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Identity, Diversity, and Team Performance: Evidence from U.S. Mutual Funds

Author

Listed:
  • Richard B. Evans

    (Darden School of Business, University of Virginia, Charlottesville, Virginia 22903)

  • Melissa Porras Prado

    (Nova School of Business and Economics, 2775-405 Carcavelos, Portugal)

  • A. Emanuele Rizzo

    (Nova School of Business and Economics, 2775-405 Carcavelos, Portugal)

  • Rafael Zambrana

    (Mendoza College of Business, Notre Dame University, Notre Dame, Indiana 46556)

Abstract

We examine team diversity and performance in the asset management industry through the lens of identity. Focusing on political ideology as the relevant dimension of identity, we find that diverse teams outperform homogeneous teams. The mechanism involves both improved decision making due to more diverse perspectives and increased monitoring by heterogeneous team members. The benefits of ideological diversity are undone when political polarization is higher, consistent with increased intrateam conflict. In examining why less diverse teams are prevalent in asset management, we find entrenched managers prefer homogeneous teams, and the local labor market supply of ideologically diverse managers is constrained.

Suggested Citation

  • Richard B. Evans & Melissa Porras Prado & A. Emanuele Rizzo & Rafael Zambrana, 2025. "Identity, Diversity, and Team Performance: Evidence from U.S. Mutual Funds," Management Science, INFORMS, vol. 71(4), pages 3026-3051, April.
    • Handle: RePEc:inm:ormnsc:v:71:y:2025:i:4:p:3026-3051
    DOI: 10.1287/mnsc.2022.00544
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