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The Impact of Managerial Change on Performance. The Role of Team Heterogeneity

  • Sandra Hentschel
  • Gerd Mühlheusser
  • Dirk Sliwka

When a key responsibility of a manager is to allocate more or less attractive tasks to subordinates, these subordinates have an incentive to work hard and demonstrate their talents. As a new manager is less well acquainted with these talents this incentive mechanism is reinvigorated after a management change – but only when the team is sufficiently homogenous. Otherwise, a new manager quickly makes similar choices as the old one did. We investigate this hypothesis using a large data set on coach dismissals in the German football league where the selection of players is indeed a key task of the coach. Indeed, we find substantial evidence that coach replacements enhance team performance (only) in homogenous teams. Moreover, from a methodological point of view, we argue that there is typically a negative selection bias when evaluating succession effects, which might reconcile previous findings of no (or even negative) effects with the vast number of dismissals observed in reality.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3950.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3950
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