Does diversity matter? Explaining the effects of team diversity on team performance using data from a student’s business simulation game

Abstract

Purpose The purpose of this study is to determine the impact of different diversity criteria (age and gender) on team performance using a business simulation game, where performance is operationalized by market valuation (Tobin’s Q) and profitability (cumulative net income). Design/methodology/approach The authors collected data of a business simulation game at a German public university (128 student groups and 645 individuals). Using multiple linear regression models, they investigated the impact of the different diversity criteria on team performance. Findings The authors found no significant effects of gender diversity on market valuation and profitability. However, the results of this study indicate a positive relationship between age diversity and both performance variables. Originality/value This paper contributes to the debate on the relationship between diversity and team performance by using data from a business simulation game. This study adds value by considering different diversity factors, objective performance indicators and the endogeneity of team formation (the seminar leaders randomly assign students to teams) which has not been applied in similar studies yet. Because of the setting of a simulated business game, the results could also be applied to the real economy where we observe working teams every day.