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Why do leaders matter? A study of expert knowledge in a superstar setting

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Author Info

  • Goodall, Amanda H.
  • Kahn, Lawrence M.
  • Oswald, Andrew J.

Abstract

This paper provides evidence of the importance of what might be termed 'expert leaders'. Although it is widely assumed that leaders affect the performance of their organizations, the complexity of this social-science research area has meant that comparatively little empirical progress has been made. We deliberately choose a narrow focus. We examine a high-skill setting in which there are accurate data on performance. We argue that an influential role is played by a leader's expert knowledge. A strong predictor of a leader's success in year T is that person's level of technical attainment, in the underlying activity, in approximately year T-20. Our data are on US professional basketball. The paper documents a correlation between brilliance as a player and the (much later) winning percentage and playoff success of that person as a team coach. The results suggest that leaders' effects on performance are substantial and are visible in the data within the first 12 months of a coach being hired.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 77 (2011)
Issue (Month): 3 (March)
Pages: 265-284

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Handle: RePEc:eee:jeborg:v:77:y:2011:i:3:p:265-284

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Organizational performance Firms Leadership Expert knowledge Fixed-effects Productivity;

References

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  1. Andrew K.G. Hildreth and Andrew J. Oswald, . "Rent-Sharing and Wages: Evidence from Company and Establishment Panels," Economics Discussion Papers 425, University of Essex, Department of Economics.
  2. Lawrence M. Kahn, 1993. "Managerial quality, team success, and individual player performance in major league baseball," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(3), pages 531-547, April.
  3. Borghans, Lex & Weel, Bas ter & Weinberg, Bruce A., 2008. "Interpersonal styles and labor market outcomes," Open Access publications from Maastricht University urn:nbn:nl:ui:27-22812, Maastricht University.
  4. Torun Dewan & David P. Myatt, 2007. "The Qualities of Leadership:Direction, Communication, and Obfuscation," STICERD - Political Economy and Public Policy Paper Series 24, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  5. Borghans, Lex & Duckworth, Angela Lee & Heckman, James J. & Weel, Bas ter, 2008. "The economics and psychology of personality traits," Open Access publications from Maastricht University urn:nbn:nl:ui:27-22807, Maastricht University.
  6. Chifeng Dai & Tracy R. Lewis & Giuseppe Lopomo, 2006. "Delegating Management to Experts," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 503-520, Autumn.
  7. Dawson, Peter & Dobson, Stephen & Gerrard, Bill, 2000. "Estimating Coaching Efficiency in Professional Team Sports: Evidence from English Association Football," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(4), pages 399-421, September.
  8. Sherwin Rosen & Allen Sanderson, 2000. "Labor Markets in Professional Sports," NBER Working Papers 7573, National Bureau of Economic Research, Inc.
  9. Barton Hughes Hamilton, 1997. "Racial discrimination and professional basketball salaries in the 1990s," Applied Economics, Taylor and Francis Journals, vol. 29(3), pages 287-296.
  10. Blanchflower, David G & Oswald, Andrew J & Sanfey, Peter, 1996. "Wages, Profits, and Rent-Sharing," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 227-51, February.
  11. Emrah Arbak & Marie-Claire Villeval, 2007. "Endogenous Leadership Selection and Influence," Working Papers 0707, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  12. Benjamin E. Hermalin, 1997. "Toward an Economic Theory of Leadership: Leading by Example," Microeconomics 9612002, EconWPA.
  13. Bernd Frick & Robert Simmons, 2007. "The Impact of Managerial Quality on Organizational Performance: Evidence from German Soccer," Working Papers 0708, International Association of Sports Economists & North American Association of Sports Economists.
  14. Julio Rotemberg & Garth Saloner, 2000. "Visionaries, Managers, and Strategic Direction," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 693-716, Winter.
  15. Morten Bennedsen & Kasper Meisner Nielsen & Francisco Pérez-González & Daniel Wolfenzon, 2007. "Inside the Family Firm: the Role of Families in Succession Decisions and Performance," The Quarterly Journal of Economics, MIT Press, vol. 122(2), pages 647-691, 05.
  16. Goodall, Amanda H., 2009. "Highly cited leaders and the performance of research universities," Research Policy, Elsevier, vol. 38(7), pages 1079-1092, September.
  17. Stefan Szymanski, 2000. "A Market Test for Discrimination in the English Professional Soccer Leagues," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 590-603, June.
  18. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  19. Sumon Majumdar & Sharun Mukand, 2008. "The Leader as Catalyst – on Leadership and the Mechanics of Institutional Change," CESifo Working Paper Series 2337, CESifo Group Munich.
  20. Marianne Bertrand & Antoinette Schoar, 2003. "Managing With Style: The Effect Of Managers On Firm Policies," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1169-1208, November.
  21. Benjamin F. Jones & Benjamin A. Olken, 2005. "Do Leaders Matter? National Leadership and Growth Since World War II," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 835-864, August.
  22. Lawrence M. Kahn, 2000. "The Sports Business as a Labor Market Laboratory," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 75-94, Summer.
  23. Peter Dawson & Stephen Dobson, 2002. "Managerial efficiency and human capital: an application to English association football," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(8), pages 471-486.
  24. Steven N. Kaplan & Mark M. Klebanov & Morten Sorensen, 2008. "Which CEO Characteristics and Abilities Matter?," NBER Working Papers 14195, National Bureau of Economic Research, Inc.
  25. Hermalin, Benjamin E., 2007. "Leading for the long term," Journal of Economic Behavior & Organization, Elsevier, vol. 62(1), pages 1-19, January.
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Citations

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Cited by:
  1. Goodall, Amanda H., 2011. "Physician-leaders and hospital performance: Is there an association?," Social Science & Medicine, Elsevier, vol. 73(4), pages 535-539, August.
  2. Goodall, Amanda H. & Pogrebna, Ganna, 2012. "Expert Leaders in a Fast-Moving Environment," IZA Discussion Papers 6715, Institute for the Study of Labor (IZA).
  3. Amanda Goodall, 2013. "Should Doctors Run Hospitals?," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 11(1), pages 37-40, 04.
  4. Goodall, Amanda H., 2012. "A Theory of Expert Leadership," IZA Discussion Papers 6566, Institute for the Study of Labor (IZA).

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