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

35 Pages Posted: 4 Oct 2012

See all articles by Sandra Hentschel

Sandra Hentschel

Bielefeld University

Gerd Muehlheusser

University of Hamburg; IZA Institute of Labor Economics

Dirk Sliwka

University of Cologne - Department of Business Administration and Human Resource Management; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 28, 2012

Abstract

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.

Keywords: managerial succession, teams, heterogeneity, tournaments

JEL Classification: D220, J440, J630

Suggested Citation

Hentschel, Sandra and Muehlheusser, Gerd and Sliwka, Dirk, The Impact of Managerial Change on Performance: The Role of Team Heterogeneity (September 28, 2012). CESifo Working Paper Series No. 3950. Available at SSRN: https://ssrn.com/abstract=2155640

Sandra Hentschel

Bielefeld University ( email )

Universitätsstraße 25
Bielefeld, NRW 33613
Germany

Gerd Muehlheusser (Contact Author)

University of Hamburg ( email )

Von Melle Park 5
Hamburg, 20146
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Dirk Sliwka

University of Cologne - Department of Business Administration and Human Resource Management ( email )

Koln, 50923
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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