Why Do Leaders Matter? A Study of Expert Knowledge in a Superstar Setting – Economic Behaviour & Organization

This paper provides evidence of the importance of what might be termed „expert leaders‟. Although it is widely assumed that leaders affect the performance of their organizations, the complexity of this social-science research area has meant that comparatively little empirical progress has been made. We deliberately choose a narrow focus. We examine a high-skill setting in which there are accurate data on performance. We argue that an influential role is played by a leader‟s expert knowledge. A strong predictor of a leader‟s success in year T is that person‟s level of technical attainment, in the underlying activity, in approximately year T-20. Our data are on U.S. professional basketball. The paper documents a correlation between brilliance as a player and the (much later) winning percentage and playoff success of that person as a team coach. The results reveal that leaders‟ effects on performance are substantial and are visible in the data within the first 12 months of a coach being hired.