Research - 19.01.2023 - 11:00
Young companies that want to position themselves in the market do not have it easy. This is especially evident when it comes to finding talented employees. In contrast to established companies with well-known names, they are less familiar to job seekers and cannot entice them with large salaries. Young companies are also more likely to fail because their business idea is not yet solidified and they are particularly vulnerable to economic downturns. "This puts new companies at a competitive disadvantage and normally face major challenges in recruiting talented employees," emphasises Silvia Stroe, assistant professor at the Global Center of Entrepreneurship and Innovation (GCEI-HSG) since 1 February 2022.
In her research paper "New ventures fighting the war for talent: the impact of product innovativeness and entrepreneurs' passion on applicant attraction", Silvia Stroe explores how young entrepreneurs can convince talented employees to work for their company. "Human capital is hugely important for new businesses as it is closely linked to business survival and growth. Hiring talent is therefore crucial for them," she explains. Often, new entrepreneurs have a strong case for being an attractive employer. "However, many of them have little experience in recruiting staff and cannot rely on the support of HR professionals."
Together with her co-author Evila Piva from the Politechnikum in Milan, Silva Stroe investigated how entrepreneurs can use verbal and non-verbal communication to convincingly convey their company's unique qualities to job seekers and thus increase their applicant pool. "We showed job seekers videos of entrepreneurs presenting their companies' products or services. Then we asked them to rate the attractiveness of these companies as employers."
From the job seekers' ratings, it was clear that companies are seen as attractive employers if they communicate the innovativeness of their products or services and show a moderate amount of passion. "The most important conclusion from this study, is that entrepreneurs looking for employees should prioritise information about product innovation. If they interact with job seekers, it could be helpful to show passion. However, they should be careful not to over-emphasise it," explains Silvia Stroe.
The assistant professor cites several reasons why over-emphasising passion can have a negative effect. "When it comes to passion, there is not only a positive side, but also a negative side." Excessive passion runs the risk of making people rigid, unresponsive to feedback and inflexible. Job seekers were likely to fear that overly passionate entrepreneurs would display irrational commitment to their company and compulsive behaviour, which could have a detrimental effect on business performance and ultimately lead to business failure. "Furthermore, our results suggest that high levels of passion distract job seekers from processing the semantic content of the advertising messages," Silvia Stroe points out.
Long before the assistant professor for Entrepreneurship and Innovation came to the University of St.Gallen, she had already dealt with the challenges of new entrepreneurs in various research studies. What fascinates her about this topic? "Starting a new business is a highly emotional process. New entrepreneurs risk a lot. There is a risk that they take the wrong paths, lose the money they invested and neglect family and friends because they work around the clock," Silvia Stroe explains. She finds it exciting to follow the complex process of a young company and find out how it can better cope with the challenges.
She is already researching new aspects around young companies. "Among other things, it is about the question of how new companies affect investors. This is also an important topic for the survival of a young company." In her research, Silvia Stroe also often uses new technology. "Her usage of these tools shows that when watching a pitch presentation for example, rational and subconscious perceptions play a role in the interpretation of what they see.
Prof. Dr. Silvia Stroe has been an assistant professor in the Global Center of Entrepreneurship and Innovation (GCEI-HSG) since 1 February 2022. She focuses her research on the role of cognition and emotions in the entrepreneurial process.
Small Business Economics is a peer-reviewed academic journal published by Springer Science+Business Media that focuses on the study of entrepreneurship from various disciplines, including economics, finance, management, psychology and sociology.
Image: Unsplash / Ian Schneider