Encouraging the formation of diverse teams in terms of cognitive abilities can improve the performance of the businesses they start and manage.
Students are divided into teams that vary in terms of the cognitive ability of their members to see how the average level of cognitive ability and the diversity of abilities affect the performance of the businesses that these teams start and run.
A very popular entrepreneurship education programme for post-secondary education in the United States and Europe. The students are required to found and run real businesses, which are then dissolved at the end of the academic year. Everything about the companies, including tax and social security payments, is real, so teams need to get involved in all the activities that are required to run a business in real life: raising capital by issuing shares, appointing officers, producing and marketing products or services, keeping the accounts and conducting shareholder meetings, among others. Finally, each company has an assigned university tutor and a business coach to report to.
- To maximise performance of the businesses that teams start and manage
The entrepreneurship course took place at a university in a city that’s considered to be an important startup hub.
Teams of approximately 12 students on an international business programme. Team members are young and highly educated individuals who generally lack experience.
Students are evaluated and divided into four categories according to their cognitive abilities, with the most able individuals being assigned to category 1 and least able to category 4. Four types of teams are formed:
- High-ability / low-dispersion teams: combining students from categories 1 and 2
- Low-ability / low-dispersion teams: combining students from categories 3 and 4
- Medium-ability / low-dispersion teams: combining students from categories 2 and 3
- Medium-ability / high-dispersion teams: combining students from categories 1 and 4
- Keeping average ability constant, teams with medium levels of ability dispersion outperformed the teams with low and high ability dispersion.
- Keeping ability dispersion constant, the average ability of the team didn’t impact team performance.
- Diversity should be encouraged in contexts where individuals tend to team up only with similar peers, but it can be detrimental to further increase diversity in teams that are already fairly heterogeneous.
- Encouraging top students to team up with students of different levels of cognitive ability, instead of joining teams with only high-ability individuals, might improve the performance of all the resulting teams in the class.