Organizational capability, efficiency, and effectiveness in Major League Baseball: 1901–2002

Effective organizations need capabilities relevant to their missions and must manage those capabilities efficiently. We anticipate capability is more important in industries in which labor is highly paid, while efficiency is more important in industries in which labor is inexpensive. We explore the contributions of capability and efficiency to effectiveness for Major League Baseball teams from 1901 through 2002. Our analysis measures team capability using offensive and defensive statistics and uses Network Data Envelopment Analysis to derive efficiency scores to capture managerial performance. We define effectiveness as the team’s winning percentage. Both capability and efficiency are significant contributors to regular season effectiveness. Capability is more important. Finally, we examine the post-season performance of post-season teams between 1903 and 2002. Our analysis measures post-season performance based on the team’s winning percentage and that of its opponent. Post-season performance is unrelated to capability and managerial performance, accounting for about 1% of post-season success.