Potluck or Chef de Cuisine? Knowledge Diversity in Teams and Breakthrough Invention

Abstract

This paper explores the relationship between knowledge diversity in teams and breakthrough invention. In an advance over the literature, I explicitly distinguish between (1) knowledge diversity built up within individual inventors and (2) diversity from non-overlapping knowledge across team members. Arguing breakthroughs require broad search across many and unfamiliar domains of knowledge, I predict that both types of knowledge diversity in teams are conducive to breakthrough invention and that they complement one another. Using inventor patenting track records to measure knowledge diversity and the receipt of expert-given awards to proxy breakthrough invention, I confirm these predictions and find support for the proposed mechanism. These findings suggest that the nature of inventive search is an important contingency factor for adequate team composition. They also raise concern of an undersupply of diverse knowledge held within individuals who face increasing incentives to specialize.

Keywords: Innovation, breakthrough, knowledge diversity, team, exploration, search, patent

JEL Classification: O31, O32, O34