Startup Acquisitions as a Hiring Strategy: Turnover Differences Between Acquired and Regular Hires

Strategy Science (Forthcoming)

37 Pages Posted: 12 Oct 2018 Last revised: 29 Feb 2024

See all articles by J. Daniel Kim

J. Daniel Kim

University of Pennsylvania - Management Department; The Wharton School

Date Written: October 19, 2023


Prior studies suggest that acquisitions can increase employee turnover. However, acquired workers are technically new hires, who are generally prone to turnover. Therefore, it is important to benchmark acquired workers against other new hires in the organization. One view suggests that compared to regular hires who select their employer based on a mutual vetting process, acquired workers can experience a poor fit with their new employer (e.g., culture clash), resulting in elevated rates of turnover. Meanwhile, as acquisitions represent a bundle of assets, acquired workers can possess complementarities accumulated with the target firm that reinforce worker–employer fit and thus their retention prospects. Using population–level data from the US, I find empirical support for both perspectives. Acquired workers from startups exhibit significantly higher turnover rates than regular hires. Moreover, in conditions under which acquired workers’ complementarities are more likely to be preserved—specifically, individuals with longer prior tenure, teams in which the founders remain intact, and target organizations that are structurally separated rather than integrated into the acquirer—I find reduced turnover differences for acquired workers relative to regular hires. Together, these results elucidate whether and when firms can harness human capital through startup acquisitions ("acqui-hiring").

Keywords: Entrepreneurship, Mergers and Acquisitions, Human Capital, Startups, Hiring

JEL Classification: L26, G34, J63, M50

Suggested Citation

Kim, J. Daniel, Startup Acquisitions as a Hiring Strategy: Turnover Differences Between Acquired and Regular Hires (October 19, 2023). Strategy Science (Forthcoming), Available at SSRN: or

J. Daniel Kim (Contact Author)

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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