Ethnic Diversity and Team Performance: A Field Experiment

Sander M. Hoogendoorn () and Mirjam Praag
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Sander M. Hoogendoorn: University of Amsterdam

No 6731, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: One of the most salient and relevant dimensions of team heterogeneity is ethnicity. We measure the causal impact of ethnic diversity on the performance of business teams using a randomized field experiment. We follow 550 students who set up 45 real companies as part of their curriculum in an international business program in the Netherlands. We exploit the fact that companies are set up in realistic though similar circumstances and that we, as outside researchers, had the unique opportunity to exogenously vary the ethnic composition of otherwise randomly composed teams. The student population consists of 55% students with a non-Dutch ethnicity from 53 different countries of origin. We find that a moderate level of ethnic diversity has no effect on team performance in terms of business outcomes (sales, profits and profits per share). However, if at least the majority of team members is ethnically diverse, then more ethnic diversity has a positive impact on the performance of teams. In line with theoretical predictions, our data suggest that this positive effect could be related to the more diverse pool of relevant knowledge facilitating (mutual) learning within ethnically diverse teams.

Keywords: ethnic diversity; team performance; field experiment; entrepreneurship; (mutual) learning (search for similar items in EconPapers)
JEL-codes: C93 D83 J15 L25 L26 M13 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2012-07
New Economics Papers: this item is included in nep-cbe, nep-dem, nep-ent, nep-exp, nep-hrm, nep-lab and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (56)

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Working Paper: Ethnic Diversity and Team Performance: A Field Experiment (2014)
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