Startup Experience and the Mobilization of Human Capital Resources in New Ventures

Abstract

Human capital resources are a foundation of organizational performance, yet highly difficult to mobilize in new ventures. Given the central role of founders’ past experiences in new venture strategy formation, we investigate whether and how their prior startup experience influences employee mobilization, depending on the outcomes of earlier endeavors. Integrating behavioral theories of the firm with regulatory focus theory, we suggest that serial founders who failed earlier are more likely to be prevention oriented and change their employee mobilization strategies towards a more targeted hiring approach. Using Danish register data, we compare the employee sourcing practices of a sample of serial entrepreneurs to a control group of novice founders who later engage in serial venturing. We find suggestive evidence of trial-and-error learning in hiring strategies among serial entrepreneurs who have discontinued previous ventures. Alternative mechanisms such as selection effects, stigma of failure, and demand-side constraints, are also tested but not empirically supported.