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Why Do Leaders Matter? The Role of Expert Knowledge

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  • Goodall, Amanda H.

    ()
    (Cass Business School)

  • Kahn, Lawrence M.

    ()
    (Cornell University)

  • Oswald, Andrew J.

    ()
    (University of Warwick)

Abstract

Why do some leaders succeed while others fail? This question is important, but its complexity makes it hard to study systematically. We examine an industry in which there are well-defined objectives, small teams, and exact measures of leaders’ characteristics. We show that a strong predictor of a leader’s success in year T is that person’s own level of attainment, in the underlying activity, in approximately year T-20. Our data come from 15,000 professional basketball games. The effect on team performance of the coach’s ‘expert knowledge’ is large and is discernible in the data within 12 months of his being hired.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3583.

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Length: 39 pages
Date of creation: Jul 2008
Date of revision:
Publication status: published in: Journal of Economic Behavior and Organization, 2011, 77(3), 265-284
Handle: RePEc:iza:izadps:dp3583

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Keywords: leadership; productivity; firms; organizational performance; fixed-effects;

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References

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  1. Benjamin E. Hermalin, 1997. "Toward an Economic Theory of Leadership: Leading by Example," Microeconomics, EconWPA 9612002, EconWPA.
  2. Aidt, Toke S. & Leong, Bernard & Saslaw, William C. & Sgroi, Daniel, 2006. "A power-law distribution for tenure lengths of sports managers," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 370(2), pages 697-703.
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  5. Hilderth, A.K. & Oswald, A.J., 1993. "Rent-Sharing and Wages: Evidence form Company and Establishment Panels," Economics Series Working Papers 99154, University of Oxford, Department of Economics.
  6. Goodall, Amanda H., 2009. "Highly cited leaders and the performance of research universities," Research Policy, Elsevier, Elsevier, vol. 38(7), pages 1079-1092, September.
  7. Blanchflower, David G & Oswald, Andrew J & Sanfey, Peter, 1996. "Wages, Profits, and Rent-Sharing," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 111(1), pages 227-51, February.
  8. Amanda Goodall, 2005. "Should Research Universities be led by top researchers? Part 1: Are they?," CEE Discussion Papers, Centre for the Economics of Education, LSE 0051, Centre for the Economics of Education, LSE.
  9. Chifeng Dai & Tracy R. Lewis & Giuseppe Lopomo, 2006. "Delegating management to experts," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 503-520, 09.
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  11. 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, MIT Press, vol. 122(2), pages 647-691, 05.
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  13. 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.
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  15. 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.
  16. Hermalin, Benjamin E., 2007. "Leading for the long term," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 62(1), pages 1-19, January.
  17. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 64, pages 242.
  18. Lawrence M. Kahn, 2000. "The Sports Business as a Labor Market Laboratory," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 14(3), pages 75-94, Summer.
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  20. 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, MIT Press, vol. 120(3), pages 835-864, August.
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Citations

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Cited by:
  1. Goodall, Amanda H., 2012. "A Theory of Expert Leadership," IZA Discussion Papers 6566, Institute for the Study of Labor (IZA).
  2. Sue Bridgewater & Lawrence M. Kahn & Amanda H. Goodall, 2009. "Substitution Between Managers and Subordinates: Evidence from British Football," NCER Working Paper Series, National Centre for Econometric Research 51, National Centre for Econometric Research.
  3. Goodall, Amanda H., 2011. "Physician-leaders and hospital performance: Is there an association?," Social Science & Medicine, Elsevier, Elsevier, vol. 73(4), pages 535-539, August.
  4. Amanda Goodall, 2013. "Should Doctors Run Hospitals?," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 11(1), pages 37-40, 04.
  5. Gürerk, Özgür & Irlenbusch, Bernd & Rockenbach, Bettina, 2009. "Motivating teammates: The leader's choice between positive and negative incentives," Journal of Economic Psychology, Elsevier, Elsevier, vol. 30(4), pages 591-607, August.
  6. Goodall, Amanda H., 2009. "Highly cited leaders and the performance of research universities," Research Policy, Elsevier, Elsevier, vol. 38(7), pages 1079-1092, September.
  7. Goodall, Amanda H. & Pogrebna, Ganna, 2012. "Expert Leaders in a Fast-Moving Environment," IZA Discussion Papers 6715, Institute for the Study of Labor (IZA).

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