Founding conditions and benefit offerings: evidence from US startups
ISSN: 0048-3486
Article publication date: 10 August 2018
Issue publication date: 21 January 2019
Abstract
Purpose
The purpose of this paper is to answer the following research question: at the time of founding of a startup, what entrepreneurial conditions would influence the long-term offerings of HR benefits? To answer this question, our study examines the effects of four founding conditions of startups – total assets, founder’s education, industry experience and startup experience – on the basis of the resource-based view of firms.
Design/methodology/approach
Using data from the Kauffman Firm Survey (KFS) conducted in the period 2005–2010, this paper analyzed the relationships between the founding conditions and the offering of HR benefits by 4,148 new ventures during the first five years after founding. In addition, this paper examined the relationships of the same founding conditions to the offering of each of seven specific benefits: alternative work schedule, bonus plan, health insurance, paid time off, retirement plan, tuition reimbursement and stock options.
Findings
Three conditions at founding – total assets, founders’ education level, industry experience – have a positive and enduring influence on the offering of HR benefits to the employees. Startup experience has a significant effect on benefit offerings during the first year after founding but no significant effect on benefit offerings in subsequent years. All founding conditions have significant and long-lasting positive effects on each benefit, except for startup experience, which has a negative effect on some benefits.
Originality/value
The HRM literature indicates that there has been a surprising gap between practical interest and academic research with regard to benefits. In addition, there is a dearth of research on how entrepreneurs make strategic decisions such as offering benefits to their employees. The study represents an attempt to fill in this gap.
Keywords
Acknowledgements
Dr Yang Xu thanks the Kauffman Foundation for the sponsored seat to access the confidential microdata set of Kauffman Firm Survey through the University of Chicago Data Enclave.
Citation
Yi, X. and Xu, Y. (2019), "Founding conditions and benefit offerings: evidence from US startups", Personnel Review, Vol. 48 No. 1, pp. 141-162. https://doi.org/10.1108/PR-09-2017-0264
Publisher
:Emerald Publishing Limited
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