Role of diversity in team performance: the case of missing expertise, an agent based simulation

TL;DR

This paper uses an agent-based simulation to explore how different aspects of diversity within management teams affect communication and performance, revealing complex dependencies on context.

Contribution

It introduces a novel agent-based model to analyze the impact of hidden diversity distributions on team dynamics and performance, extending traditional empirical approaches.

Findings

Diversity effects depend on communication schemes and team composition.

Intrapersonal and dominant function diversity can both enhance or hinder performance.

A third measure of aggregate expertise is necessary for comprehensive analysis.

Abstract

Theory and empirical research on management teams' influence on firm performance have witnessed continuous development, and by now incorporate numerous details. Classic, experiment-based studies examining social systems collect vast amount of data, but often times investigate only the first one or two modes of the distribution of measured variables, and experience difficulty in analyzing the effect of context. For example, in functional diversity research, management teams are described by measures incorporating complex distributions of capabilities of individual managers and teams of managers. To investigate the effect of hidden distributions, and the effect of functional diversity composition on team communication and performance, we developed an agent-based model, and conducted a series of simulation experiments. Modeling results show that depending on the context, such as communication scheme among interacting agents, or their functional composition, intrapersonal functional diversity (IFD), and dominant function diversity (DFD) might enhance or reduce performance and communication among agents. Furthermore, simulation results also suggest that a third measure is required alongside IFD and DFD capturing the aggregate expertise of the team to comprehensively account for empirical findings.