Who Loses When a Team Wins? Better Performance Increases Racial Bias

Although it is well known that team performance influences strategic decision making, little is known about its impact on ascriptive inequality. This study proposes a performance effect on racial bias: higher team performance reduces managers’ performance pressure and therefore, leads to more managerial bias in the subsequent decisions. I find strong evidence for this proposition using a fine-grained data set from the National Basketball Association. In this highly competitive industry, team performance is positively associated with coaches’ subsequent exercise of racial bias: players experience more favorable treatment from same-race coaches after their teams win games. This study shows an important relationship between performance feedback and racial bias and suggests that, even in highly competitive industries, managerial bias may persist in high-performing teams and organizations.

The online appendices are available at https://doi.org/10.1287/orsc.2018.1232.