R and D team diversity and performance in hypercompetitive environments

Hoisl, K, Gruber, M and A Conti (2017). R and D team diversity and performance in hypercompetitive environments, Strategic Management Journal, 38: 1455-1477.

This article examines the effects of an R and D team's composition on its performance outcomes in hypercompetition. The fundamental feature of firms in hypercompetitive settings is that they are constantly challenged to improve their competitiveness in a relentless race to outperform one another.

Analyzing a unique data set from the Formula 1 motorsport racing industry, the authors find an inverse U-shaped relationship between team diversity in task-related experience and performance; an important result that diverges from well-established theories developed in more stable environments. Fundamentally, they show that the role of R and D team experience diversity varies depending on the size of the organization in which R and D teams operate. While they find a moderating effect for firm age, this effect is not as robust as that of firm size.

For managers, they show that a team's diversity in job-related experience increases its performance up to a certain extent. Once R and D teams become too diverse, performance decreases because communication and coordination become more difficult. They also show that the role of R and D team diversity varies depending on the size of the organization in which R and D teams operate.