Startup workers flee for bigger, more established companies during pandemic
Findings reveal vulnerability of early-stage firms in downturns
IMAGE:
TING XU IS AN ASSISTANT PROFESSOR OF FINANCE AT THE UNIVERSITY OF TORONTO'S ROTMAN SCHOOL OF MANAGEMENT. HIS RESEARCH FOCUSES ON ENTREPRENEURIAL FINANCE, INNOVATION, LABOR AND PRODUCTIVITY. HIS WORK HAS EXPLORED ANGEL FINANCING, CROWDFUNDING, INNOVATION DIFFUSION, STARTUP LABOR MARKET, AND THE BOUNDARY OF PUBLIC AND PRIVATE FIRMS. HIS WORK HAS BEEN PUBLISHED IN LEADING ACADEMIC JOURNALS, INCLUDING THE JOURNAL OF FINANCE, THE REVIEW OF FINANCIAL STUDIES, THE REVIEW OF ECONOMICS AND STATISTICS, AND THE JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS. HIS RESEARCH HAS BEEN COVERED IN NEWS OUTLETS SUCH AS BLOOMBERG, NPR, BBC, SLATE, AND POLITICO, AND HAS BEEN PRESENTED TO REGULATORS SUCH AS THE SEC AND THE US HHS. HIS RESEARCH HAS RECEIVED FUNDING FROM THE SOCIAL SCIENCES AND HUMANITIES RESEARCH COUNCIL OF CANADA, THE CANADIAN SECURITIES INSTITUTE RESEARCH FOUNDATION, AND THE CANADIAN FOUNDATION FOR GOVERNANCE RESEARCH.
view moreCREDIT: UNIVERSITY OF TORONTO
October 19, 2023
Startup workers flee for bigger, more established companies during pandemic
Findings reveal vulnerability of early-stage firms in downturns
Toronto - The world may have felt like it had stopped in the pandemic’s first weeks. But a “flight to safety” was underway at a popular digital job platform catering to the startup sector.
Digging into the data for nearly 180,000 users from AngelList Talent (now called Wellfound), the biggest online recruitment platform for private and entrepreneurial companies, researchers have found that U.S. job hunters turned away from smaller, early-stage companies in favour of positions at bigger, more established firms.
Just as research has shown investors rush to safer places for their money during downturns, the labour market shows similar behaviour – and this is the first study to document it, points out researcher Ting Xu, an assistant professor of finance at the University of Toronto’s Rotman School of Management.
“Our results explain why startups struggled in the COVID-19 downturn despite a robust financing market,” said Prof. Xu, who conducted the study with fellow researchers Shai Bernstein of Harvard Business School and Richard R. Townsend of the University of California San Diego.
They found that, compared to the period before, job hunters were 20 per cent more likely to search for work at companies with more than 500 employees after March 13, 2020 when the U.S. declared a state of national emergency over the pandemic. The companies were concentrated in sectors such as IT, media, e-commerce, healthcare and business services.
The average size of companies that job seekers searched also grew by 29 per cent after March 13, continuing until mid-May, the end of the examined data period. Job seekers were also more likely to search companies that were bigger than their employment at the time.
The general trends didn’t change in the application phase. The average size of companies where workers applied increased by eight per cent and the firms were 16 per cent more likely to be in a later stage of fundraising.
The overall trend was driven by highly-skilled, better-educated job seekers, which is no small thing, Prof. Xu said. “It’s not only the quantity of talent that matters for firm success, but also its quality,” he said. “If the shift is concentrated among high-quality candidates, it means that the startups are not just losing access to any talent, but to the best talent that are critical to their success.”
Not only did applications to smaller, early-stage startups dropped by 20 per cent, the researchers found these companies became less responsive to the applications they did get and were less likely to hire – a signal, said Prof. Xu, that the quality of applications dropped.
The research helps to explain why startups, theorized to be well-positioned to seed new growth during an economic recovery, tend instead to suffer: “Startups struggle to hire during downturns,” said Prof. Xu.
The pandemic was an ideal period to study this behaviour because it was not as complicated by other potential contributing factors as in other economic downturns. People’s economic expectations dropped off much more sharply and quicker, and startup financing remained relatively healthy.
The paper has been accepted for publication in The Review of Financial Studies.
Bringing together high-impact faculty research and thought leadership on one searchable platform, the new Rotman Insights Hub offers articles, podcasts, opinions, books and videos representing the latest in management thinking and providing insights into the key issues facing business and society. Visit www.rotman.utoronto.ca/insightshub.
The Rotman School of Management is part of the University of Toronto, a global centre of research and teaching excellence at the heart of Canada’s commercial capital. Rotman is a catalyst for transformative learning, insights and public engagement, bringing together diverse views and initiatives around a defining purpose: to create value for business and society. For more information, visit www.rotman.utoronto.ca.
JOURNAL
Review of Financial Studies
METHOD OF RESEARCH
Data/statistical analysis
SUBJECT OF RESEARCH
People
ARTICLE TITLE
Flight to Safety: How Economic Downturns Affect Talent Flows to Startups
Communities of color experienced fear and mistrust of institutions during COVID-19 pandemic
UC Riverside-led study calls for culturally sensitive health interventions to address trauma
Peer-Reviewed PublicationIMAGE:
PHOTO SHOWS ANN CHENEY (LEFT) AND EVELYN VÁZQUEZ.
view moreCREDIT: SCHOOL OF MEDICINE, UC RIVERSIDE.
RIVERSIDE, Calif. -- A study led by researchers in the School of Medicine at the University of California, Riverside, has found that in communities of color in Inland Southern California, historical, cultural, and social traumas induce fear and mistrust in public health and medical, scientific, and governmental institutions, which, in turn, influence these communities’ hesitation to get tested and vaccinated for COVID-19.
The study, published in Culture, Medicine, and Psychiatry, underscores the need for community-based health interventions that consider structural and social determinants of health to address such traumas experienced by racial/ethnic minority populations in the U.S.
From January to March 2021, the researchers, led by Ann Cheney, an associate professor of social medicine, population, and public health, conducted 11 virtual focus groups (5-10 people attended each focus group) who identified as Black/African American, Latinx/Indigenous Latin American, and/or Native American/Indigenous. Participants shared information on the cultural and structural factors that shaped their COVID-19 testing and vaccination.
“We found the intersection of historical, cultural, and social traumas contributed to fear and mistrust in institutions — government, medicine, and public health,” Cheney said. “These different levels of trauma intersect and shape decision-making around COVID-19 testing and vaccination in the current pandemic.”
Evelyn Vázquez, the first author of the research paper and a community psychologist, led the data analysis of the 11 focus groups and used the findings to develop a theoretical model, called the “Continuum of Trauma,” to show how the different types of trauma shape COVID-19-related decisions among disadvantaged populations. The model crosses temporal, cultural, and social spaces among communities of color.
“This model describes the shared grief, assault on collective identity, and marginalization among racial and ethnic minorities in Inland Southern California,” said Vázquez, an assistant professional researcher in the Department of Social Medicine, Population, and Public Health. “We found that collective experiences of trauma across the continuum have induced fear, hesitancy, and institutional mistrust among marginalized communities.”
Key findings from the focus groups:
- All participants discussed historically based trauma as grounded in structural racism and histories of government and public health abuses.
- Black/African American and Native American/Indigenous community participants talked about the U.S. government’s falsehoods and lies.
- Latinx/Indigenous Latin American community members spoke about classism they faced, the loss of religious leaders during the pandemic, fear and mistrust in public health, and fear of job loss.
- All participants shared how the COVID-19 pandemic affected their collective identity.
- All participants found social trauma and racial- and income-based inequities were pronounced in the current pandemic.
- Many faced job-related stress, childcare concerns, and housing inequities.
- Many experienced discrimination in health-care settings.
- Many distrusted government institutions, feared seeking medical care, and were reluctant to get tested and vaccinated for COVID-19.
“Trauma exists along a continuum and contributes during the COVID-19 pandemic to health disparities as well as fear and mistrust in institutions,” Vázquez said. “For collective healing, we need community-based approaches. For example, transformative interventions that impinge upon structural and social determinants of health can address the fear and mistrust of institutions.”
Vázquez explained that this fear and mistrust stem from historical trauma and colonizing practices in the history of medicine.
“Fear and mistrust are also linked to cruelty enacted by the U.S. government towards racial/ethnic minorities and loss of community elders and their knowledge,” she said.
Cheney stressed that interventions could transform three types of power in historically marginalized groups: political, economic, and social.
“Interventions can promote community-level health equity and freedom from trauma by promoting health education and literacy and providing access to community-based interventions developed by communities of color for communities of color,” she said. “To succeed, interventions must be culturally sensitive and responsive.”
Cheney and Vázquez were joined in the study by Michelle Burroughs of UCR, Preeti Juturu of UCLA, and Juliet McMullin of UC Irvine.
The research paper is titled “Continuum of Trauma: Fear and Mistrust of Institutions in Communities of Color During the COVID-19 Pandemic.”
The University of California, Riverside is a doctoral research university, a living laboratory for groundbreaking exploration of issues critical to Inland Southern California, the state and communities around the world. Reflecting California's diverse culture, UCR's enrollment is more than 26,000 students. The campus opened a medical school in 2013 and has reached the heart of the Coachella Valley by way of the UCR Palm Desert Center. The campus has an annual impact of more than $2.7 billion on the U.S. economy. To learn more, visit www.ucr.edu.
JOURNAL
Culture Medicine and Psychiatry
METHOD OF RESEARCH
Survey
SUBJECT OF RESEARCH
People
ARTICLE TITLE
Continuum of Trauma: Fear and Mistrust of Institutions in Communities of Color During the COVID-19 Pandemic
No comments:
Post a Comment