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

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

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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File URL: http://www.sciencedirect.com/science/article/B6V8F-51F7PJB-1/2/338f80ba2dc36c5ba56a9ba452a06c9e
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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
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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  9. 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.
  10. Lawrence M. Kahn, 1993. "Managerial Quality, Team Success, and Individual Player Performance in Major League Baseball," ILR Review, Cornell University, ILR School, vol. 46(3), pages 531-547, April.
  11. 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.
  12. Hermalin, Benjamin E, 1998. "Toward an Economic Theory of Leadership: Leading by Example," American Economic Review, American Economic Association, vol. 88(5), pages 1188-1206, December.
  13. Lex Borghans & Angela Lee Duckworth & James J. Heckman & Bas ter Weel, 2008. "The Economics and Psychology of Personality Traits," NBER Working Papers 13810, National Bureau of Economic Research, Inc.
  14. 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.
  15. Borghans, Lex & ter Weel, Bas & Weinberg, Bruce A., 2006. "Interpersonal Styles and Labor Market Outcomes," IZA Discussion Papers 2466, Institute for the Study of Labor (IZA).
  16. 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.
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  18. 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.
  19. 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.
  20. Francisco Pérez-González, 2006. "Inherited Control and Firm Performance," American Economic Review, American Economic Association, vol. 96(5), pages 1559-1588, December.
  21. Julio Rotemberg & Garth Saloner, 2000. "Visionaries, Managers, and Strategic Direction," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 693-716, Winter.
  22. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  23. Kahn, Lawrence M & Sherer, Peter D, 1988. "Racial Differences in Professional Basketball Players' Compensation," Journal of Labor Economics, University of Chicago Press, vol. 6(1), pages 40-61, January.
  24. 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.
  25. 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.
  26. 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.
  27. 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.
  28. Hermalin, Benjamin E., 2007. "Leading for the long term," Journal of Economic Behavior & Organization, Elsevier, vol. 62(1), pages 1-19, January.
  29. Barton Hughes Hamilton, 1997. "Racial discrimination and professional basketball salaries in the 1990s," Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 287-296.
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