Heterogeneity and Group Performance: Evaluating the Effect of Cultural Diversity in the World's Top Soccer League

Abstract

This paper uses data from the UEFA Champions League tournament between 2003 and 2013 to study the impact of diversity on group performance. We find that more diverse teams outperform less diverse ones. All else equal, a one-standard deviation increase in the average team’s linguistic distance (our proxy for cultural heterogeneity) is associated with a 0.33 rise in per-game goal differential. Because most soccer games tend to be very low-scoring and close, our estimates imply that by incorporating additional (culturally inherent) skills to its roster, an average team could change an outcome from a tie to a win once in every three games. Structural equation modeling (SEM) reinforces these findings. These results have important implications for the debates regarding diversity’s impact on the performance of businesses and ultimately countries' well-being.

Keywords: diversity, soccer, UEFA Champions League, goal differential team performance

JEL Classification: D21