How can teams of stars sustain increased levels of team performance? : the moderating effect of team leader experience, previous outcomes and team talent composition on team performance

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Master Thesis Entrepreneurship & Innovation

How can teams of stars sustain increased levels of team performance?

The moderating effect of team leader experience, previous outcomes and team

talent composition on team performance

“A basketball team is like the five fingers of your hand. If you can bring them all together you have a fist. That is how I want you to play.”

( Mike Krzyzewski)

- Head coach of U.S National Basketball Team –

Supervisor: Dr. Balazs Szatmari

Author: Stefan Daniel Teodorescu

Student ID: 10436189 Date:

06/22/2018

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Statement of originality

This document is written by Stefan Daniel Teodorescu, who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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LIST OF FIGURES

Figure 1: Nonlinear relationship between Number of Stars in a team and Team

Performance………..26

Figure 2: Moderating effect of Leader Experience………..30

Figure 3: Moderating effect of within team Age Diversity……….33

Figure 4: Moderating effect of Prior Outcomes………..35

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LIST OF TABLES

Table 1:

Mean, Standard Deviation and Correlations of Study Variables………48

Table 2:

Hierarchical Regression Model for Curvilinear Relationship………50.

Table 3:

Curve Estimate Test for Nonlinear Relation………51

Table 4:

Hierarchical Regression Model for Moderating Effect on Nonlinear Relation

Coaching/Leader Experience………...52

Table 5:

Hierarchical Regression Model for Moderation On Linear Relation

Coach/Leader Experience………54

Table 6

: Hierarchical Regression Model for Moderating Effect On Nonlinear Relation

Age Diversity………55

Table 7:

Age Diversity………...56

Table 8:

Hierarchical Regression Model for Moderating Effect On Nonlinear Relation

Prior Outcomes………57

Table 9:

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1

ABSTRACT

Prior studies have previously investigated the impact of highly talented individuals who can exert varied influences upon the teams they are members of. This study aims to contribute to the research stream on high performance and star performers by analyzing how teams of star performers can develop sustainable long term competitive advantage. For this purpose the present study first investigates the nature of the relationship between the number of star performers in a team and the outcomes produced by the respective team. Furthermore, the current account sets to explore various factors that can create supportive intra-team mechanisms which can help star performers collaborate effectively. Thus the effect of leadership experience, team age heterogeneity and previous team outcomes will be examined. Using a sample of data collected on basketball teams from the National Basketball Association (NBA) this study aims to advance the understanding of the various mechanisms defining teams comprised of star performers.

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1. INTRODUCTION

Individuals who possess distinguished attributes in terms of personal capabilities and capacity to produce outstanding levels of results have been constantly recognized by various groups as a source of competitive advantage. Given the superior set of contributions, personal skills, resources and overall improvement in performance they can generate, star performers represent a highly desirable talent pool category. The resource based perspective acknowledges the importance for companies or various other groups to attract individual talent that can create opportunities for long term competitive advantage (Barney, 1991;Prahalad & Hamel 1990). Past examinations of the methods in which companies can develop competitive advantage systematically integrate the underlying assumption that organizations constitute homogenous bundles of resources that do not display significant differences. Porter (1980) developed a research stream which proposed that organizations participating in business activity in the same industry possess homogenous arrays of resources. On the other side of the spectrum the resource based approach views organizations as differentiated entities which are characterized by an ongoing process of developing internal and external capabilities that allow the conceptualization of distinct business models (Barney, 1991). In accordance to the resource based approach to competitive advantage companies are structuring their overall activity in such way to integrate their resources, assets and human capital into differentiated strategies (Wright, Smart, and McMahan,1995).

An element that emerges as a potential source for developing competitive advantage is human capital. The individuals involved in performing the overall strategic objectives of an organization execute direct influence upon the overall performance of the company. Researchers focusing on the area of strategic human resource management have argued that the effective attraction of individuals with the right set of skills, attitudes and behaviors can

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3 create distinguished abilities in generating high levels of performance that cannot be easily replicated (Wright et al.,1994). In this context, the examination of individuals displaying heightened capabilities to generate positive impact upon organizational performance at various levels becomes of substantial value. Top performers have received extensive attention in the academic literature with numerous accounts using designations such as “ high performers “, “key contributors”, “elite performers” or ”top talents” in order to categorize and differentiate those individuals that generate better results when compared with other performers (Call, Nyberg, and Thatcher, 2015) .

Star Performers Defined

For the purpose of this study the designation of star performers will be utilized to define those individuals who produce unique and varied contributions for an organization. Star performers have been analyzed and defined in various ways but the most broadly accepted definition of star performers presents them to be those individuals who contributed disproportionately amounts of productivity and who are uniquely valuable for the performance of an organization (Call, Nyberg, and Thatcher, 2015). As an immediate outcome of their pronounced ability to create varied advantages for a company, star performers are considered to be a platform for competitive advantage for the organizations they pertain to. Researchers in different fields have consistently investigated the various aspects associated with star performers in order to conceptualize a more precise understanding of how those individuals contribute to the overall organizational development. Specific accounts have developed a more robust argumentation of how star performers add substantial levels of productivity and quality around performance objectives (Aguinis & O’Boyle, 2014). Other accounts have developed knowledge around more indirect methods through which star performers contribute to the general performance of the group they are part of such as the increased visibility those individuals attain (Groysberg et al., 2008). Adding to that, particular research streams have

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4 analyzed the impact star performers have on the attraction of external resources and new opportunities by examining the social skill and behaviors of high performers in creating resourceful networks (Oldroyd & Morris, 2012). Other academic research bodies have developed theoretical perspectives examining the effect star performers exert upon colleagues and how they influence the knowledge and level of competency of peers (Oettl, 2012). Consequentially to the multifaceted contributions and alternative methods through which star performers can impact the overall performance of a company, they become a category of human capital that companies continuously compete for.

When elaborating his theory of how companies develop sustained performance and competitive advantage, Barney (1991) acknowledged that in order for a particular resource to be an opportunity for competitive advantage it must display a set of characteristics: first it must be valuable; second it must possess traits that make it rare; thirdly there should be a limited capability to replicate it; and lastly there should not exist easy substitutes that could replace it. Implementing this reasoning when analyzing the potential of star performers to become vital constitutes in the development of prolonged competitive advantage there can be observed specific parallels. Star performers constitute a highly valuable resource for any organization in which they undertake activity as their distinguished set of capabilities, experience and social skills can integrate positively in the development of organizations. Accounts from people directly involved in business operations have repetitively expressed their appreciation for the value added produced by star performers by unanimously observing that someone who is remarkable at fulfilling his role contributes significantly more than other performers within the company (Kelley & Caplan, 1993;Otel, 2012). On top of that, star performers display unique individual performance and capabilities to interact with the external environment that allow them not only to create opportunities for themselves but also for the groups they are part of. Such increased abilities to create new forms of knowledge and

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5 identify venues for potential opportunities attach to star performers the recognition of being a rare resource in attaining increased levels of results. Different research streams have emphasized that within any industry there will exist high performers but there will always be a restricted category of performers that will attract most of the attention due to their unique abilities and those are the star performers (Gardner, 2005). Given the differentiated contributions that can be made by those disproportionally productive and influential individuals, they constitute a human resource capital that is the center of attention for all companies looking for developing differentiating strategies.

Star Performers in Organizations

Jacobson (1992) argued based on Schumpeter’s theory of deriving new business models through ongoing reconfigurations, that the commercial environment is in a constant state of change generated by action-reaction dyads among participants in the business arena. The present business landscape is increasingly more characterized by systemic changes that occur both in the external and internal constituents of the commercial environment. For this reason organization are regularly deploying efforts towards developing internal competencies that can ensure a robust competitive presence.

One way to achieve sustained effectiveness in adjusting to the competitive pressures posed by various external factors is by developing a highly competent talent pool within the company. Recognizing the organizational benefits that can be derived by nurturing the human resource capital, companies are constantly competing for the best and the brightest in their industries (Hunter, Schmidt, & Judiesch, 1990). Star performers represent the top category of talent for which organizations are continuously competing in an attempt to create unique internal competencies. Researchers analyzing the degree to which companies are involved in attracting top talent have suggested that across industries the attraction and retention of top

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6 talent is a core objective for organizations (Chambers, Foulon, Handfield-Jones, Hanklin, & Michaels, 1998). Given the pronounced capability of star performers to perform at high levels of productivity and to attract external resources such as investments, it becomes visible why organizations are striving to attract them. Gardner (2005) in his analysis of firms’ competitive moves around human capital has suggested that organizations engage in “competitive interactions” in order to attain long term benefits. Gardner (2005) defines “competitive interactions” as the spectrum of initiatives a particular commercial entity undertakes in order to create business opportunities for competitive advantage and emphasizes that competition for top performers is a driver for differentiation.

Considering the specific and distinct characteristics star performers possess, organizations have a justifiable motivation to integrate such talent in their operations. Interestingly the interest towards star performers is not limited to the business domain. Various accounts have illustrated that there is heighted attention directed towards star performers in many groups ranging from consulting firms, boards of directors, academic departments, start-ups and sport teams (Groysberg, Polzer and Elfenbein, 2011)

Star Performers in Sports Settings

Sport teams have represented a fruitful area of study for developing models that have applicability in business. Sports have been used in developing a broader understanding of various organizational phenomena that have provided a clearer picture of how companies should tackle certain situations (Wolfe, Richard A., et al, 2005). There are various dimensions around which the sports and business domain exhibit similarities. Both fields of study are concerned with developing competitive advantage, enhancing team performance and developing structures for attaining objectives (Wright, Smart and McMahan, 1995). In this

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7 reveal potential findings that have applicability in business. For the purpose of this study special focus will be directed towards basketball. Basketball is a team sport in which the effectiveness of team performance is closely linked to the individual capabilities of each team member. Given the fact that basketball teams perform in a highly competitive environment in which precise objectives need to be achieved there is a consistent interest in developing human capital pools that can enhance team performance (Wright, Smart and McMahan, 1995). Star performers, through their varied set of capabilities and unique individual productivity can positively influence a team’s outcomes. Therefore basketball is another example of environment in which teams compete for gathering the best talent within their ranks. Possessing team members that differentiate themselves due to their increased competencies and individual skills can offer a team an edge in obtaining more wins and better position against other competitors.

The Varied Impact of Star Performers

The general assumption when analyzing the potential impact star performers have on the performance of the groups they are part of is that increased levels of high performers will automatically increase team performance. There is a widespread perception that there is a linear and continuously positive relation between increased levels of talent within a team and overall performance(Swaab, et al, 2014). The wide spectrum of contributions star performers can facilitate within a team provide a solid foundation for arguing that the more star performers a team attracts the better the overall team performance will be. Proponents of this idea implicitly assume that once a team of star performers is created the members of the team will naturally have the capability of creating collaborative mechanisms that will facilitate high performance (Boynton and Fischer 2005). Contesting those arguments attempting to prove the beneficial effect of assembling teams of star performers, various accounts have identified opposing outcomes once too many star performers are brought together in the same team.

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8 When there are too many star performers present in a team there is difficulty in establishing a functional hierarchical structure that can ease the process of attaining desired results. Overbeck et al. (2015) suggested that when there are too many individuals with similar expectations in regards to the status they should receive , group cohesiveness and efficiency will consequentially be negatively impacted. Furthermore research of status showed that when team members are interested primarily in gaining dominant positions within a team they will almost inevitably display behaviors that are counterproductive for the team’s overall functioning (De Dreu & Weingart, 2003). Star performers are highly competitive individuals that have strong personalities and in instances in which there is an increased number of top talent in the same team this might lead to detrimental competition within the team that will ultimately fracture team performance (Porath, Overbeck, & Pearson, 2008). All those different arguments suggest that there is a potential marginal decreasing benefit of having increased numbers of star performers in a team. Therefore, the addition of extra talent within a team offers positive effects up to a particular point. Once that point is reached, the presence of additional star performers will cause diminishing and possible negative effects on team performance. This idea is proposed by Swaab et al. (2014) who analyzed through numerous experiments developed in sports settings the ultimate negative impact too many high performers have on team performance. The current study recognizes that teams of stars can face difficulties in developing appropriate collaborative systems and thus attempts to explore potential factors that might assist teams of star performers in displaying superior performance over time.

Leadership has been recognized as being a vital component in the performance of a team. Coaching is a particular type of team leadership that has the potential to influence collaboration in positive ways (Fournies, 1978). In both basketball and business, coaching serves as a facilitator for increased integration among individual talent. The leader of a

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9 particular team has the potential to engage in diverse activities that can serve as tools for improving overall team collaboration and effectiveness. Hackman and Wageman (2005) suggested that the leader of a team can improve team effectiveness through activities such as process consultation, behavior modeling and developmental coaching. Through those distinct mechanisms for development the leader provides individual support for the team members and assists them to better understand their roles and functions within a team. Therefore, the experience of the leader - in business- or coach - in basketball- becomes critical when it comes to identifying potential methods of making individuals in a team engage in constructive and productive ways. Pfeffer and Davis-Blake (1986) analyzed the effect of experience in the situation in which succession events occurred among coaches in NBA and proposed that prior experience has a significant effect on team effectiveness.

Furthermore another factor that might have a positive effect on interactions among teams of star performers would be demographic diversity. Diversity has been associated in various studies with positive effects upon team functioning (Timmerman, 2000). Age diversity within teams of star performers could have a positive impact upon the collaborative and knowledge integrative systems team members develop. Under this assumption individual star performers who are older have consolidated throughout time their reputation and status as distinguished performers and are less likely to compete internally for recognition. Moreover, seasoned star performers have gradually accumulated knowledge about their specific field and this expert knowledge allows them to have positive influence on their colleagues (Kehoe & Tzabbar, 2015). Huckman & Pisano (2006) observed that star performers with increased accumulated experience can positively influence their peers by becoming role models. On the other hand young star performers contribute to the process of refreshing a team’s skill composition, perspectives and learning opportunities. In support of this idea, various research accounts

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10 suggested that possessing a diverse group of team members would enhance team collaborative learning (Hofman and Maier, 1961)

Outcomes have also been identified as potential triggers for acknowledging team effectiveness. In the case of collaborative activities it is essential for team members to identify the aspects that lead to success or unsatisfactory results. Researchers have investigated the connection between performance and previously obtained results (Mizruchi, 1991). Teams of star performers have an uncontested objective of maintaining long term success. Therefore analyzing past performance to improve various aspects of team work is essential. Both positive and negative results have been shown to affect future performance. Success has been associated with an increase in team confidence that ultimately leads to better results in the future (Lewin et al., 1944). On the other hand unsatisfactory results have been shown to increase motivation for improving future results ( Mizruchi, 1991). In the case of teams of star performers it can be expected that prior unsatisfactory results will create an internal awareness among team members that certain aspects need to be adjusted for improved future performance.

Combining the various research perspectives surrounding star performers the current study will contribute at extending the knowledge related to the different collaborative mechanisms defining teams of star performers. By integrating theories from status research, elite performers and antecedents of success this study attempts to answer to the following research question: How can teams of star performers sustain high standards of performance throughout time?. In an attempt to propose potential methods through which teams of star performers can attain sustained levels of high performance this paper will investigate relations between leadership experience, age diversity, performance outcomes and teams formed by star performers.

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2. LITERATURE REVIEW

2.1.STAR PERFORMERS: Who are they?

Individuals who display unique personal constructs that translate into distinguished capabilities to produce remarkable contributions have consistently received attention from various groups. Consequentially a comprehensive academic literature integrating perspectives from numerous fields has consolidated over time in an attempt to understand the meaning, distinguishing factors and unique contributions revolving around star performers. Particular studies have analyzed the impact of star performers in the movie industry by specifically investigating the impact star actors exert on the overall success of a movie (Elberse 2007). Other research bodies have examined the importance of star performers in product development teams by exploring the contributions star software engineers bring within a team (Volmer and Sonnentag, 2011). Interest into exploring the effects of star performers on innovation productivity and leadership has motivated the development of theories around the effects of star scientists on research outcomes (Kehoe and Tzabbar, 2014).

Even though considerable attention has been given to analyzing star performers in the context of formal settings such as academia and organizations certain research accounts have made use of less traditional environments to expand knowledge around star performers. One particular field of study that has been prolific for the development of frameworks related to star performers has been the area of sports. Researchers have analyzed how star performers develop expert knowledge by assessing differences in behaviors and practices among experts and novices playing chess and performing dance (de Groot 1978; Simon & Chase 1973). Additionally there have been extensive examinations dedicated to developing integrative methods of identifying star and elite athletes as a means to facilitate academic discourse (Swann, Moran, Piggot, 2015). On top of that other accounts have developed knowledge

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12 around the impact of star performers on decisions making processes related to team composition in basketball teams (Ertug, 2013). This accumulated knowledge around star performers illustrates the extensive acknowledgment that has been offered to such individuals and the unique characteristics that make them so special.

Within this section varied research perspectives related to star performers and the uniqueness they bring to the groups they are part of will be integrated in an attempt to formulate a more precise understanding about the aspects that differentiate those individuals. Looking at both the ways star performers differentiate in terms of personal contributions and also analyzing the indirect effects they have upon the overall team performance and team dynamics, this section will suggest a response to the question of who are those individuals labeled as star performers.

One of the most common definitions concerning star performers identifies them as being those individuals that display disproportionate levels of personal contributions and visibility among various groups of interest (Groysberg and Nanda, 2008; Oldroyd and Morris, 2012; Hunter, Schmidt, and Judiesch, 1990; Narin & Breitzman, 1995). Analyzing the implications of such definitions one can immediately recognize that star performers are significantly more valuable when compared with other categories of performers. Due to their personal attributes that allow them to perform more effectively regardless of the context, star performers have the capacity to produce results that are disproportionately valuable. This notion of disproportionate value attached to the performance of stars creates a separation benchmark from other performers indicating the substantial resourcefulness a star performer possesses (Aguinis & O’Boyle, 2014).

The exceptional contributions a star performer provides to a group, organization or other social structure can be varied but the most immediate one is through personal task

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13 performance. Task performance represents the individual capacity of a particular person to fulfill effectively the primary responsibilities associated with the job they perform (Motowidlo & Van Scotter, 1994). Thus the abilities possessed by a particular individual responsible to execute certain functions within an organization or a team are closely linked to the effectiveness of job execution. In the case of star performers, their unique attributes and knowledge related to the job performed, allows them to gain superior productivity and deliver disproportionate results (Groysberg and Nanda, 2008). Various accounts across specializations have recognized the unique levels of productivity and task proficiency star performers exhibit. Lotka (1926) observed that the contributions made by top scientists are highly skewed with 6 % of scientists in the realm of physics producing more than 50% of all the academic publications. Furthermore, Rothaermel and Hess (2007) explored the impact of top researchers in the pharmaceutical industry and noted that the contributions generated by top researchers are around three standard deviations over the average. Research performed by Groysberg et al. (2008) looked at the significant impact the top 3% security analysts in investment banking have upon the quality and quantity of results delivered. This concentration of high productivity and distinguished skills associated with only a selected group of individuals is present in the sports industry as well. Ertug (2013) analyzed in the context of the National Basketball Association how organizations dedicate significant efforts to attract the best human resources under the conviction that the best performers will improve organizational performance and revenues.

One possible explanation for the superior competencies and productivity shown by star performers comes from the area of expert knowledge development. Experts are those individuals who have systematically engaged in the process of deliberate practice and have developed comprehensive knowledge and skills that allow them to perform tasks with superior efficiency (Ericsson & Lehmann, 1996). Therefore, the unique competencies a star

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14 possesses are the result of an ongoing process of developing performance specific skills that allow for outstanding productivity. Deliberate practice is a potential facilitator for the development of expert knowledge. Deliberate practice is defined as a voluntary and consistent involvement in particular activities that have the potential to improve performance the greatest (Feltovich, Prietula, & Ericsson, 2006 ). Through the specific focus on targeted set of skills that have the potential to substantially improve one’s performance, stars develop knowledge pools and competencies that allow them to influence the outcomes of the teams they are part of.

Interestingly, due to their accumulated expert knowledge, stars have the ability to effectively adjust to different scenarios and display sustained levels of productivity throughout time. Prolonged levels of top performance often displayed when most needed make star performers an invaluable resource for their teams and organizations (Call, Nyberg and Thatcher, 2015).

The connection between high levels of performance and time separates star performers from other types of individuals. Star performers in various industries have the capacity to build up on prior experiences and constantly produce disproportionate levels of productivity.

Studies have developed a temporal approach to understanding distinguished performance. Researchers have provided support to the idea that sustained levels of high performance can be associated with the traits possessed by an individual and not to advantages provided by circumstances (Call, Nyberg and Thatcher, 2015). Through the positive interplay between a star’s abilities and exceptional performance in diverse situations, it can be inferred that the consistent levels of outstanding results and productivity are the outcome of a stars’ personal capabilities. Summarizing those ideas, star performers not only have the capacity to deliver disproportionate levels of productivity but they also have the ability to consistently display such increased performance over long periods of time.

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2.2 STAR PERFORMERS: Status and Reputation

The unique attributes of star performers help them in delivering relevant and high quality results. On top of that the cumulated superior performance shown throughout time provides the possibility of establishing certain quality signals that make star performers more visible among different groups. Researchers have argued that in certain situations organizations base their decisions regarding personnel selection on the reputation a particular individual has consolidated over time ( Lee, Pollock, & Jin, 2011). Reputation constitutes the amount of visibility a particular person has achieved as a consequence of past unique accomplishments and superior level of performance ( Lee, Pollock, & Jin, 2011). In this context prior exemplifications of increased capabilities communicate externally the potential of an individual to display similar behavior in future circumstances. Star performers have a natural ability to create a robust reputation and visibility among external groups as their performance constantly shows high quality and contextual relevance. For this reason various accounts have supported the idea that star performers besides showing disproportionate levels of task performance also show high levels of visibility (Groysberg and Nanda, 2008).

Furthermore, the visibility of a star performer doesn’t contribute solely as a mechanism of signaling quality and consequentially building reputation among various groups interested in the impact a star can produce. Visibility can also facilitate the process of acquiring status within a particular social group. Status is conceptualized by various research accounts as the degree of respect, recognition and influence one possesses in relation to other social actors (Magee & Galinsky, 2008). Whereas reputation is strictly bound and derived from past performance, status requires additional key capabilities that contribute at building individual recognition. One possible aspect that can influence an individual’s ability to attain status recognition in a social group is the amount of political and social skills one possesses at a particular moment. Political or social skills have been defined by different accounts to be

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16 those skills that allow a person to understand the perspectives of others and equally to influence others in the pursuit of organizational or personal objectives (Ferris et al., 2005). Looking at the case of star performers one can assume that such individuals are well equipped with political and social skills that allow them to successfully perform over time. Due to the fact that star performers have the ability to display disproportionate levels of productivity over time it can be argued that they utilize their social skills to collaborate and gain required resources to sustain their ongoing development.

Status can be developed in multiple contexts and providing different degrees of benefits. In the case of star performers what sets them apart and makes them incredible resources for the groups they are part of is their ability to consolidate external status. External status reflects one’s ability to interact with multiple individuals in different settings and it can be conceptualized by the amount of recognition an individual receives for its performance and competencies across different audiences (Kehoe, Lepak, Bentley,2016). Therefore an antecedent for status creation is the ability one displays in creating value around key objectives through superior performance. Arguments have been proposed that in situations in which task performance can be accurately assessed in accordance to certain criteria status can gradually be gained (Magee & Galinsky, 2008).

Given the broader recognition star performers receive as a consequence of their ability to maintain high performance, they can be further separated from other individuals by analyzing the benefits derived from status recognition. The combination of superior ability in producing distinct performance output and creating external awareness that leads to status recognition allows star performers to access various external resources that are valuable for them and the groups they are part of. Podolny (1993) developed a conceptualization for status as a facilitating mechanism that predicts and signals quality within the boundaries of a particular network. Star performers have an inherent capability to signal quality through their unique

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17 attributes and capabilities to create outstanding outcomes. Furthermore, this quality signaling that naturally follows from distinguished past results becomes a foundation on which star performers build the path to subsequent resources and opportunities. Because of the repetitive and sustained achievement of organizational or personal objectives exhibiting remarkable features, star performers create accessibility to further development platforms that can assist them and the groups they work with in acquiring future objectives. Given the disproportionate contributions star performers produce and the ensuing status recognition such individuals have the possibility to more easily attract external resources they might need for future projects and objectives (Chen, Peterson, Phillips, Podolny, & Ridgeway, 2012). Complementing this, star performers have the benefit of facing fewer obstacles and hence decreased barriers in accessing knowledge pools and resources that would propel them towards engaging their skills in activities that necessitate high performance (Podolny, 2005).

Another form of support mechanism star performers might derive from their personal traits is the potential social support they can obtain by creating valuable social ties with influential members of different groups. Different accounts have argued that status has a direct influence upon the manner in which a particular individual is perceived when engaged in social interactions (Bothner, Kim, & Smith, 2012). External parties utilize various social categorization methods to develop an understanding of the effectiveness of an individual in developing high performance. In the case of star performance their long track of unique contributions and disproportionate levels of productivity consolidate their reputation which emphasizes their credibility in front of others when it comes to developing expectations about future performance.

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2.3 STAR PERFORMERS: Impact on team performance

Contributions through personal excellence around task performance and the development of associated benefits such as status that facilitates the acquisition of resources are direct methods through which a star performer can add value to a group. Those unique attributes characterizing star performers can also generate indirect impact upon the colleagues and overall group performance for the social structure the star performer is part of. Kehoe,Lepak and Bentley (2016) in their comprehensive analysis of the types of contributions star performers bring to a team have proposed that such human capital that combines expert knowledge, past exceptional performance and external status presents the opportunity to create significant indirect contributions – contributions different from those directly linked to the performance of a star- for their teams.

One type of indirect influence star performers exert on the teams they are part of and has the potential of benefitting significantly the group performance is the access to external resources. Those external resources can be represented by potential new collaborators, customers, funding support and decreased barriers in knowledge acquisition and obtaining information about promising opportunities (Kehoe,Lepak andBentley,2016). Conceptualizing a typology for the indirect contributions star performers channel towards the social groups they are members of, it can be observed that they have the ability to attract a spectrum of external resources that can be placed on a continuum from intangible to tangible resources. All those different resource pools that a star performer has the ability to integrate in the ongoing undertakings of an organization have been associated by multiple theoretical frameworks with quality signal effects. Spence (1974) argued that quality signals are generally more easily to be attained by high quality and industrious actors and thus such individuals are more effectively in attracting potential opportunities.

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19 Consequentially, the reputation derived from past successful outcomes and the status achieved by accessing social groups that extend future opportunities, position star performers in such way to provide developmental platforms for their teams and organizations by means of external resources. This relationship between the presence of star performers in a team and improvement in access to external sources of support has been analyzed and theoretically operationalized by various accounts. Groysberg and Lee (2010) observed how the external recognition received by outstanding investment analysts who ranked high in client satisfaction reviews had a beneficial impact upon overall organization performance as more clients expressed willingness to collaborate with the organization hiring the star performer. Investigating the same phenomenon but in a different setting, Ravid (1999) observed the influence star performers have on providing access to external resources by acknowledging the increase in financial performance of particular movie due to increased spending on tickets for those movies employing star actors. As a consequence of sustained evidence of performing at peak levels that translates into high quality results, star performers have the capability of creating a reinforcing mechanism of building positive expectations around future performance. Lucifora and Simmons (2003) developed a model in the sports industry through which they offered a convincing framework that exemplified the increased willingness of potential customers to allocate more financial resources for purchasing tickets for sporting events involving star athletes.

Further extending the analysis of the multifaceted indirect contributions star performers provide to the groups they undergo activity with, one other vital positive mechanism through which stars impact group performance is through the influence they have on their colleagues. Star performers tend to be perceived as highly valuable social ties due to their comprehensive acumen, experience and access to resources (Zucker & Darby, 1997).Because of this, star performers have the power not only to make people gravitate towards them in different

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20 circumstances but also to trigger various modifications and adjustments in team behavioral patterns and performance. The examination of the influence star performers have on the people they closely develop working environments with can be developed on different dimensions. One of the most commonly recognized facets of star performers’ contributions towards team development is through their expert knowledge and outstanding performance. Huckman & Pisano (2006) argued that star performers have the ability to establish conduct standards and gradually become role models within their team. Furthermore, Lockwood & Kunda (1997) proposed that a star performer’s enhanced capability to engage in habits and behaviors that lead consistently to outstanding performance can create a benchmark for other aspiring high performers who will be motivated to replicate the star’s behaviors to achieve similar outcomes.

Mentorship is another form of developmental platform that a star performer can provide to his colleagues. Noe (1988) developed a theoretical model suggesting the important influence key individuals can have on other social partners in gaining certain opportunities by means of mentorship. By establishing constructive relations that facilitate collaboration, star performers can engage in knowledge transfer with other team members and thus enhancing colleagues understanding and access to relevant information that can be transformed in opportunities for development. Knowledge spillovers have been identified as building blocks for stimulating the conceptualization of new ideas, creating new strategies and ultimately generating prospects for improved outcomes. Lucas (1988) argued that knowledge spillovers can be considered the driving force for progress and improved economic performance. Knowledge spillovers are the results of the direct interaction between individuals in various circumstances where ideas are mutually shared and gradually implemented in new methods that drive performance.

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21 Star performers, besides having the natural capability of engaging in mentorship activities to aid the performance of colleagues, they also have the possibility of developing structural norms and working processes that shape the overall activity of a team. Because of the reputation star performers build and their recognition as highly competent individuals they have the ability to influence organizational norms and create procedural standards that enhance organizational productivity

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Lacetera, Cockburn, & Henderson, 2004). Highly distinguished performers as a consequence of their expert knowledge and external recognition for excellent performance build credibility among different groups of individuals that allow them to express their ideas around different methods that have the possibility to improve overall colleagues and organization performance.

Combining expert knowledge, comprehensive social networks and well established visibility among different social structures star performers have the ability to configure systems within their working environments that support both the development of their team as well as the overall standards of performance. Even though the body of research investigating the positive effects star performers induce upon the internal and external environments they are associated with has provided thorough theoretical argumentations, other accounts have developed distinct perspectives that challenge the contention that star performers have a positive influence upon performance. Therefore in the subsequent section an analysis of various perspectives examining how the presence of too many star performers can erode team collaboration and ultimately lead to unsatisfactory results will be presented. Using those multifaceted perspectives I will commence the process of hypothesis formulation. After investigating how teams with too many star performers can gradually experience detrimental collaborations and display difficulties in creating excellent results, the analysis will further center on developing argumentations of how specific variables characterizing teams of star performers can overcome the potential.

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3. HYPOTHESES

Creating an integrative reasoning around all the potential benefits that might be brought forward by star performers it becomes reasonably justified to create positives expectations about future performance when there are multiple star performers in the same team. This perception that increased talent within the team leads to outstanding outcomes and performance has been supported by multipole research accounts. Gardner (2005) has developed an analysis of the ongoing competitive behaviors displayed by organizations in an attempt to attract the most talented human capital. Whereas Aguinis & O’Boyle (2014) have theoretically conceptualized a prevalent assumption upon which many different groups base their decisions to seek the most talented individuals, which emphasizes the link between increased levels of talent in a team and subsequent production of outstanding results. Such propositions have encouraged the analysis of star performers and their contributions towards their teams with research accounts attempting to configure theoretical frameworks around the topic in more applied settings. Tziner and Eden (1985) in their analysis of tank crew performance developed a robust argumentation that high performing actors have the potential to generate excellent collaborative results. They identified a significant connection between the outputs produced by a team and each team member individual level of competence. More accurately, Tziner and Eden( 1985) proposed that high performing individuals performed significantly better when collaborating with other high performing actors as compared to situations in which collaboration occurred with low performing team members. The general acknowledgment of star performers as key influencers spans across industries and research settings. Theoretical models highlighting the importance of star performers have been developed in the sports industry as well. Staw and Hoang (1995) demonstrated the impact star performers have on the player selection procedure in the National Basketball Association(NBA) and how team representatives are constantly developing methods of

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23 attracting the best talent. Furthermore, Ertug and Castelluci (2013) analyzed how star plyers in the National Basketball Association(NBA) derive constant attention from teams willing to accomplish different performance objectives

3.1 Too many stars can be problematic

This widespread perception assuming that increased levels of talent within a team naturally lead to excellent results illustrates a linear and systematic relationship between the number of star performers and distinguished outcomes (Swaab, et al, 2014). Considering the wide spectrum of benefits star performers have the potential to integrate in a team structure one can naturally support the contention that teams incorporating multiple star performers will have the capability to outperform their counterparts. Proponents of this perspective inherently assume that star performers have a natural capability to transfer their skills into constructive and mutually supporting team collaborations that promote outstanding outcomes. In spite of existing evidence for the positive effects star performers have on their teams a paralleling body of research has consolidated over time challenging the effectiveness of bringing too many stars in the same team.

Combining research perspectives from status, hierarchy, group dynamics and competitive pressures theory, various accounts contest that teams of stars can effectively develop collaborations that lead to superior results. Status is a naturally seeking element that all individuals aspire to gain and can be recognized as the level of recognition, respect and external attention one attains (Overbeck, Correll, Park, 2005). Status aspirations are prevalent among different categories of individuals but it can be assumed that behaviors leading to acquiring increased status are more often displayed by star performers. Star performers because of their unique knowledge, competencies and ability to impact positively their immediate environment attain performance levels that justify the expectation for unique

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24 recognition. Consequentially, in circumstances in which there are multiple star performers whose past performance and contributions towards the team provide them with individual expectations for certain positions within the team, there may arise within team conflicts. Overbeck et al. (2005) suggested that when there are too many individuals with similar expectations in regards to the status they should receive, group cohesiveness and efficiency will consequentially be negatively impacted. Furthermore, Gould (2003) suggested that one of the primary triggers for interpersonal conflicts is represented by individuals having disagreements around the degree of dominance their position within a team structure displays in comparison to others. Based on those arguments it can be proposed that status conflicts represent a potential variable that erodes the cooperative mechanisms among star performers. Status conflicts can be defined as those social interaction mechanisms that are displayed by people in an attempt to create delineations in terms of internal team status standings (Polzer and Caruso, 2008; Porah et al. 2008). When a team is composed of individuals that justifiably expect to occupy a certain distinguished position within the structure of a group, such overlapping expectation will have detrimental impact upon the collaborative processes undergone inside a team. Status seeking behaviors can encourage people to interact with colleagues in such ways that promote ineffective collaborations, tension within team and animosity that distract from achieving team overall objectives (Hackman and Morris 1975;Pondy 1967).

One key element directly affected by the various status seeking behaviors star performers have the propensity to engage in is the stability of internal team hierarchy that often is the platform for effective performance. Hierarchy has been proved by multiple accounts to be the backbone for building constructive and high performing environments that lead to superior results ( Fiske, 2010). Within group hierarchy is another form of team structure that develops inside the borders of a team and is an impetus for individual coordination and successful

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25 collaborative performance (Overbeck, Correll, Park, 2005). Therefore, the presence of increased number of star performance within the same team has a potential negative influence upon team collaboration as such individual have the tendency to engage in behaviors motivated by a willingness to prove their dominance within the team. Research on status showed that when team members are interested primarily in gaining dominant positions within a team they will almost inevitably display behaviors that are counterproductive for the team’s overall functioning (De Dreu & Weingart, 2003).

Star performers are inherently characterized by an eagerness to outperform their peers. Realizing the potential impact they can have upon the idea generation, reconfiguration of performance patterns and production of results, star performers have a strong personal motivation to improve their capabilities and influence upon their team.Duckworth, Peterson, Matthews, & Kelly, 2007 argued that grit and the personal willingness to push boundaries towards enhanced levels of performance make top performers incredibly dedicated and competitive. Team work requires a certain type of constructive competitiveness with the external environment in order to attain great results. On the other hand an increased sense of competiveness within the team, especially among star performers attempting to assert their dominance within the team will lay a foundation for the emergence of barriers in collaboration and team cohesion. Bendersky & Hays, 2012 proposed that teams composed of 1too many dominant individuals face problems with establishing a good collaborative environment due to disputes over authority and within group dominance. Furthermore, De Dreu & Weingart (2003) emphasized how excessive intra-team competition leads to individuals engaging in conduct aiming to self-actualization that impedes effective cooperation towards team objectives. While Groysberg et al. (2010), suggested that the preferential position attained by star performers might hinder group effectiveness primarily due to their resistance to collaboration and knowledge transfer. Considering all those different

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26 arguments it can be stated that individual star performers have the natural ability to impact a team’s performance in many ways. But the positive effects of star performers upon team outcomes might diminish in situations in which there is a high concentration of star performers in the same team facing the challenge of developing effective collaborative environments.

HYPOTHESIS (H1): Star performers have an overall positive impact upon team performance up to a point. After a particular point when there are too many star performers in the same team various detrimental effects will occur within the team that will lead to unsatisfactory outcomes.

Figure 1: Nonlinear relationship between Number of Stars in a team and Team Performance

3.2 Leader Experience as Moderator

In spite of the possible difficulties star performers might encounter in effectively working together, their unique capabilities of providing teams various opportunities and leadership towards exceptional results still makes them a highly desirable talent pool. Because of this it becomes of great interest exploring potential constituents that might facilitate the long term sustenance of effective collaborations within teams of star performers. Groups of individuals across industries and specializations acknowledge the remarkable potential of star performers and constantly develop ways of attracting such human capital into their organizations (Groysberg, Polzer and Elfenbein, 2011). Consequentially it presents both theoretical and practical relevance investigating potential ways that can support star performers in adequately integrating their competencies within teams that attract multiple such performers. The strategic human resource management research literature has repetitively suggested that there

Talent

Composition/Number of Star Performers

(+/-) Team

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27 are key roles within an organization that have the ability to dictate, shape and influence in a visible way the interactions and developing collaborations within teams (Tomer, 1987). One potential role that can directly guide the development of a team and the internal processes occurring among team members is the leadership role. The leader position is consensually recognized as a key link in the effective functioning of team because the leader holds the most formal power in directing outcomes and distributing resources within a team (Bass, 1990). Multiple accounts have extended the comprehension of team leaders as vital components in providing support for the development of individual competencies among team members. Bertrand and Schoar (2003) in their analysis of managers switching organizations identify a significant contribution of managerial aptitude on organizational outcomes. Grusky (1961) investigated how managerial succession events had an impact on the organizational performance and team cooperation immediately after the succession event and suggested that the outcome of the succession event is highly dependent on the manager’s personal attributes. Furthermore, Berri , Leeds , Leeds and Mondello (2009) examined the impact effective caching has on individual player performance in basketball and they concluded there is a direct and significant positive impact of coaching on individual player development.

All those different accounts point towards the fact that a leader has the capability of guiding teams on the path to establishing efficient and supportive environments among team members. Therefore, a natural curiosity is what are the contributions that a team leader brings to a team that ultimately translate into extraordinary collaborations among independent team members. Integrating elements form attributional theory, Pfeffer and Davis-Blake (1986) argue that the leader exerts overall impact upon the within team mechanisms through the quality of his personal attributes. Hence, a leader’s levels of skill, acumen and overall experience become indispensable ingredients in the process of creating highly effective teams that have the ability to produce excellent results. Smith et al. (1984) analyzed how individual

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28 constructs of a leader’s abilities, such as relevant experience drastically affect the amount of influence an individual occupying a leadership position can have upon the collaborations developing within a team. Additionally, Berri, Leeds, Leeds, Mondello (2009) constructed a model in which they provide convincing arguments that the personal capabilities and experience a leader possesses have a substantial impact upon the individual performance of each team member. Considering all those distinct perspectives one can argue that the accumulated experience a leader possess serves as a foundation for better understanding the needs of each team member and providing individual assistance that ultimately helps overall team collaboration. In the case of star performers, it becomes critical for the team leader to have the necessary experience to handle the potential disputes and within group competitiveness in such way to help star performers perform at peak levels.

Accumulated experience facilitates the acquisition of knowledge about various situations, behaviors and best practices that can be accessed when needed to improve certain circumstances. One form of knowledge that is primarily derived through experiences and constant engagement with new situations is tacit knowledge. Tacit knowledge can be defined as knowledge that cannot be easily codified and that can be most commonly attained through experience (Berman, Down and Hill, 2002).Based on this information one can infer a direct connection between tacit knowledge or experiential acumen and the direct involvement of a leader in numerous distinct experiences over time. Berman, Down and Hill (2002) proposed that comprehensive experience and repetitive interaction with multifaceted situations allows an individual to develop pattern recognition and awareness about how to best react when faced with different challenges. Therefore, based on prior experience a leader can anticipate the potential obstacles that might arise among stars and develop solutions that could help star performers overcome hindrances in collaborative performance.

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29 Integrating extensive knowledge developed over the years, a leader has the potential to recognize specific aspects related to star performer’s activity and make them aware about those elements that could foster better collaborations with other top performers. Indeed, a leader has the capability to influence his team in multiple ways by displaying a spectrum of different behaviors that incorporate potential benefits for a team. A leadership behavior that is closely recognized to have positive impact upon team and collaborative spirit development is coaching. Coaching is a particular type of team leadership that has the potential to influence collaboration in positive ways (Fournies, 1978). Coaching emphasizes the direct involvement of the leader in various activities that serve the process of creating effective intra-team processes and interactions among team members (Barry, 1991). There is a prevalent consensus among different research streams that the more a leader engages in coaching activities the more he will be able to impact team members’ involvement in the tasks performed, their ability to solve potential intra-team disengagements that can obstruct performance and the effectiveness with which team members collectively assume responsibility for overall objectives (Wageman, 2001).

Coaching besides offering support for individual development and team effectiveness also serves as a method of stablishing trust among leader and team members. When leaders displays proactive behaviors in helping individual team members develop and at the same time the leader is willing to facilitate coaching activities that help the team progress, the level of team satisfaction and trust increases ( Cohen et al, 1996). Combining all those different perspectives it can be assumed that a leader constantly engaged in coaching teams of star performers can positively impact the interaction and individual performance of each star and in so doing creating opportunities for long term development. Hackman and Wageman (2005) suggested that the leader of a team can improve team effectiveness through activities such as process consultation, behavior modeling and developmental coaching. Whereas, Pfeffer and

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30 Davis-Blake (1986) analyzed the effect of experience in the situation in which succession events occurred among coaches in NBA and proposed that prior experience has a significant effect on team effectiveness. Therefore whether we center our analysis on organizational leaders or coaches in sports it can be hypothesized that a team leader’s experience and the various behaviors derived from experience can have a beneficial impact upon the collaborations among star performers.

HYPOTHESIS (H2): The relevant experience of the leader has a direct impact upon the internal team collaborations and individual performance of team members. Therefore the more experienced a team leader the better will he be able to provide assistance for star performers in developing effective cooperation patterns that lead to sustained levels of high performance.

Figure 2: Moderating effect of Leader Experience

3.3 Age Diversity as Moderator

Furthermore another factor that might have a positive effect on interactions among teams of star performers could be demographic diversity. Diversity has been associated in various studies with positive effects upon team functioning (Timmerman, 2000). Age diversity within teams of star performers could have a positive impact upon the collaborative and knowledge integrative systems team members develop. Various research streams have offered support for

Talent Composition/Number of Star Performers (+/-) Team Performance Leader Experience (+)

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31 the idea that increased variability around key diversity elements such as age, facilitates the development of various within team behavioral and knowledge sharing patterns that establish successful collaborations (Michel and Hambrick 1992). Continuing in the same line of reasoning one can assume that teams of star performers which display increased variability in age could benefit from combing each individual exceptional talents and experience to develop adequate working structures. Berman, Down, Hill (2002) offer a well-supported argumentations for how team heterogeneity in terms of tenure and age among basketball teams can positively influence the learning and collaborative processes within the team.

A possible main effect age diversity can have upon the resulting effectiveness of a team of star performers is to diminish overall internal conflict among such individuals. Pelled et al. (1999) proposed that groups characterized by age homogeneity, meaning that the age of team members is highly similar, have a tendency to encounter with increased frequency various types of internal team conflicts. Furthermore, Pelled et al. (1999) argued that individuals having similar age would be more inclined to display increased competitive behaviors for various forms of recognition. Star performers are inherently highly competitive and willing to continuously find ways to improve their performance and results but differences in terms of age among star performers might decreases within team competition for recognition.

Under this assumption individual star performers who are older have consolidated throughout time their reputation and status as distinguished performers and are less likely to compete internally for recognition. With a track of highly distinguished results obtained over time and well established social ties, older star performers have differentiated themselves in terms of scope and quality of contributions thus being less likely to feel threatened by other rising stars (Kehoe, Lepak, Bentley, 2016). On top of that, seasoned star performers have gradually accumulated knowledge about their specific field and this expert knowledge allows them to have positive influence on their colleagues (Kehoe & Tzabbar, 2015). It can be assumed that

How can teams of stars sustain increased levels of team performance? : the moderating effect of team leader experience, previous outcomes and team talent composition on team performance

Master Thesis Entrepreneurship & Innovation