Identity, Diversity, and Team Performance: Evidence from U.S. Mutual Funds

Melissa Porras Prado (), Richard B. Evans and Rafael Zambrana

No 14305, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We examine team diversity and performance in the asset management industry through the lens of identity. Focusing on political ideology as the relevant dimension of identity, we find that diverse teams outperform homogeneous teams. The mechanism involves both improved decision-making due to more diverse perspectives and increased monitoring by heterogeneous team members. The benefits of ideological diversity are undone when political polarization is higher, consistent with increased intra-team conflict. In examining why less diverse teams are prevalent in asset management, we find entrenched managers prefer homogeneous teams, and the local labor market supply of ideologically diverse managers is constrained.

Keywords: Â mutual fund; Teams; Dispersion in beliefs; Diversity; Labor incentives; Political ideology; Campaign contributions; Polarization; Pacs (search for similar items in EconPapers)
JEL-codes: G11 G23 J33 J44 L22 L25 L84 M12 M52 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-cdm and nep-hrm
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