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New research from the University of Illinois at Urbana-Champaign and ESMT Berlin explores the factors influencing the job choices of talented STEM PhDs, revealing how and why startups can hire high-caliber scientists and engineers .

Technology startups are often encouraged to hire the best scientists and engineers to help them succeed in commercializing cutting edge technologies. But why would talented employees leave jobs at big companies like Amazon and Google to work in risky startups for low pay?

Indeed, a growing body of entrepreneurship research suggests that The fact that employees in large established companies earn much less than their peers has been interpreted as evidence that startups are unable to hire high-caliber workers.

However, in a subsequent study management ScienceMichael Roach, associate professor at the Gies College of Business at the University of Illinois at Urbana-Champaign, and Henry Sauermann, professor of strategy and academic director of the Valley Entrepreneurship Hub at ESMT Berlin, point out that some high-potential employees prefer to be involved. Startups for non-monetary gains despite earning a low salary.

Michael Roach says, “A key insight from our research is that many high-potential scientists and engineers choose jobs at early-stage startups rather than large tech companies because of specific career preferences that the unique work setting that startups offer.” align better with. “Many of these individuals are interested in becoming startup employees rather than founders, which is contrary to the popular belief that it is primarily aspiring entrepreneurs who choose to work at startups.”

Plus, Roach says that aspiring founders are also more likely to work at startups, often to gain experience that will help them become better entrepreneurs in the future.

using the For almost a decade, more than 2,000 science and engineering Ph.D. By following a group of women, the researchers measured the career preferences of the respondents. And he got Ph.D. related to. First-time industry jobs for graduates in startups or established firms. This comprehensive approach allowed the researchers to draw a nuanced picture of the factors influencing job choice among high-calibre scientists and engineers.

“High-potential graduates at startups earn roughly 20% less salary than their peers at established companies,” says Henry Sauerman. “This suggests that for these individuals, the non-financial benefits of startup employment outweigh the lower levels of pay and resources compared to established firm employment.”

More detailed data on underlying reasons reveals that startup joiners highly value factors such as autonomy and opportunities to work on cutting-edge technologies. By analyzing both job applications and job offers, the researchers also found that a large pool of individuals attracted to work at startups enables startups to “cherry-pick” the most talented applicants. As a result, startup employees are on average more capable than employees at established firms, as Ph.D. is measured using. Program Ranking.

Roach and Sauerman’s research provides valuable insights for founders, managers and policy makers. It suggests that early-stage technology startups can overcome the challenges of attracting and retaining human capital by attracting individuals who have a strong preference to operate in an entrepreneurial environment.

“While these individuals appear willing to ‘pay’ to work in startups, it is not necessarily ‘free’ to their employers. Rather, some of the characteristics that attract workers to startups – such as autonomy – may need to be carefully managed and may involve costs of their own,” the authors caution.

PHD. For. For scientists considering their career path, the study offers a new perspective. This suggests that people who are attracted to the dynamic and innovative environment of startups may have to accept lower pay and higher risk, but may end up with a more satisfying job.

Still, the authors advise job seekers to carefully consider what each type of job involves, rather than relying on assumptions and stereotypes. They recommend not only using comparative data on things like salary, but also qualitative insights from current employees and those who have left the company.

The study also has implications for the broader technology sector and economy. By demonstrating that startups can attract high potential , it underscores the potential of startups to spur innovation and economic growth. The findings also highlight the benefits of fostering an entrepreneurial culture and environment in established firms to attract and retain top talent.

more information:
Michael Roach et al, Can Technology Startups Hire Talented Early Employees? qualifications, preferences and choice of the employee’s first job, management Science (2023). DOI: 10.1287/mnsc.2023.4868

Journal Information:
management Science

Provided by European School of Management and Technology

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