Candidate Selection in Teams: Be the Best or Surround Yourself with the Best?

Abstract

This study investigates, via an experiment, how the decentralization of a firm’s selection process affects the caliber of the chosen candidate in a team-based environment. We predict and find that, when decision makers have comprehensive and unambiguous candidate-specific information regarding who is the best for the job, the quality of the selected candidates is lower under a decentralized versus centralized selection process. We also find that nonpecuniary status concerns drive the effect. Results of two boundary conditions reveal that, as the clarity of information regarding who is the best candidate for the job decreases (due to decision-makers having weaker or mixed signals about job candidates), the quality of selected candidates becomes no worse under a decentralized than under a centralized selection process. Overall, our results indicate that nonpecuniary status considerations and information environment can influence candidate selection decisions in organizations. Data Availability: Data are available from the authors upon request.