Feeling Good About Giving: The Benefits (and Costs) of Self-Interested Charitable Behavior

Abstract

In knowledge-intensive settings such as product or software development, fluid teams of individuals with different sets of experience are tasked with projects that are critical to the success of their organizations. Although building teams from individuals with diverse prior experience is increasingly necessary, prior work examining the relationship between experience and performance fails to find a consistent effect of diversity in experience on performance. The problem is that diversity in experience improves a team's information processing capacity and knowledge base, but also creates coordination challenges. We hypothesize that team familiarity - team members' prior experience working with one another - is one mechanism that helps teams leverage the benefits of diversity in team member experience by alleviating coordination problems that diversity creates. We use detailed project- and individual-level data from an Indian software services firm to examine the effects of team familiarity and diversity in experience on performance for software development projects. We find the interaction of team familiarity and diversity in experience has a complementary effect on a project being delivered on time and on budget. In team familiarity, we identify one mechanism for capturing the performance benefits of diversity in experience and provide insight into how the management of experience accumulation affects team performance.