Research on Houston Astros scandal finds unethical behavior not always a ‘home run’

Spying on one’s competitors is a practice as old as business itself. Intelligence gathered in an ethical manner is encouraged, and often necessary, for organizational success. But when information is gathered unethically – known as “illicit competitive intelligence” – red flags are raised, and sanctions or punishments could follow.

But does illicit competitive intelligence actually help an organization perform better? That’s what Gies professors Deepak Somaya and Joseph Mahoney set out to investigate. In their paper, “Did Cheating Help the Houston Astros Win? Organizational Misconduct, Illicit Competitive Intelligence, and Organizational Performance,” coauthored with Michigan State University professor Joshua Downs, these scholars used the 2017 Houston Astros sign-stealing scandal to examine the effects of illicit competitive intelligence.

“In general, it's hard to get data on wrongdoing, because naturally, everyone wants to keep it hidden. And even if you do get data, it’s hard to directly connect that wrongdoing with the performance of an organization,” said Deepak Somaya (right), the Diane and Steven N. Miller Professor at Gies. “Maybe you can measure a company’s profitability during a period of misconduct, but you likely won’t see a direct cause and effect. With the Astros scandal, we have really robust and detailed data. We know with a high degree of certainty when and where it occurred, and their batting performance is very directly connected to their sign stealing.”

During the 2017 and 2018 seasons, the Astros engaged in an elaborate scheme to gain an unfair advantage during home games. Using a combination of video surveillance and an internal database of other teams’ signs, the Astros decoded the signs used by opposing catchers and relayed them to their batters in real-time. This involved placing a camera in center field to capture the signals, deciphering the signals in real time using the database, and then communicating the upcoming pitches to the hitters by banging in code on a trash can. The Astros won the World Series during the 2017 season – but after the scandal came to light in 2020, General Manager Jeff Luhnow and manager A.J. Hinch were suspended and subsequently fired. The team also forfeited draft picks and paid a fine of $5 million, the maximum allowed under the Major League Baseball Constitution.

To examine if the sign stealing actually helped the Astros’ hitters perform better, the research team measured the Astros’ OPS (on-base + slugging percentage) at home vs. away, and compared them during pre-cheating vs. cheating periods. The researchers expected that if cheating helped the Astros win, it would manifest in a bigger home field batting advantage during the cheating period. However, they found no such effect in the data. “There is no discernible evidence,” the authors write,” that the Astros gained a batting advantage from their cheating.”

“The Astros had a marvelous baseball team all season long, and they may have won the World Series without any cheating at all. The tragedy is we will never know,” said Mahoney, Caterpillar Chair of Business and associate director of Gies’ Illinois Strategic Organizations Initiative (ISOI). “There’s also a lot of pressure in business to win, and even when you're on top and winning, it's never good enough.”

So why, despite their best efforts, was the sign-stealing not an obvious advantage? In the paper, which was accepted for publication in Academy of Management Discoveries, the researchers suggest three possible explanations.

First is organizational-professional identity conflict, which refers to how much a person identifies with their profession versus with their organization. In this case, the Houston Astros’ players could be thinking “Is my identity as a baseball player more important than my identity as a member of this team?” If it’s the former, then they may have not participated in the scheme, at least covertly, because they felt a sense of conflict with the ethical norms of what it means to be a baseball professional.

Second is information leakage, which is that one’s competitors may learn of the scheme and implement countermeasures to prevent it from working. We know that at least some other teams did learn of the Astros’ sign-stealing and took appropriate precautions when playing against them. Information leakage may have rendered the entire scheme “ineffective,” the authors say.

Finally, disruption of routines may have played a role in the potential ineffectiveness of the sign-stealing scandal. Organizational routines are important for organizational success, and changes in routines can take a great deal of adjustment. Especially in “high-velocity environments” where there is “late-arriving information,” such as trash-can banging as a batter is anticipating a pitch, individuals (such as batters in this case) may not perform at their best due to a disruption of their routines. In fact, this disruption could negatively affect their performance more so than if they weren’t being aided at all.

“There’s a famous quote attributed to hall-of-famer Yogi Berra that says, ‘You can’t think and hit at the same time,’ which might be what’s in play here,” Mahoney (right) said. “Batters must make split-second decisions about whether and how to swing, and now they are diverting their attention by needing to listen for the banging of a trash can. Just like in business organizations, if you're asking people to think about new things when they are already performing a complex well-honed activity, you're probably going to get lower performance there, too.”

So what can the business world learn from this study?

“There seem to be some general conditions under which this kind of cheating doesn't help,” said Somaya. “My hope is that people and organizations will come away with the insight that not only does misconduct involve terrible ethical compromises, it often just isn’t worth it.”

“A lot of the costs of cheating are somewhat invisible or hard to measure, but that doesn't mean they're not really important,” Mahoney said. “Not only is the Astros’ World Series championship forever tainted, but the cheating also doesn’t seem to have helped them at all. The benefit may have seemed obvious; their batters knew what pitch was coming. But if people were more aware of all of the hidden costs and uncertain benefits of cheating, they’d realize this type of misconduct might not pay.”