The Effect of Heterogeneity of Ability in Teams on Performance

The range of ability levels among individuals within an organization can vary, with some organizations having a more homogeneous group (i.e., restricted range) and others having a more heterogeneous (larger range) group of individuals. An important question to consider is how this affects organizational performance. Using data from the National Basketball Association (NBA), this paper finds support for the notion that heterogeneity (versus homogeneity) in ability levels within a team has a positive effect on performance. Furthermore, we examine what the underlying mechanism is that causes heterogeneity in ability to be beneficial for performance. The three possible mechanisms we test for include: learning (i.e., that low ability members learn from their high ability counterparts), motivation (i.e., that low ability and high ability individuals are motivated to perform better on account of the abilities of their counterparts), and coordination gains (low and high ability members pick tasks that results in the greatest marginal benefit to the group). Our results show that low ability individuals benefit from heterogeneous teams, suggesting possible learning effects within heterogeneous teams.