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Ethnic Diversity and Team Performance: A Field Experiment

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  • Hoogendoorn, Sander M.

    ()
    (University of Amsterdam)

  • van Praag, Mirjam C.

    ()
    (Copenhagen Business School)

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.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6731.

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Length: 29 pages
Date of creation: Jul 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6731

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

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  16. 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.
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Citations

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Cited by:
  1. Michaela Trax & Stephan Brunow & Jens Suedekum, 2012. "Cultural diversity and plant‐level productivity," Norface Discussion Paper Series, Norface Research Programme on Migration, Department of Economics, University College London 2012029, Norface Research Programme on Migration, Department of Economics, University College London.
  2. Alberto Alesina & Johann Harnoss & Hillel Rapoport, 2013. "Birthplace Diversity and Economic Prosperity," NBER Working Papers 18699, National Bureau of Economic Research, Inc.
  3. 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, Norface Research Programme on Migration, Department of Economics, University College London 2013012, Norface Research Programme on Migration, Department of Economics, University College London.
  4. Dr Max Nathan, 2013. "The Wider Economic Impacts Of High-Skilled Migrants: A Survey Of The Literature," NIESR Discussion Papers, National Institute of Economic and Social Research 11607, National Institute of Economic and Social Research.
  5. Longhi, Simonetta, 2013. "Impact of cultural diversity on wages, evidence from panel data," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(5), pages 797-807.

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