Ethnic Similarity Helps Small Team Performance

This submission has an editorialized, misleading title.

The actual title of this paper is "Homophily in Entrepreneurial Team Formation" and it presents a number of results, one of which being that: "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." Very different implication from that of this editorialized submission title.

Here's the full 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.