Hidden treasures or red flags? A recruiter's view of (not) hiring former entrepreneurs into corporate jobs

Abstract Entrepreneurs may enter the labor market to seek alternative employment opportunities, and their job applications are gaining increasing attention. With a focus on the recruiting side, we leverage the role congruity theory to examine how recruiters with various characteristics and backgrounds assess former entrepreneurs who apply for corporate jobs. We propose that job applicants with entrepreneurial experience will systematically receive fewer offers than otherwise equally qualified non‐entrepreneur applicants. However, we also suggest that this “entrepreneurship‐penalty effect” will be weakened when the recruiters are female, have shorter organizational tenure, or have entrepreneurial experience. We tested our hypotheses in a policy‐capturing experiment with follow‐up surveys using a sample collected in 2019 and 2022, that is, before and after the outbreak of COVID‐19. We found general support for our hypotheses and identified recruiters’ preferences for entrepreneur‐applicants at two‐time points. Results revealed that recruiters of different characteristics and backgrounds had varying assessments of former entrepreneur applicants, which provides implications for both sides of recruitment.