[yoyonamite]

My guess for the small companies that don't hire is that it's the incentives. If my outcomes as the hiring person are that a bad hire is a large negative, a no hire is a very slight negative, and a good hire is a slight positive (possibly even neutral), I'm going to prefer no hire most of the time. I believe this is a fairly common decision matrix.

For example:

bad hire lowers managements' opinion of my performance and can be costly to team morale, especially if company culture makes firing difficult

no hire can be blamed on lack of qualified developers rather than a competency issue

good hire is nice, but if current development team can push back on workload, that benefits the company much more than the development team