Career concerns and personnel investment in the Major League Baseball player draft

Abstract

This study examines the relationship between career concerns of organizational decision‐makers and their investments by analyzing data from Major League Baseball's (MLB) annual player draft. Career concerns for MLB general managers (GMs) can create incentives to prioritize near‐term success and thus spend fewer draft resources on high school players (who, being younger than college players, are less likely to provide near‐term benefit to an MLB team). Findings are consistent with this: underperforming expectations in the prior season leads teams to spend significantly smaller proportions of signing bonus dollars on high school players, an effect driven by GMs with relatively short tenures.