Finders, Keepers; Losers, Weepers. An Empirical Analysis on the Ability to Recognize Talent in the NBA

Regardless of the specific definition, talent is a valuable resource that can provide a competitive advantage. Businesses understand the significance of attracting and retaining top talent. They use tools such as job richness, career opportunities, shared goals, and competitive salaries to recruit skilled individuals. For these very reasons top-tier companies are at clear advantage compared to smaller, less attractive firms, and this advantage is destined to endure since career mobility across top companies is limited. In this paper I try to investigate if companies that can exert a lesser attraction power toward promising prospects can “beat the market” and select skilled yet overlooked talent. To explore this aspect, I chose the National Basketball Association (NBA). In the NBA talents entering the job market can’t choose they preferred destination, and where for teams missing out on talent is costly, because hiring options are limited and strictly regulated. The research question can be formulated as follows: “Has any team, on a regular basis, selected players that outperformed their expected value?”. My results show that some organizations distinguished themselves, some for the good, some for the bad, in the process of ex-ante talent recognition.