Referral bonuses in global talent acquisition: the role of social networks in China and the US

In the contemporary “war for talent,” multinational enterprises increasingly deploy referral hiring, using bonuses to identify and attract prospective job candidates. Despite the emergence of referral bonuses as a global “best practice,” our knowledge about how bonuses operate across diverse national contexts is insufficient. In this paper, we leverage insights from social network research to develop our theory about how context shapes the effect of bonuses on job referring. We hypothesize that the effect of bonuses on referrals is stronger in China, where affective networks dominate, than in the United States, where instrumental networks dominate. In China, employees perceive bonuses as a tacit approval to engage in behavior they already find socially desirable. Thus, while bonuses incentivize referrals in the US, they legitimize them in China. Data from nationally representative surveys conducted in the US and China in 2012 support our hypothesis. Further analyses reveal that bonuses are associated with more external referrals (referrals to employers other than one’s own) in China, a finding not replicated in the US, providing additional support for the legitimization mechanism. The results underscore how social networks shape hiring processes in diverse national contexts and call for a richer model of motivations in job referring.