Hiring in a Recession? Performance Implications of Countercyclical Human Capital Sourcing

• DOI: 10.5465/ambpp.2017.17331abstract
• Publication Date: 2017-11-01T21:20:13Z
• Authors: Amit Jain Chauradia; John Mawdsley; Rhett Andrew Brymer
• Keywords: 8. Economic growth; 1. No poverty

Extant research theorizes that countercyclical hiring, i.e., hiring during economic downturns, can improve firm performance. However, prior studies have yet to unpack the conditions under which this seemingly paradoxical strategy–hiring talent when demand for firms’ products and services is less stable or declining–is beneficial for firms. In the context of the U.S. legal services industry, we theorize and predict that while firms may perceive they can achieve performance benefits from hiring expert talent during a recession, such recruitment harms performance. We theorize that during recessions, the sources of acquired hired human capital hold are more critical as hiring outcomes vary more dramatically across labor market pools during these economic downturns. We identify three sources for human capital from which we suggest firms can reduce the harmful performance effects of recessionary hiring. First, hiring human capital from institutions such as corporations or governments can establish or strengthen...