Major League Baseball managers: Do they matter?

Smart and Wolfe (2003) assessed the concurrent contribution of leadership and human resources to Major League Baseball (MLB) team performance. They found that player resources (defense/pitching and offence/batting) explained 67% of the variance in winning percentage, whereas leadership explained very little (slightly more than 1%) of the variance. In discussing the minimal contribution of leadership to their results, the authors suggested that future studies expand their operationalization of leadership. That is what is done in this study. Finding that the expanded operationalization has limited effect in explaining the contribution of leadership, we take an alternative tack in attempting to understand leadership in MLB. In addition, we estimate a production frontier (based on offensive and defensive resources), determine the efficiency of MLB managers relative to that frontier, and investigate the extent to which manager efficiency can be explained by manager characteristics. Finally, manager characteristics are related to manager compensation.