Pipelines and Protection: How Financial Insecurity Shapes the Startup Workforce

This dissertation examines the implications of financial insecurity for the entrepreneurial labor force, including how employer-entrepreneurs manage this labor force. It is well known that venture employees – or “joiners” – endure lower pay and job security than the employees of established organizations, both of which undermine financial security (i.e., the perception that one’s financial resources are sufficient). While prevailing wisdom suggests that most joiners accept the risks of financial insecurity in exchange for the benefits of working for a new venture, the consequences of that tradeoff are poorly understood at both the levels of the individual and the joiner-entrepreneur relationship. This dissertation is divided into three chapters that examine the consequences of financial insecurity for joiners and their employers’ reactions to those consequences. The first chapter integrates the emergent and fragmented literature on financial insecurity, summarizing cumulative evidence for and mechanisms driving the adverse and self-reinforcing effects of financial insecurity (for employees in general, and for joiners specifically). The second chapter offers four empirical studies testing the role of financial insecurity in undermining incumbent joiners’ desire to work for another new venture, shedding new light on new venture talent pipelines. The third chapter presents a dyadic theory of financial protection behavior, which seeks to explain how and why employers act to protect the financial security of their employees in face of threats, including threats commonly faced by joiners. Together, these three chapters illustrate that financial insecurity is a major strain on the entrepreneurial labor force, but that entrepreneurs have substantial agency to ameliorate this strain. I discuss theoretical and practical implications of these studies for employer-entrepreneurs and the joiner workforce.