It depends on the make-up of the original teams. Encouraging team diversity in contexts where students tend to form very homogeneous teams can improve performance, but increasing it further in situations where teams are already moderately diverse can be detrimental.
What’s the rationale behind this?
Entrepreneurs show a pronounced tendency to create firms with people of a similar age, gender, ethnicity and education level, among other characteristics. Still, there are reasons to believe that a certain amount of diversity could boost team performance in entrepreneurial settings.
Heterogeneous teams are likely to enjoy a wider pool of skills and knowledge. This diversity might be useful when facing a challenge, as it may lead to a more diverse pool of solutions. The complementarity of team members can also be beneficial when assigning the variety of tasks to be accomplished to ensure venture success.
However, more diverse teams also demand more and better communication among team members to prevent misunderstandings, conflicts and trust problems. Thus, diversity could also be detrimental for entrepreneurial teams.
When talking about team diversity, there seems to be a trade-off between information gains and communication costs. Business challenges at the core of many entrepreneurial education courses represent interesting settings to study those trade-offs.
Entrepreneurship education students
Outcomes of interest
Does it work? Here’s what we know so far…
Amount of diversity
- In entrepreneurship courses, teams with medium levels of diversity tend to outperform very homogeneous and very heterogeneous teams.
TYpe of diversity
- Teams seem to benefit from having diverse members in terms of abilities and perform better on entrepreneurship courses.
- However, imposing high levels of diversity in terms of educational background and ethnicity might be detrimental to team performance.
- It’s unclear what the effect of greater gender diversity is on team performance.
- Diversity might work better in bigger teams, as they enable the benefits of various approaches to problem-solving, skills and personality traits without giving up the positive peer effects of having similar people in the team.
Encouraged or forced
- Some of the detrimental effects of imposed diversity aren’t replicated when diverse teams are formed voluntarily.
Ideas worth trying
- If you’re willing to increase team diversity in your course, try forming larger teams so as not to compromise the benefits of having teammates that participants can easily relate to.
- Try sharing the potential benefits of deviating from fully homogeneous teams with the participants to encourage students to form more diverse teams voluntarily.
What to avoid
- Avoid creating extremely diverse teams in your course. The costs of building effective communication within the team can outweigh the benefits of gathering a wider variety of skills.