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

57 Pages Posted: 8 Jan 2020 Last revised: 26 Jan 2021

See all articles by Richard B. Evans

Richard B. Evans

University of Virginia - Darden School of Business

Melissa Porras Prado

Nova School of Business and Economics; Centre for Economic Policy Research (CEPR)

Antonino Emanuele Rizzo

Nova School of Business and Economics

Rafael Zambrana

University of Notre Dame - Mendoza College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: December 17, 2019

Abstract

We examine team diversity and performance in the asset management industry. Focusing on political ideology as the source of both potential complementarities and conflict in a group, we find diverse teams perform better than 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 intra-team 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.

Keywords:  Mutual fund, Teams, Dispersion in Beliefs, Identity, Diversity, Labor incentives, Political Ideology, Campaign Contributions, Polarization, PACs

JEL Classification: G11, G23, J33, J44, L22, L25, L84, M12, M52

Suggested Citation

Evans, Richard B. and Porras Prado, Melissa and Rizzo, Antonino Emanuele and Zambrana, Rafael, Identity, Diversity, and Team Performance: Evidence from U.S. Mutual Funds (December 17, 2019). Available at SSRN: https://ssrn.com/abstract=3505619 or http://dx.doi.org/10.2139/ssrn.3505619

Richard B. Evans

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4030 (Phone)
434-243-7680 (Fax)

HOME PAGE: http://faculty.darden.virginia.edu/evansr/

Melissa Porras Prado (Contact Author)

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda 1
Carcavelos, 2775-405
Portugal

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Antonino Emanuele Rizzo

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

Rafael Zambrana

University of Notre Dame - Mendoza College of Business ( email )

Notre Dame, IN 46556-5646
United States

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