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Capital investment and managerial efficiency A simple model for sport clubs

Author

Listed:
  • Dimitri Paolini

    (DiSea CRENoS - Universita` di Sassari, via Torre Tonda, 42, 07100 Sassari (Italy), Core, Universite´ catholique de Louvain, Voie du Roman Pays 34, 1348 Louvain-LaNeuve (Belgium))

  • Juan de Dios Tena

    (DiSea CRENoS - Universita` di Sassari, via Torre Tonda, 42, 07100 Sassari (Italy), Universitad Carlos III, Madrid (Spain))

Abstract

This paper analyzes the relation between resource inputs and managerial effort in sport teams (or, more generally, in firms). The discussion is motivated by a theoretical model that suggests that clubs use managerial effort as a substitute of capital resources in the production process. In this framework, different levels of effort are always optimal decisions given its relative cost. Thus, the relatively higher effort exerted by small (compared to big) sport team is not a consequence of hidden information or incentive problems in the organization but it is a optimal decision of small team/firm to offset capital market restrictions. Managers in big firms, on the other hand, are not obliged to offer their maximum personal effort given that it can be more easily substituted by capital resources in the production process.

Suggested Citation

  • Dimitri Paolini & Juan de Dios Tena, 2014. "Capital investment and managerial efficiency A simple model for sport clubs," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 122(3), pages 321-330.
    • Handle: RePEc:vep:journl:y:2014:v:122:i:3:p:321-330
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    More about this item

    Keywords

    Managerial effort; Organizational; Diseconomies of scale; Small teams;
    All these keywords.

    JEL classification:

    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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