Working Paper: NBER ID: w23459
Authors: Paul A. Gompers; Kevin Huang; Sophie Q. Wang
Abstract: We study the role of homophily in group formation. Using a unique dataset of MBA students, we observe homophily in ethnicity and gender increases the probability of forming teams by 25%. Homophily in education and past working experience increases the probability of forming teams by 17% and 11 % respectively. Homophily in education and working experience is stronger among males than females. Further, we examine the causal impact of homophily on team performance. Homophily in ethnicity increases team performance by lifting teams in bottom quantiles to median performance quantiles, but it does not increase the chance of being top performers. Our findings have implications for understanding the lack of diversity in entrepreneurship and venture capital industry.
Keywords: homophily; entrepreneurship; team formation; diversity; performance
JEL Codes: J15; J16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| homophily in ethnicity (J15) | probability of forming teams (C78) |
| homophily in gender (J16) | probability of forming teams (C78) |
| homophily in education (I24) | probability of forming teams (C78) |
| homophily in past working experience (C92) | probability of forming teams (C78) |
| homophily in ethnicity (J15) | team performance (M54) |
| team performance (M54) | likelihood of being top performers (L25) |