# 12-068/3 (2012-07-13; 2014-05-01)

Sander Hoogendoorn, University of Amsterdam; Mirjam van Praag, University of Amsterdam
Ethnic diversity, team performance, field experiment, entrepreneurship, (mutual) learning
JEL codes:
J15, L25, C93, L26, M13, D83

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 diff erent countries of origin, enabling us to include extremely diverse teams in our study. We find that a moderate level of ethnic diversity has no e ffect on team performance in terms of business outcomes (sales, pro ts and pro ts per share). However, if at least the majority of team members is ethnically diverse then more ethnic diversity seems to aff ect 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.