You Went to Harvard, So What? The Effects of Founder Prestige on Job Seeker Evaluations of Start-ups

Whether it is the business (horse) or the people (jockey) that is more important in driving a start-up’s success is a popular debate among practitioners and researchers. However, most of the discussions have taken place in the context of early stage and venture capital investment. This paper extends this debate by moving the stage to a new context: entrepreneurial recruitment. Using signaling theory as the main theoretical framework, we argue that a founder’s education and employment background from prestigious institutions can signal both the quality of the venture and the quality of the founder. Using a series of three randomized lab experiments, we show that job seekers are attracted to firms with founders who have such prestigious backgrounds, and that they use the information as a signal of the quality of the venture, thus providing evidence supporting the horse argument.