Data envelopment analysis (DEA) is used to create a measure of managerial efficiency in an attempt to reassess the conflicting theories concerning the impact of organizational performance on managerial firings, and the counter-theories concerning the impact of manager hirings on organizational performance. The analysis uses data for 147 college basketball teams from 1984-1991. The results indicate that winning, not efficiency, is the key criterion used in determining managerial retention. Yet, when managers of losing teams are dismissed, the teams tend to do even worse. However, if the efficiency of the new manager is greater than that of the former, the disruptive effect of succession is minimized. Because administrators appear to focus on winning not efficiency, they will often select new managers that are less efficient than departed managers. These results are unique to this literature and indicate promise for the use of DEA in analyses of the internal efficiencies of organizations.
All Science Journal Classification (ASJC) codes
- Strategy and Management