More than money: The symbolic role of stock options in tech worker attraction by technology startups

The survival and growth of early-stage technology startups depend heavily on their ability to attract tech workers. It is popular for startups to offer stock options to rank-and-file tech workers, a practice rooted in the financial view that the financial prospects associated with these offerings help attract employees. Yet, recent research suggests tech workers often lack the knowledge necessary to properly evaluate stock options, casting doubt on this justification. To this end, we conducted a series of experiments to examine whether, and why, startup stock options may attract tech workers. We find a strong employee attraction effect for startups that offer stock options, which however is only partially driven by financial considerations. A more important driver appears to be tech workers' inference about a startup's unobservable qualities, particularly how it treats employees. While tech workers are aware of stock options' financial implications, they make financially calculated decisions only when explicitly prompted to do so. Recognizing that the financial view has limited applicability, our study highlights the importance of a symbolic approach to understanding stock options in startup recruiting. Our study contributes to the literature on startup recruiting and stock options by offering a more nuanced understanding of how tech workers make sense of stock option offerings and by highlighting the importance of a symbolic view alongside the prevailing financial view.