Firms often hire individuals with entrepreneurial experiences, but we know little about the effect of hiring such talents. This paper seeks to explore the circumstances under which hiring ex-founders can either hinder or enhance the performance of the hiring firm. Drawing on the theory of informal organizations and knowledge recombination, I propose that newcomers with firm-founding experiences can trigger status competition with incumbent employees, obstructing knowledge exchange among members. Through an analysis of hiring decisions made by global high-end fashion firms from 2001 to 2019, I show that firms that have recently hired employees with firm-founding backgrounds experience a negative impact on their creative performance. However, this effect can be mitigated a) when the hiring firm possesses a strong identity and b) when its design team orchestrates its employees with a steep hierarchical structure.
