Employers' social contacts and their hiring behaviour in a vignette study

This study addresses two main research questions. First, whether referrals from employers’ business and professional contacts matter for their hiring behaviour, and if so, why. Second, whether employers’ use of educational qualifications as screening criteria varies in the presence of referrals from their business and professional contacts. Theoretically, various hypotheses were formulated, arguing that driven by different mechanisms, applicants referred by business or professional contacts will more likely be hired, fit better in the new working environment, and be easily trainable than the non-referred applicants. Moreover, the presence of such social contacts will in particular increase the role of educational qualifications as screening criteria. Based on a combination of a factorial survey (also known as a vignette study) with an experimental design with a sample of employers in England, we were able to assess the causal effect of employers’ social contacts on their hiring decisions and the underlying mechanisms. Our results show that due to informational advantages, referrals from business and professional contacts of employers do matter for their hiring behaviour. Moreover, educational credentials are indeed the only screening criteria that gain additional weight in increasing the likelihood of an applicant being hired, being considered as easily
trainable, and fitting well in the new working environment, when the applicant is referred by an employer’s business or professional contacts. This reinforces the argument made in the literature that, when formal educational qualifications are not easily interpretable due to loose linkages between school curricula and occupational profiles, informal recruitment channels can represent a compensatory strategy for employers to deal with poor signalling.