The purpose of this paper is to investigate employers’ recruitment strategies to address distinct job-related agency problems before establishing an employment relationship. Insights from agency theory and the social embeddedness perspective are combined to hypothesize whether and why employers adapt their recruitment strategies to the job type (differing in level of discretion) for which they are externally hiring.
The hypotheses are empirically tested using data from a survey of 288 Dutch employers. Questions were asked about the two types of jobs. Multi-level logistic regression analysis is applied to investigate the effect of social context on the choice of recruitment strategy. In addition to that, separate analyses are conducted for the two job types, using logistic regression analysis.
As predicted, employers have the tendency to use informal recruitment channels more often for jobs with high degree of discretion (i.e. managerial, professional, and specialists jobs (MPS)) than for jobs with low degree of discretion (i.e. administrative and supporting jobs). In addition, the type of information transmitted through employers’ social contacts matters for their recruitment strategies. In particular, the reliable and trustworthy information from contacts with friends and family is more important for MPS jobs. This seems to be the way employers deal with the high agency costs characterizing this type of jobs.
This study extends prior research as follows. First, while earlier studies more closely looked at why organizations use formal or informal recruitment, this study specifically focusses on the role the job type plays in the hiring process. Second, it provides an extension of agency theory by including job type in the analyses. And, third, the study examines how the networks of employers, rather than employees, affect the hiring process.
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