Abstract
Extant literature suggests that network diversity can generate positive outcomes for startups. We examine the case of ethnic diversity as a driver of network diversity and hypothesize that ethnic diversity increases startup acquisition likelihood. Furthermore, we hypothesize that the positive relationship between ethnic diversity and acquisition likelihood increases for teams with greater professional experience. We find empirical support for our hypotheses using a dataset of startups that participated in the Techstars accelerator program between 2010 and 2018. The implication of this study is that ethnic diversity in startup teams drives acquisition likelihood through the mechanisms of cognitive and network diversity which lead to information processing advantages, but that this effect is present mainly for more experienced teams.
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