The Effects of Pay Disparity in a Team’s Strategic Core

Abstract

Effective teamwork among all members of a team is important, yet team performance is often driven by star performers, or by a team’s strategic core. Although research indicates that apportioning a greater percentage of financial resources to a team’s strategic core—team members who encounter more team problems, have greater exposure to team tasks, and are more central to team workflow—is connected with greater team success, how those financial resources are disbursed among the strategic core should affect the manner and extent of contributions a team receives from its core role holders. Using a combination of equity theory and money priming theory as a conceptual basis, we posit that inequitable pay disparity among core role holders on a team is negatively associated with team performance and that this effect is stronger when strictly considering a team’s strategic core as opposed to considering the team as a whole. We examine team effort and coordination as explanatory mechanisms for this expected effect and test our hypotheses in a sample of professional basketball teams from the National Basketball Association. Results support a negative connection between inequitable pay disparity and team performance, but only when the disparity exists among core role holders (as opposed to the entire team) and only via the mediating mechanism of team coordination (not team effort). These findings underscore the pervasive impact of core role holders on team performance, emphasizing that how core role holders are paid is meaningfully connected with team success.