Performance Below Historical Aspirations, Team Size and Member Contribution Dispersion

Abstract

We study how negative performance deviations from historical aspirations influence team size and dispersion of team member contributions. Drawing on performance feedback theory we posit that organizational performance below historical aspirations in the most recent period will raise doubt in team members’ abilities. This will consequently trigger a search for talent which will result in larger teams. Doubt in members’ abilities will also lead to a less equitable contribution dispersion, with fewer team members entrusted with a larger contribution share toward team output. We also expect that these relationships will be weaker for more talented teams. Empirical analyses based on data from the English Premier League are consistent with our theoretical expectations. The fixed effects specification of our models and several supplemental analyses, including instrumental variable estimation, confirm the robustness of our findings.