Political Directors and the Recruitment of Foreign Workers

Abstract

Companies strive to gain a competitive advantage by recruiting highly qualified employees. One way to achieve this goal is by recruiting foreign workers, frequently through the H-1B visa program. However, immigration has become a contentious political issue in the United States, making it more difficult to recruit foreign workers. We examine how politicians on the board influence recruitment strategies aimed at attracting foreign workers. Studying the aftermath of the 2016 U.S. presidential election and President Donald Trump’s “Buy American, Hire American” policy, we estimate the impact of political directors on recruiting strategies. By analyzing the near-universe of job advertisements in the United States, we develop novel firm-level measures of employment barriers for foreign workers. We find that the presence of political directors increased the employment barriers for foreign workers after Trump’s inauguration. We also argue that the information processing capabilities of the board moderate this effect: diverse boards and boards with Human Resources committees decrease the employment barriers for foreign workers, whereas shareholder meetings during periods of heightened political risk increase these employment barriers.