Roland Bel, Vladimir Smirnov, Andrew Wait

On Broadway and sports: how to make a winning team

Introduction

On broadway and sports: how to make a winning team. Build winning teams: analyze incumbent vs. newcomer incentives, effort dynamics, and optimal team formation strategies for organizations, job rotation, and mergers.

Abstract

A successful organization – or Broadway production – needs the right team. A potential issue is that incumbent workers in a team might have a lower marginal return of effort, reducing the incentive for them to invest relative to newcomers. While agents always prefer to be teamed with others they have worked with before, a principal may wish to use new team members; this occurs when the loss from lower investment is sufficiently large. In fact, a principal may select a team of newcomers even when incumbents produce greater surplus. These insights have implications for job rotation, centralization-versus-decentralization and mergers.

Review

This paper presents an intriguing theoretical exploration into optimal team composition, particularly focusing on the strategic decisions a principal makes regarding the inclusion of incumbent workers versus newcomers. The core premise is that incumbents, potentially facing a lower marginal return on their effort, may have reduced incentives to invest compared to new team members. This dynamic, the abstract suggests, can lead to a principal deliberately selecting a team of newcomers, even when incumbent teams might produce a higher overall surplus, if the potential loss from diminished incumbent investment outweighs the benefits of their existing experience or familiarity. The research appears to offer a valuable contribution by challenging the intuitive assumption that established teams are always superior. By introducing the principal-agent conflict arising from differential investment incentives, the paper provides a fresh perspective on why organizations might pursue strategies like team rotation or refreshment, despite individual agents' preference for working with known colleagues. The stated implications for job rotation, centralization-versus-decentralization, and mergers highlight the broad applicability of these insights, suggesting that the underlying model has significant practical relevance beyond the specific "Broadway and sports" framing. To maximize its impact, the full paper would benefit from a detailed exposition of the theoretical model underpinning these conclusions, clearly defining how "marginal return of effort," "investment," and "surplus" are conceptualized and measured. While the title promises a connection to Broadway and sports, the abstract is quite general; elucidating how these specific domains illustrate or are illuminated by the theoretical framework would strengthen its narrative. Further, a discussion of the contextual factors that might influence the "sufficiently large" threshold for preferring newcomers, or the dynamic effects of such team compositions over time, would enhance the paper's robustness and applicability.

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