Ethnic Diversity and Team Performance: A Field Experiment

Tinbergen Institute Discussion Paper 12-068/3

34 Pages Posted: 14 Jul 2012 Last revised: 2 May 2014

See all articles by Sander Hoogendoorn

Sander Hoogendoorn

University of Amsterdam - Faculty of Economics and Business (FEB); Tinbergen Institute

Mirjam van Praag

University of Amsterdam - Department of Economics; Copenhagen Business School; Tinbergen Institute; IZA Institute of Labor Economics

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Date Written: July 13, 2012

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 different countries of origin, enabling us to include extremely diverse teams in our study. 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 seems to affect 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.

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

JEL Classification: J15, L25, C93, L26, M13, D83

Suggested Citation

Hoogendoorn, Sander and van Praag, Mirjam, Ethnic Diversity and Team Performance: A Field Experiment (July 13, 2012). Tinbergen Institute Discussion Paper 12-068/3, Available at SSRN: https://ssrn.com/abstract=2105284 or http://dx.doi.org/10.2139/ssrn.2105284

Sander Hoogendoorn (Contact Author)

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Mirjam Van Praag

University of Amsterdam - Department of Economics ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4096 (Phone)
+31 20 525 4182 (Fax)

Copenhagen Business School ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

Tinbergen Institute

Gustav Mahlerlaan
Amsterdam
Netherlands

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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