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Ethnic Diversity and Team Performance: A Field Experiment

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  • Sander Hoogendoorn

    ()
    (University of Amsterdam)

  • Mirjam van Praag

    ()
    (University of Amsterdam)

Abstract

One of the most salient and relevant dimensions of team heterogeneity is ethnicity. We measure the impact of ethnic diversity on the performance of business teams using a 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 diff erent countries of origin, enabling us to include extremely diverse teams in our study. We find that a moderate level of ethnic diversity has no e ffect on team performance in terms of business outcomes (sales, pro ts and pro ts per share). However, if at least the majority of team members is ethnically diverse then more ethnic diversity seems to aff ect the performance of teams positively. Our data suggest that this positive effect might be related to the more diverse pool of relevant knowledge facilitating (mutual) learning within ethnically diverse teams.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 12-068/3.

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Date of creation: 13 Jul 2012
Date of revision: 01 May 2014
Handle: RePEc:dgr:uvatin:20120068

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Web page: http://www.tinbergen.nl

Related research

Keywords: Ethnic diversity; team performance; field experiment; entrepreneurship; (mutual) learning;

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References

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  1. Alesina, Alberto & La Ferrara, Eliana, 2005. "Ethnic Diversity and Economic Performance," Scholarly Articles 4553005, Harvard University Department of Economics.
  2. Ozgen, Ceren & Nijkamp, Peter & Poot, Jacques, 2011. "Immigration and Innovation in European Regions," IZA Discussion Papers 5676, Institute for the Study of Labor (IZA).
  3. Åslund, Olof & Edin, Per-Anders & Fredriksson, Peter & Grönqvist, Hans, 2009. "Peers, neighborhoods and immigrant student achievement – evidence from a placement policy," Working Paper Series 2009:20, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  4. Sander Hoogendoorn & Hessel Oosterbeek & Mirjam van Praag, 2011. "The Impact of Gender Diversity on the Performance of Business Teams: Evidence from a Field Experiment," Tinbergen Institute Discussion Papers 11-074/3, Tinbergen Institute, revised 01 May 2014.
  5. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2010. "Does Labor Diversity Affect Firm Productivity?," Working Papers 10-12, University of Aarhus, Aarhus School of Business, Department of Economics.
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  9. Neil Lee & Max Nathan, 2011. "Does Cultural Diversity Help Innovation in Cities: Evidence from London Firms," SERC Discussion Papers 0069, Spatial Economics Research Centre, LSE.
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Cited by:
  1. Ceren Ozgen & Thomas de Graff, 2013. "Sorting out the impact of cultural diversity on innovative firms. An empirical analysis of Dutch micro-data," Norface Discussion Paper Series 2013012, Norface Research Programme on Migration, Department of Economics, University College London.
  2. Longhi, Simonetta, 2013. "Impact of cultural diversity on wages, evidence from panel data," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 797-807.
  3. Trax, Michaela & Brunow, Stephan & Suedekum, Jens, 2013. "Cultural diversity and plant-level productivity," DICE Discussion Papers 119, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  4. Alberto Alesina & Johann Harnoss & Hillel Rapoport, 2013. "Birthplace Diversity and Economic Prosperity," CReAM Discussion Paper Series 1304, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  5. Dr Max Nathan, 2013. "The Wider Economic Impacts Of High-Skilled Migrants: A Survey Of The Literature," NIESR Discussion Papers 11607, National Institute of Economic and Social Research.

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