Negative word-of-mouth and applicant attraction : the role of employer brand equity

Word-of-mouth (WOM) is a valued source of employment information for job seekers. Given mixed prior research findings, we do not yet understand when and why negative WOM affects applicant decision-making. Building on signaling theory and brand equity literature, we propose that the strength of the negative signal provided by negative WOM varies depending on applicants' knowledge of an employer and its image and reputation, conceptualized as employer brand equity. First, in an experimental study, we find that employer brand equity moderates the relation between negative WOM and potential applicants' attraction to employers. Specifically, the negative effect of negative WOM is weaker when the organization is positively or negatively well-known than when the organization is unknown. Second, a qualitative field study among actual job seekers shows that employer brand equity buffers against the negative effect of negative WOM not only on applicants' attraction, but also on their application and job choice decisions. In case of sufficient prior positive employer knowledge, most job seekers would apply, even after receiving negative WOM. Moreover, the consistency between the negative WOM and job seekers' prior knowledge about the organization seems to play a role. Finally, in case of limited prior knowledge, certain contingency variables (i.e., consensus, verification, and direct experience) influence the signaling power of negative WOM. Providing more insights on the potential impact of negative WOM and the role of employer brand equity can help applicants to take a more informed approach in their job search and offer organizations possible avenues to minimize the impact of negative WOM