Human Capital Theory and Social Capital Theory on Sports Management

By Barros C. P.; Alves, F. M. P. | International Advances in Economic Research, August 2003 | Go to article overview

Human Capital Theory and Social Capital Theory on Sports Management


Barros C. P., Alves, F. M. P., International Advances in Economic Research


Abstract

This paper analyzes sports managers' earnings and blends traditional aspects of management derived from human capital theory with new aspects derived from social capital theory. It captures the integrative and relational aspects of sports management. In 2000, the authors carried out a questionnaire in the Madeira Islands. Data about the amateur sports managers were then taken from it. Results obtained verify that sports managers' earnings are function of both types of theoretical determinants posited by the human capital theory and the social capital theory. The authors conclude that both issues are determinants of sports managers' earnings. (JEL Z00)

Introduction

Sports managers play a role in the development of sports markets. In contemporary sports clubs, several individuals perform the role of managers. The Board of Directors usually performs several tasks: planning, organizing, directing, and controlling [Robbins and Coulter, 2001]. The stakeholders' assembly and the fiscal council control the board of directors, as happens in private enterprises. Trainers, sometimes also called sports managers, are individuals who manage the sports teams, assuming the role of production directors [Dobson and Goddard, 2001, Chaps. 5-6]. In a multi-activity sports club, there will be several trainers working under the sports managers' direction.

This paper analyzes the determinants of sports managers' earnings and blends two theories. Initially, human capital theory asserted that the market compensated the cost of education [Mincer, 1974]. More recently, social capital theory asserted that the market also compensated the social ties and networks [Coleman, 1990]. The authors concentrate on sports managers who have the top responsibility for the management of sports organizations. They play the role of Chief Executive Officer.

On the one hand, many articles have demonstrated human capital theory for different countries [Psachaxopoulos, 1985]. Moreover, this positive correlation might be the reason why sports management courses have been rising so steadily in the world. On the other hand, there was scarce evidence on the validity of social capital theory. Since the concept of human capital did not capture the integrative and relational aspects of management shown by the social capital theory, it is important to test these two different theories jointly. The integrative and relational aspects of management derive from the strength of social ties and structural holes observed in the role of the sports managers. These are concepts associated with social capital theory.

This paper analyzes the amateur sports managers' return to education, using data from a questionnaire undertaken in Madeira Island in 2000. It takes into account the individual aspects derived from human capital theory and the integrative and relational aspects derived from social capital theory.

The paper is organized as follows: Section two presents a literature review that sets the context where the current research is done. The third section introduces the institutional setting to shed light on particular aspects of the labor market under analysis. Section four expounds the theoretical framework. Section five develops the empirical study. Section six gives the results and section seven concludes.

Literature Review

According to Mincer [1974], the classic specification of human capital theory for the determination of earnings is:

(1) log [w.sub.i] = [[alpha].sub.0] + [[alpha].sub.1][S.sub.i] + [[alpha].sub.2]EX[P.sub.i] + [[alpha].sub.3]EX[P.sup.2.sub.i] + [[epsilon].sub.i],

where [w.sub.i] is the log of earnings of individual i, [S.sub.i] is a measure of his or her schooling, EXP represents the years of experience, [[epsilon].sub.i] is the statistical error term, and [alpha] are parameters to be estimated, with the parameter [[alpha].sub.1] being the return to schooling. …

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