How Founders Attract Joiners: Evidence From a Conjoint Analysis

Abstract

Hiring is one of the most important and yet also one of the most difficult responsibilities in a startup. When an organization is small and only has a few employees, even one bad hire can impede the startup's growth or even lead to its demise. Yet, because startups have limited cash flow, they typically cannot offer the salaries or job security offered by larger corporations with whom they compete for talent. The question then is how startups can attract talented employees without offering competitive financial packages. The few studies that do address this find that startups provide several nonpecuniary benefits that larger corporations do not. Yet, which types of non-pecuniary incentives are most effective has been relatively understudied. In addition, whether (and which type of) workers prefer and are thus willing to give up pecuniary benefits in exchange for non-pecuniary benefits remains to be empirically established. This study uses a conjoint analysis to provide causal evidence of these relationships. Specifically, the questions I address in this study are: Which non-pecuniary incentives are most effective in attracting employees to startups, and how do these preferences differ across employee types?