Effects of Applicant Reactions on Strategic Business Unit Performance

Abstract

This study examines the unit-level emergence and consequences of applicant reactions to a selection process. Social exchange theory is integrated with recruitment and applicant reactions research to propose that hiring managers create a social context that explains how and why unit-level reactions emerge to influence collective turnover, customer satisfaction, and financial outcomes. The study uses a large sample of quickservice strategic business units (restaurants) that vary in terms of their selection practices. Data sources include applicants, managers, incumbent employees at two levels, and unit level metrics including collective turnover, customer satisfaction, and sales, across multiple months. The results find that hiring manager behavior creates a social context that contributes to the emergence of collective applicant reactions, and units with more favorable applicant reactions have less collective turnover and greater customer satisfaction. Overall, this study demonstrates the importance of the social context in selection processes and demonstrates the business impact of applicant reactions.