Organizations tout the importance of innovation and entrepreneurship. Yet, when hiring it remains unclear how they evaluate entrepreneurial human capital—namely, job candidates with founder experience. How hiring firms evaluate this experience—and especially how this evaluation varies by entrepreneurial success and failure—reveals insights into the structures and processes within organizations. Organizations research points to two perspectives related to the evaluation of founder experience: Former founders may be advantaged, due to founder experience signaling high-quality capabilities and human capital, or disadvantaged, due to concerns related to fit and commitment. To identify the dominant class of mechanisms driving the evaluation of founder experience, it is important to consider how these evaluations differ, depending on whether the founder’s venture failed or succeeded. To isolate demand-side mechanisms and hold supply-side factors constant, we conducted a field experiment. We sent applications varying the candidate’s founder experience to 2,400 software engineering positions in the United States at random. We find that former founders received 43% fewer callbacks than nonfounders and that this difference is driven by older hiring firms. Further, this founder penalty is greatest for former successful founders, who received 33% fewer callbacks than former failed founders. Our results highlight that mechanisms related to concerns about fit and commitment, rather than information asymmetry about quality, are most influential when hiring firms evaluate former founders in our context.

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Research SummaryGiven the high cost of external hiring and uncertainty related to performance benefits, how can organizations foster an environment that maximizes the post‐mobility performance of external hires and their collaborators? In this article, I posit that R&D team design is an important factor that could shape the post‐mobility performances of both groups. Building on the interfirm mobility, innovation, and teams literatures, I argue that technological knowledge diversity within teams and across teams could differently impact innovation performance. Analyzing 63,976 interfirm moves of engineers and scientists, I find that the post‐mobility performances of external hires and teammates are conditioned by team design. A high level of within‐team diversity improves the performances of both groups, while a high level of across‐team diversity hurts their innovation outcomes.Managerial SummaryIn the war for talent, firms often offer premium wages to source external hires. Yet there have been unclear expectations about the post‐mobility outcomes of these hires and the implications for team performance. To better assess the value of hiring, managers should look beyond the performance of external hires and also consider team member performance. In the context of knowledge production activities, external hires, on average, experience an improvement in innovation performance after they move. Working with an external hire reduces the productivity of immediate collaborators but leads to more breakthrough innovations with greater technological impact. Most importantly, the performances of external hires and their teammates can be further improved by effectively designing R&D teams. Recomposing teams such that a high level of diversity exists within a team but minimal divergence across teams creates an environment that appears to enhance post‐mobility innovation activities.

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