How Are Employees Recruited to the Firm?
Entrepreneurs may find that they have trouble recruiting good employees to a small, young firm. This may occur because the firm lacks a reputation as a good employer (Aldrich & Fiol, 1994), or simply because of a tight labor market. Regardless of whether they find themselves dependent on particular employees, entrepreneurs who have trouble hiring may try to adopt practices to enhance their recruiting. One tactic they may adopt is to offer special recruitment deals to potential employees. These deals may include unusually large stock option grants, extra weeks of vacation not earned through tenure with the firm, signing bonuses, promises of early salary reviews, and a wide variety of other perks. To the extent that entrepreneurs find that they are dependent on particular employees, and unable to hire anyone else with the appropriate skills, they may be more willing to offer special recruitment deals. Hypothesis 2: Entrepreneurs experiencing large numbers of dependence relations will be
