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Why Do Leaders Matter? The Role of Expert Knowledge

  • Goodall, Amanda H.


    (Cass Business School)

  • Kahn, Lawrence M.


    (Cornell University)

  • Oswald, Andrew J.


    (University of Warwick)

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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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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References listed on IDEAS
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  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. Francisco Pérez-González, 2006. "Inherited Control and Firm Performance," American Economic Review, American Economic Association, vol. 96(5), pages 1559-1588, December.
  6. 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.
  7. Hermalin, Benjamin E., 2007. "Leading for the long term," Journal of Economic Behavior & Organization, Elsevier, vol. 62(1), pages 1-19, January.
  8. 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.
  9. 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.
  10. repec:oup:qjecon:v:118:y:2003:i:4:p:1169-1208 is not listed on IDEAS
  11. 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.
  12. Sumon Majumdar & Sharun Mukand, 2007. "The Leader as Catalyst: On Leadership and the Mechanics of Institutional Change," Working Papers 1128, Queen's University, Department of Economics.
  13. Julio Rotemberg & Garth Saloner, 2000. "Visionaries, Managers, and Strategic Direction," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 693-716, Winter.
  14. 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.
  15. 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.
  16. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64, pages 242.
  17. Amanda Goodall, 2005. "Should Research Universities be led by top researchers? Part 1: Are they?," CEE Discussion Papers 0051, Centre for the Economics of Education, LSE.
  18. repec:oup:qjecon:v:122:y:2007:i:2:p:647-691 is not listed on IDEAS
  19. repec:oup:qjecon:v:120:y:2005:i:3:p:835-864 is not listed on IDEAS
  20. 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, vol. 370(2), pages 697-703.
  21. repec:oup:qjecon:v:111:y:1996:i:1:p:227-51 is not listed on IDEAS
  22. Goodall, Amanda H., 2009. "Highly cited leaders and the performance of research universities," Research Policy, Elsevier, vol. 38(7), pages 1079-1092, September.
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