepreneurship happens a lot, a lot of people fail. But it basically boils down to that we all come into different work places with experiences, and how do those experiences get translated into the application process, and how they can help or hurt us, is something that I think theoretically we don't know as much about. And I think, phenomenologically if we think about the contribution again, it is a huge decision to become an entrepreneur. Our paper is not saying don't become an entrepreneur, or that you're not going to get a job if you do. Instead, it's giving another piece of information for people to consider this important career choice that they were lacking beforehand. Coming back to my comment around how individuals come to me and ask me about this debate pretty regularly, and we really never had an answer. Again, I want to be clear: I don't think that our paper is the end of this question, but I hope it's part of a triangulation of evidence around how people are evaluating this experience.
CM: How does the article matter for managers?
MC: We often see CEOs and managers expressing their desire to want their talents to become entrepreneurial and innovative. This focus, along with their innovative skills and mindsets, suggests that hiring firms would prefer former founder candidates. It's interesting to see that former founders are not excelling at the initial stage of the hiring process. So we think that this is a case for the misaligned incentives between the upper level managers and the recruiters, who may not share the same vision, and that managers should carefully consider and make clear what their hiring goal is.
CM: What is the catch phrase that best fits your article?
TB: I think the larger take-away is that these experiences that people have can be evaluated differently. If we're only looking at recruiters who obviously have negative reaction to this founder experience relative to not having it, it's still not clear if that would be true if the CEO would meet with every single person who applied. Maybe they would have a very positive reaction. So I think that when we think about this paper, it should make founders comfortable, that even if they fail, there is still a market for their talent. Former founders need to consider, “how do I leverage my network, to be able to gain employment?”
CM: What’s a fun fact?
MC: One fun fact is that to ensure consistency during the application process, we were in charge of sending all the 2,400 application materials. So for a month and a half I was in charge of applying to jobs for 8-10 hours a day. And Tristan had to check 36 e-mail accounts every day to record callbacks.
TB: That is a fun fact. I think it's a good one! We both felt that this is something that we should learn more about and think about. Talking to some of the leading scholars who do these kind of studies, many did it themselves. So we thought it was a rite of passage to do that as well. Hours and hours every single day for a long time. But that effort was worth it, because we really felt that we knew the process, we understood the data, and it wasn't just us getting reports back from individuals doing it for us.
CM: Thank you for this interview!