The impact of national culture, altruism, and risk preference on salaries: The case of the Major League Baseball

Abstract

Based on the longitudinal data of 30 Major League Baseball (MLB) teams over seasons from 2017 to 2020, we used random effect (RE) models to conduct regression analyses on the detailed data of pitchers and fielders. Cultural distance (CD) was measured in terms of Hofstede’s cultural indicators and Global Preference Survey (GPS) data. The results showed that salary premiums for foreign MLB players existed and CD was significantly positively correlated with salaries. Further, the risk preference (/altruism) difference between foreign pitchers and American pitchers was significantly positively (/negatively) correlated with the salaries of foreign pitchers. Salary estimation data showed that the salary premium was nearly 20% for players from South Korea and Panama, the lowest (only 0.11%) for players from Australia, and only 6.13% for players from Dominican Republic (accounting for the largest proportion of foreign MLB players), indicating that the MLB’s foreign player recruitment policy is correct.