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Institutional settings and rent appropriation by knowledge-based employees: the case of Major League Baseball

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  • Aya S. Chacar

    (Florida International University, Miami, FL, USA)

  • William Hesterly

    (University of Utah, Salt Lake City, UT, USA)

Abstract

We examine the role of institutional settings in determining rent appropriation by employees. Based on an inductive historical study of owner-player relations in Major League Baseball from the inception of professional baseball to the present, we show that both formal and informal institutional rules can dramatically influence rent appropriation. We draw upon anthropology research on social relations to understand how differences in informal norms regarding the social relations between the owners and the players affect appropriation. Our findings show that when social relations are defined by authority ranking, pay is determined more by fiat than by market forces or bargaining. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Aya S. Chacar & William Hesterly, 2008. "Institutional settings and rent appropriation by knowledge-based employees: the case of Major League Baseball," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(2-3), pages 117-136.
    • Handle: RePEc:wly:mgtdec:v:29:y:2008:i:2-3:p:117-136
    DOI: 10.1002/mde.1395
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    Cited by:

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    2. Wolfgang Sofka & Christoph Grimpe & Ulrich Kaiser, 2022. "Understanding the unwritten rules of the game: Government work experience and salary premiums in foreign MNC subsidiaries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(6), pages 1110-1132, August.
    3. Victor M. Bennett & Robert Seamans & Feng Zhu, 2015. "Cannibalization and option value effects of secondary markets: Evidence from the US concert industry," Strategic Management Journal, Wiley Blackwell, vol. 36(11), pages 1599-1614, November.
    4. Steigenberger, Norbert, 2014. "Only a matter of chance? How firm performance measurement impacts study results," European Management Journal, Elsevier, vol. 32(1), pages 46-65.
    5. Sendil K. Ethiraj & Pranav Garg, 2012. "The Division of Gains from Complementarities in Human-Capital-Intensive Activity," Organization Science, INFORMS, vol. 23(3), pages 725-742, June.
    6. Jill A. Brown & Peter T. Gianiodis & Michael D. Santoro, 2015. "Following Doctors’ Orders: Organizational Change as a Response to Human Capital Bargaining Power," Organization Science, INFORMS, vol. 26(5), pages 1284-1300, October.
    7. Barlow, Matthew A. & Hesterly, William S. & Cameron Verhaal, J., 2023. "Catching a falling star: Mobility of declining star performers, peer effects, and organizational performance in the National Football League," Journal of Business Research, Elsevier, vol. 165(C).
    8. Pattit, Jason M. & Raj, S.P. & Wilemon, David, 2012. "An institutional theory investigation of U.S. technology development trends since the mid-19th century," Research Policy, Elsevier, vol. 41(2), pages 306-318.

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