If You Spend It, They Will Come: Recruiting Expenses, Reputation, and Human Capital Acquisition

Abstract

In this paper we examine the role that recruitment expenses, organization reputation, and managerial reputation play on a firm’s ability to acquire high quality human capital. Relying on signaling theory, we suggest that firms investing in recruitment expenses are better able to signal competence and quality to their recruits and that this will increase their ability to acquire high quality employees. Using a sample of NCAA football teams over a five-year period of time we find that recruitment expenses and organizational reputation do in fact have a direct effect on the organizations ability to acquire high quality human capital. Specifically, the results of multilevel analyses indicate that recruiting expenses predict year-by-year changes in the quality of human capital acquired and the team-level (between team) variable for current team success (organizational reputation) is a significantly better predictor of the quality of human capital acquired than the within-team variable for current team success. These findings suggest that while unstudied in the literature, recruitment expenses are, in fact, an important component in a firm’s ability to acquire high quality human capital.