Scaling With Bias? The Role of Founders' HR Knowledge and Experience in Hiring and Managerial Appointments

Abstract

New ventures are expected to continuously add new jobs and managerial positions to meet the expanding demands of scaling. However, the rapid pace and inherent uncertainty of scaling often lead founders of new ventures to rely on heuristics when making these critical hiring and managerial appointment decisions. By integrating research on scaling, cognition in decision-making, and gender stereotypes with literature on HR practices, we argue that such heuristics can exacerbate reliance on gender stereotypes rather than the actual competencies of potential candidates. Using matched employer-employee census data covering all new ventures established and led by solo male founders in Sweden between 2004 and 2018, we find that scaling decreases the likelihood of hiring females for job positions and appointing females to managerial positions. However, the founder's HR education mitigates these negative effects on both female hiring and managerial appointments, while the founder's HR experience only mitigates the negative effects on female hiring decisions. We also tease out the invoked mechanisms, conduct post hoc tests, and run an extensive number of robustness tests.