How Does Team Diversity Evolve? Exploring Adaptation and Perpetuation Perspectives in Entrepreneurial Team Change

The influence of the evolution of team diversity on performance is a neglected yet important issue in entrepreneurial ventures where team changes are extensive. In addressing this gap, we conceptualize how diversity influences team change and consequently impacts firm growth. Utilizing both individual and firm level data, we test our conceptual model on a novel sample of 137 team change events in 94 new-technology based firms using multi-level analysis. Results show that team variety does not directly influence change in team variety but that this relationship is significantly moderated by team separation and team disparity. Increase in team variety influences firm revenue growth. Managerial\nimplications are discussed.