Performance implications of financial resource allocation in new hiring: the case of major league baseball
ISSN: 0025-1747
Article publication date: 5 September 2023
Issue publication date: 24 October 2023
Abstract
Purpose
Integrating the resource-based view (RBV) with pay dispersion research, the authors examine how the allocation of resources between hiring new employees and compensating current employees, as well as the allocation of resources among new employees, affects organizational performance.
Design/methodology/approach
The authors use panel data on Major League Baseball teams. The authors also use system generalized method of moments (GMM) estimations to control for the impact of past performance on current performance, unobserved individual heterogeneity and omitted variable bias.
Findings
The authors find that the larger the portion of the human resources (HR) budget allocated to hiring new employees, the poorer organizational performance becomes unless the focal organization has already significantly underperformed. The authors also find that pay concentration among new employees has a positive impact on organizational performance unless the focal organization has already significantly overperformed.
Originality/value
This study extends RBV research by examining how resource allocation patterns affect organizational performance, which has rarely been studied. Moreover, by showing the organizational context's significant effect on the outcome of financial allocation for resource acquisition, this study extends both the RBV research and the pay dispersion research.
Keywords
Citation
Shin, H.W., Cho, S. and Lee, J.K. (2023), "Performance implications of financial resource allocation in new hiring: the case of major league baseball", Management Decision, Vol. 61 No. 10, pp. 2829-2850. https://doi.org/10.1108/MD-07-2022-0887
Publisher
:Emerald Publishing Limited
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