Advanced Search
MyIDEAS: Login to save this paper or follow this series

Ability Dispersion and Team Performance: A Field Experiment

Contents:

Author Info

  • Hoogendoorn, Sander M.

    ()
    (University of Amsterdam)

  • Parker, Simon C.

    ()
    (Western University, Canada)

  • van Praag, Mirjam C.

    ()
    (Copenhagen Business School)

Abstract

This paper studies the impact of diversity in cognitive ability among members of a team on their performance. We conduct a large field experiment in which teams start up and manage real companies under identical circumstances. Exogenous variation in – otherwise random – team composition is imposed by assigning individuals to teams based on their measured cognitive abilities. The setting is one of business management practices in the longer run where tasks are diverse and involve complex decision-making. We propose a model in which greater ability dispersion generates greater knowledge for a team, but also increases the costs of monitoring necessitated by moral hazard. Consistent with the predictions of our model, we find that team performance as measured in terms of sales, profits and profits per share first increases, and then decreases, with ability dispersion. Teams with a moderate degree of ability dispersion also experience fewer dismissals due to fewer shirking members in those teams.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ftp.iza.org/dp7044.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7044.

as in new window
Length: 34 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:iza:izadps:dp7044

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: knowledge pooling; entrepreneurship; field experiment; team performance; ability dispersion; moral hazard;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Hong, Lu & Page, Scott E., 2001. "Problem Solving by Heterogeneous Agents," Journal of Economic Theory, Elsevier, Elsevier, vol. 97(1), pages 123-163, March.
  2. Alexandre Mas & Enrico Moretti, 2006. "Peers at Work," NBER Working Papers 12508, National Bureau of Economic Research, Inc.
  3. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 100(4), pages 801-17, August.
  4. Alex Bryson & Rafael Gomez & Kerry L. Papps, 2010. "Heterogeneous Worker Ability and Team-Based Production: Evidence from Major League Baseball, 1920-2009," CEP Discussion Papers dp1015, Centre for Economic Performance, LSE.
  5. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2009. "Are Risk Aversion and Impatience Related to Cognitive Ability?," CESifo Working Paper Series 2620, CESifo Group Munich.
  6. Barton H. Hamilton & Jack A. Nickerson & Hideo Owan, 2003. "Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 111(3), pages 465-497, June.
  7. S. Iranzo & F. Schivardi & E. Tosetti, 2006. "Skill dispersion and firm productivity: an analysis with employer-employee matched data," Working Paper CRENoS 200617, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  8. Oosterbeek, Hessel & van Praag, Mirjam & Ijsselstein, Auke, 2010. "The impact of entrepreneurship education on entrepreneurship skills and motivation," European Economic Review, Elsevier, Elsevier, vol. 54(3), pages 442-454, April.
  9. Dohmen Thomas & Falk Armin & Huffman David & Sunde Uwe & Schupp Jürgen & Wagner Gert, 2009. "Individual Risk Attitudes: Measurement, Determinants and Behavioral Consequences," ROA Research Memorandum, Maastricht University, Research Centre for Education and the Labour Market (ROA) 007, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  10. Lawrence M. Kahn, 2000. "The Sports Business as a Labor Market Laboratory," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 14(3), pages 75-94, Summer.
  11. Gould, Eric D. & Winter, Eyal, 2007. "Interactions Between Workers and the Technology of Production: Evidence from Professional Baseball," IZA Discussion Papers 3096, Institute for the Study of Labor (IZA).
  12. Edward P. Lazear, 1998. "Globalization and the Market for Teammates," NBER Working Papers 6579, National Bureau of Economic Research, Inc.
  13. Eric Hanushek & Ludger Woessmann, 2008. "The Role of Cognitive Skills in Economic Development," Discussion Papers, Stanford Institute for Economic Policy Research 07-034, Stanford Institute for Economic Policy Research.
  14. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, American Economic Association, vol. 71(5), pages 845-58, December.
  15. Zeynep Hansen & Hideo Owan & Jie Pan, 2006. "The Impact of Group Diversity on Performance and Knowledge Spillover -- An Experiment in a College Classroom," NBER Working Papers 12251, National Bureau of Economic Research, Inc.
  16. Mark Grinblatt & Matti Keloharju & Juhani Linnainmaa, 2011. "IQ and Stock Market Participation," Journal of Finance, American Finance Association, American Finance Association, vol. 66(6), pages 2121-2164, December.
  17. Franck, Egon & Nüesch, Stephan, 2010. "The effect of talent disparity on team productivity in soccer," Journal of Economic Psychology, Elsevier, Elsevier, vol. 31(2), pages 218-229, April.
  18. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(3), pages 551-75, August.
  19. Cutler, David M. & Lleras-Muney, Adriana, 2010. "Understanding differences in health behaviors by education," Journal of Health Economics, Elsevier, Elsevier, vol. 29(1), pages 1-28, January.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Chen, Chia-Ching & Chiu, I-Ming & Smith, John & Yamada, Tetsuji, 2012. "Too smart to be selfish? Measures of cognitive ability, social preferences, and consistency," MPRA Paper 41078, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp7044. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.