TY - JOUR AU - Hansen,Zeynep AU - Owan,Hideo AU - Pan,Jie TI - The Impact of Group Diversity on Performance and Knowledge Spillover -- An Experiment in a College Classroom JF - National Bureau of Economic Research Working Paper Series VL - No. 12251 PY - 2006 Y2 - May 2006 UR - http://www.nber.org/papers/w12251 L1 - http://www.nber.org/papers/w12251.pdf N1 - Author contact info: Zeynep K. Hansen College of Business and Economics Department of Economics Boise State University 1910 University Drive Boise, ID 83725-1620 Tel: 208/426-3314 Fax: 208/426-2071 E-Mail: zeynephansen@boisestate.edu Hideo Owan University of Tokyo Institute of Social Science Tokyo 113-0033 JAPAN Tel: 81-3-5841-4985 Fax: 81-3-5841-4905 E-Mail: owan@iss.u-tokyo.ac.jp Jie Pan University of Arkansas at Little Rock E-Mail: no email available AB - An important yet under-explored question in the teamwork literature concerns how group characteristics affect productivity. Within a given teamwork setting, it is not obvious how group member diversity affects the performance of the individual and the group. The group may gain from knowledge transfer and sharing while it may be crippled by communication and coordination problems that are prevalent in heterogeneous groups. In this study, we combine class performance data from an undergraduate management class with students%u2019 personal records to explore diversity and knowledge spillover effects. A major advantage of our dataset is the exogenous assignment of groups, which rules out the troublesome yet common self-selection issue in team literature. Our results indicate that male-dominant groups performed worse both in group work and in individually taken exams than female-dominant and equally-mixed gender groups after controlling for other group characteristics. Individual members from a group with more diversity in age and gender scored higher in exams. However, we did not find any significance of a group%u2019s racial composition over group and individual performances. Another novel aspect of this natural experiment is that each group chooses their own group contract form %u2013 members of %u201Cautonomous%u201D groups receive equal grade for their group work while those in "democratic" groups can adopt differentiated point allocation, thus, providing a proper mechanism to punish free riders. Our estimation results show a significant correlation between the choice of a democratic contract and the group and individual performance. To address the endogeneity problem in groups%u2019 contract choices, we use a maximum likelihood treatment effect model and found that the democratic group contract has a positive and significant effect on group performance. ER -