Wage dispersion and team performance: evidence from the small size professional baseball league in Taiwan

Abstract

By using professional baseball teams in Taiwan as an example, these articles address the issue of how wage disparities affect organizational performance. Salary and performance data on 364 players on seven teams for the years 1990 through 2000 in Taiwan are collected and both fixed and random effect models together with an index to measure the intra- and inter-salary dispersion are used to investigate the effects of player's wage dispersion on the team's winning percentage, i.e. the team performance. Our empirical results show that teams with less total salary expenditures or greater wage disparity reduce the team's winning percentage and thus hinder the organizational performance.