Abstract
We developed two studies in order to understand the relationship between pay dispersion and team performance. In Study 1, we examined the relationship between pay dispersion and team performance by using publicly available databases containing pay-related data and team-performance data. Results showed that there is a positive relationship between pay dispersion and team performance for the National Basketball Association (NBA), a negative relationship for Major League Baseball (MLB), and no significant relationship for the National football League (NFL). Furthermore, we found an inversed U-shaped relationship for the NBA. In Study 2, we addressed whether task interdependence exists across professional sports. Unlike what we expected regarding the role of task interdependence (i.e., reciprocal task interdependence), we argue that factors such as a salary cap, cooperative hierarchy, and reliance upon key players could be critical factors for determining the effectiveness of pay dispersion. Both theoretical and practical implications are discussed.
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