Diversity and productivity in production teams

Barton H. Hamilton, Jack A. Nickerson, Hideo Owan

Research output: Chapter in Book/Report/Conference proceedingChapter

18 Citations (Scopus)

Abstract

The popular press often touts workforce demographic diversity as profit enhancing because it may reduce the firm's communication costs with particular segments of customers or yield greater team problem-solving abilities. On the other hand, diversity also may raise communication costs within teams, thereby retarding problem solving and lowering productivity. Unfortunately, there is little empirical research that disentangles the above countervailing effects. Diversity in ability enhances the team productivity if there is significant mutual learning and collaboration within the team, while demographic diversity may harm productivity by making learning and peer pressure less effective and increasing team-member turnover. We evaluate these propositions using a novel panel data from a garment plant that shifted from individual piece rate to group piece rate production over three years. Because we observe individual productivity data, we are able to econometrically distinguish between the impacts of diversity in worker abilities and demographic diversity. Teams with more heterogeneous worker abilities are more productive at the plant. Holding the distribution of team ability constant, teams composed of only one ethnicity (Hispanic workers in our case) are more productive, but this finding does not hold for marginal changes in team composition. We find little evidence that workers prefer to be segregated; demographically diverse teams are no more likely to dissolve, holding team productivity (and hence pay) constant, than homogeneous teams.

Original languageEnglish
Title of host publicationAdvances in the Economic Analysis of Participatory and Labor-Managed Firms
Pages99-138
Number of pages40
DOIs
Publication statusPublished - 2012 Dec 1
Externally publishedYes

Publication series

NameAdvances in the Economic Analysis of Participatory and Labor-Managed Firms
Volume13
ISSN (Print)0885-3339

Fingerprint

Team production
Productivity
Workers
Demographics
Communication cost
Piece rate
Problem solving
Panel data
Ethnic groups
Peers
Team composition
Turnover
Workforce
Profit
Empirical research

Keywords

  • Collaborative skills
  • Compensating differentials
  • Diversity
  • Productivity
  • Teams
  • Turnover

ASJC Scopus subject areas

  • Industrial relations
  • Economics, Econometrics and Finance (miscellaneous)

Cite this

Hamilton, B. H., Nickerson, J. A., & Owan, H. (2012). Diversity and productivity in production teams. In Advances in the Economic Analysis of Participatory and Labor-Managed Firms (pp. 99-138). (Advances in the Economic Analysis of Participatory and Labor-Managed Firms; Vol. 13). https://doi.org/10.1108/S0885-3339(2012)0000013009

Diversity and productivity in production teams. / Hamilton, Barton H.; Nickerson, Jack A.; Owan, Hideo.

Advances in the Economic Analysis of Participatory and Labor-Managed Firms. 2012. p. 99-138 (Advances in the Economic Analysis of Participatory and Labor-Managed Firms; Vol. 13).

Research output: Chapter in Book/Report/Conference proceedingChapter

Hamilton, BH, Nickerson, JA & Owan, H 2012, Diversity and productivity in production teams. in Advances in the Economic Analysis of Participatory and Labor-Managed Firms. Advances in the Economic Analysis of Participatory and Labor-Managed Firms, vol. 13, pp. 99-138. https://doi.org/10.1108/S0885-3339(2012)0000013009
Hamilton BH, Nickerson JA, Owan H. Diversity and productivity in production teams. In Advances in the Economic Analysis of Participatory and Labor-Managed Firms. 2012. p. 99-138. (Advances in the Economic Analysis of Participatory and Labor-Managed Firms). https://doi.org/10.1108/S0885-3339(2012)0000013009
Hamilton, Barton H. ; Nickerson, Jack A. ; Owan, Hideo. / Diversity and productivity in production teams. Advances in the Economic Analysis of Participatory and Labor-Managed Firms. 2012. pp. 99-138 (Advances in the Economic Analysis of Participatory and Labor-Managed Firms).
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