Homophily in Entrepreneurial Team Formation

52 Pages Posted: 30 May 2017 Last revised: 3 Jun 2017

See all articles by Paul A. Gompers

Paul A. Gompers

Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Kevin Huang

Harvard Business School

Sophie Calder-Wang

University of Pennsylvania - The Wharton School; Harvard University

Multiple version iconThere are 2 versions of this paper

Date Written: May 2017

Abstract

We study the role of homophily in group formation. Using a unique dataset of MBA students, we observe homophily in ethnicity and gender increases the probability of forming teams by 25%. Homophily in education and past working experience increases the probability of forming teams by 17% and 11 % respectively. Homophily in education and working experience is stronger among males than females. Further, we examine the causal impact of homophily on team performance. Homophily in ethnicity increases team performance by lifting teams in bottom quantiles to median performance quantiles, but it does not increase the chance of being top performers. Our findings have implications for understanding the lack of diversity in entrepreneurship and venture capital industry.

Suggested Citation

Gompers, Paul A. and Huang, Kevin and Calder-Wang, Sophie, Homophily in Entrepreneurial Team Formation (May 2017). NBER Working Paper No. w23459, Available at SSRN: https://ssrn.com/abstract=2976199

Paul A. Gompers (Contact Author)

Harvard Business School - Finance Unit ( email )

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Harvard University - Entrepreneurial Management Unit ( email )

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Kevin Huang

Harvard Business School ( email )

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Sophie Calder-Wang

University of Pennsylvania - The Wharton School ( email )

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Harvard University ( email )

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