Still The Same: The New Venture Diversity Imperative and Workforce Segregation
Dr. Jing CHEN
Department of Innovation and Organizational Economics
Copenhagen Business School
New ventures create jobs. We propose that new ventures also contribute to workforce segregation by sourcing personnel from organizations that are, on average, less diverse than the populations from which their members are drawn. Considering hiring and retention mechanisms, we analyze the evolution of organizational members’ prior employers for a cohort of almost 1,000 new ventures. Despite a supposed imperative to diversify personnel, we find that organizations founded by teams drawn from few prior employers continue to be staffed by personnel drawn from few prior employers. Although new employees are generally hired from an increasingly diverse set of prior employers, prior employer diversity decreases with cumulative attrition. We, therefore, infer that the persistence of founding homogeneity is more attributable to differential retention than to differential hiring. Implications for workforce segregation and new venture performance are discussed.