Are Entrepreneurs Penalized during Job Searches? It Depends on Who is Hiring

Abstract

How do job-applicants with entrepreneurship experience — “post-entrepreneurs”— fare in the wage labor job market? We propose an “entrepreneurship-experience penalty” generally occurs yet varies in strength depending on the recruiters faced by post-entrepreneurs in their job application process. In an experiment utilizing the selection-decisions of 275 recruiters (experimental study participants) in reaction to objectively-identical job-applicants’ resumes whose differences relate to whether their last-held job was as a Founder or as an Executive, we found that: (a) resumes of Founders (compared to Executives) are about 23-29 percent less likely to be picked as top-choice for hire, (b) this entrepreneurship penalty is weaker for recruiters with (rather than without) entrepreneurial aspirations, and (c) this recruiter moderator-effect is stronger for recruiters in smaller (rather than larger) firms.

Keywords: Entrepreneurship, job search, hiring, return-to-entrepreneurship, entrepreneurship-penalty, in-group favoritism, firm-size effect

JEL Classification: J60; M13