Ethnic diversity and team performance: a randomized eld experiment∗

One of the most salient and relevant dimensions of team heterogeneity is ethnicity. We measure the causal e ect of ethnic diversity on the performance of business (start-up) teams using a randomized eld 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 the population consists of 55% students with a nonDutch ethnicity from 53 di erent countries of origin. As outside researchers, we were allowed to exogenously vary the ethnic composition of otherwise randomly composed teams. We nd that ethnically diverse teams perform better in terms of their business outcomes (sales, pro ts and pro ts per share). In line with theoretical predictions, our data suggest that ethnic heterogeneous teams accomodate a more diverse pool of relevant knowledge facilitating (mutual) learning. This could partially explain their better business performance. JEL-codes: J15, L25, L26, M13, C93, D83