Entrepreneurial team diversity, performance and disruption: Insights from a simulation model

Abstract

While team diversity is believed to increase both cognitive conflict (performance-enhancing) and risk of affective conflict (disruption-enhancing), examining this trade-off in entrepreneurship settings is hampered by the lack of data allowing for joint assessments of diversity, performance and disruption over time in new venture teams. Drawing upon research in psychology and small group research, we develop a simulation model formalizing how different levels of entrepreneurial team diversity may influence team performance and disruption over time. Experimenting with different scenarios related to the diversity-performance and diversity-disruption relationships, our model generates insights how team diversity act as a double-edged sword where teams with greater diversity are more likely to create high-performing ventures, but also more exposed to the risk of disruption. Explicating the boundary conditions under which diversity maximize long-term team performance conditional on team survival, we contribute to the discussion on entrepreneurial team composition, behavior, and performance.