Are the highest performers the best?

Denrell, Jerker (2011) Are the highest performers the best? In: Organizational Learning, April 2011, Asilomar, California.

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The relation between performance and ability is a central concern in discussions of imitation and learning - should we imitate and learn from the highest performers? Past research has illustrated how social mechanisms, combined with noise, can produce a weak or even non-existent association between performance and ability. The implication is that even high performance may not tell us much about the ability of the agent. Still, if performance and ability are positively correlated, it makes sense to imitate the highest performers. In this paper we point to a different effect of noise. We show that high levels of noise can in fact lead to a negative association between performance and ability for high levels of performance. The implication is that the highest performers are not the most impressive - instead, agents with moderately high performance are expected to have the highest ability. We first demonstrate how this conclusion can be derived from a formal model. We then illustrate that the basic results are consistent with the game results of the U.S. Major League Baseball between 2000-09. Our findings imply alternative explanations and predictions for three phenomena: post-hiring surprise, management fashions, and the decline of dominant firms.

Item Type: Conference or Workshop Item (Paper)
Keywords: Performance; Ability; Models
Subject(s): Strategy; Entrepreneurship & Global business
Centre: Faculty of Strategy, Entrepreneurship and International Business
Date Deposited: 18 Mar 2012 20:01
Last Modified: 23 Oct 2015 14:06

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