v10i2 Huszar

The impact of hierarchical differentiation on team effectiveness is heavily discussed in scientific research with strong arguments lined up on both the pro and the contra sides. To contribute to this debate, I investigated the relationship between a specific facet of hierarchical differentiation, pay dispersion, and team effectiveness. I collected data from five seasons of Premier League and conducted a regression analysis to study the effect of pay dispersion on team performance, cooperation and aggressivity. The empirical results show that pay dispersion is positively and directly associated with aggressivity, whilst its relation with team performance and cooperation is moderated through the financial might of teams. The significant interaction effect for team performance means that pay dispersion has a significant negative effect for high financial might teams, and a weak positive effect for low financial might teams. For cooperation the interaction shows a significant positive effect for the low financial might teams and a weak negative effect for the high financial might teams. Thus, I conclude that pay dispersion indeed affects team effectiveness, however the economic power standing behind the teams needs to be considered.