Abstract
What is the effect of dispersed levels of cognitive ability of members of a (business) team on their team's performance? This paper reports the results of a field experiment in which 573 students in 49 teams start up and manage real
companies under identical circumstances for one year. We ensured exogenous variation in -otherwise random- team composition by assigning students to teams based on their measured cognitive abilities (Raven test). Each team
performs a variety of tasks, often involving complex decision making. The key result of the experiment is that the performance of business teams first increases and then decreases with ability dispersion. We seek to understand this
finding by developing a model in which team members of different ability levels form sub-teams with other team members with similar ability levels to specialize in different productive tasks. Diversity spreads production over different tasks in order to escape diminishing marginal returns under specialization. The model comes with a boundary condition: our experimental finding is most likely to emerge in settings where different tasks exhibit moderate differences in their productive contributions to total output.
companies under identical circumstances for one year. We ensured exogenous variation in -otherwise random- team composition by assigning students to teams based on their measured cognitive abilities (Raven test). Each team
performs a variety of tasks, often involving complex decision making. The key result of the experiment is that the performance of business teams first increases and then decreases with ability dispersion. We seek to understand this
finding by developing a model in which team members of different ability levels form sub-teams with other team members with similar ability levels to specialize in different productive tasks. Diversity spreads production over different tasks in order to escape diminishing marginal returns under specialization. The model comes with a boundary condition: our experimental finding is most likely to emerge in settings where different tasks exhibit moderate differences in their productive contributions to total output.
| Original language | English |
|---|---|
| Publication date | 2014 |
| Number of pages | 35 |
| Publication status | Published - 2014 |
| Event | The DRUID Society Conference 2014: Entrepreneurship - Organization - Innovation - Copenhagen Business School, Frederiksberg, Denmark Duration: 16 Jun 2014 → 18 Jun 2014 Conference number: 36 http://druid8.sit.aau.dk/druid/registrant/index/login/cid/15 |
Conference
| Conference | The DRUID Society Conference 2014 |
|---|---|
| Number | 36 |
| Location | Copenhagen Business School |
| Country/Territory | Denmark |
| City | Frederiksberg |
| Period | 16/06/2014 → 18/06/2014 |
| Internet address |