Mixing the princes and the paupers: Pay and performance in the National Basketball Association

Simmons, Robert; Berri, David J.

doi:10.1016/j.labeco.2010.11.012

Cited by 49 publications

(33 citation statements)

References 31 publications

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“…Thus, overcoming some of the analytical problems, the DeBrock et al (2004) findings reported very similar estimates of a negative relationship between pay dispersion and team performance in the baseball context. Simmons & Berri (2011) conducted an additional analysis in the NBA to overcome the residual dispersion issue and other limitations. Although focused on individual player performance and not team wins as an outcome, they constructed a measure of justified inequality, or the amount of dispersion that could be reasonably explained by existing player talents, as well as a measure of unjustified inequality.…”

Section: Team Performancementioning

confidence: 99%

Pay Dispersion

Shaw

2014

Annu. Rev. Organ. Psychol. Organ. Behav.

135

179

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This article describes and evaluates the substantial literature on the performance-, turnover-, and attitude-related outcomes of pay dispersion. In the past 15 years, compensation researchers have identified and pursued the resolution of well-known theoretical dilemmas about reward allocations and, as a result, have made much progress in terms of understanding the consequences of pay structures. This review explores the evolution of several contingencies of these relationships, including the effects of explained versus unexplained variation in pay, the role of work interdependence, and the nature of other pay-system characteristics. The article concludes with a summary evaluation, the proposal of several stylized facts about the consequences of pay dispersion, and a research agenda to aid researchers in addressing unresolved issues in the literature.

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Section: Team Performancementioning

confidence: 99%

Pay Dispersion

Shaw

2014

Annu. Rev. Organ. Psychol. Organ. Behav.

135

179

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“…Therefore, the presence of tie-hirings is correlated with a general measure of roster stability. Simmons and Berri (2011) recently found evidence for a positive effect of roster stability on player performance in the NBA. They argued that continuous interactions of a stable group of players incorporate learning and peer effects.…”

Section: Resultsmentioning

confidence: 98%

The Temptation of Social Ties: When Interpersonal Network Transactions Hurt Firm Performance

2012

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We introduce agency concerns to social capital theory and predict that managers can use individual social capital to reduce personal effort costs, which is not in the best interest of the firm. To test this prediction, we collect data on all 8,019 hiring decisions from general managers in the National Basketball Association between 1981 and 2011. We find that managers have a clear preference for hiring players through social ties. The probability that a manager hires players from an NBA franchise to which he is socially tied is 27.6% higher than for an untied franchise. To isolate the motivation for this behavior, we complement our data with information on the sporting performance of teams. In line with agency theory, we find that the hiring of players through social ties reduces team performance. The effect is large: on average, each social-tie player reduces team winning percentage by 5.4%. Overall, this paper documents first empirical evidence that decision makers' use of individual social capital can lead to reduced firm-level performance.

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“…This idea is forwarded by Rosen (1981) who observes the "superstar" effect and that wide variation in salaries is important in team success. Simmons and Berri (2011) examine the salary structure of the National Basketball Association (NBA) and also conclude that increased pay inequality enhances player performance and increases the probability of success. However, this research of pay inequality in sports is not uniformly consistent.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of NFL salary cap concentration on team success

Zimmer¹

2016

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The paper empirically tests National League Football (NFL) team data from 2000 through 2009 to ascertain factors of team performance. Of particular interest is the assessment of payroll distribution on team performance. The results indicate that the salary concentration has a non-linear influence on team performance. Success in the NFL can be best achieved at either extreme of low or high salary concentrations. A threshold of team talent must be assembled before on field success is achieved. Acquiring elite talent, especially at the quarterback position, is likely the best alternative to achieve high levels of team performance. It is further shown that larger markets have a positive performance bias which suggests an ability to more easily acquire better player talent. The results indicate that NFL salary distribution has an impact on team success, and that it is preferable to acquire fewer elite players than many good players.

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Mixing the princes and the paupers: Pay and performance in the National Basketball Association

Cited by 49 publications

References 31 publications

Pay Dispersion

Pay Dispersion

The Temptation of Social Ties: When Interpersonal Network Transactions Hurt Firm Performance

The Impact of NFL salary cap concentration on team success

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