Racial diversity and team performance: evidence from the American offshore whaling industry

Abstract We use data from the American offshore whaling industry to examine the relationship between racial diversity and team performance. Teams consist of the crew operating onboard whaling vessels, and performance is measured by the value of the output captured during the voyage. The results show robust estimates of racial diversity’s association with team performance at the firm level, which is U-shaped. Whereas increasing levels of racial diversity initially reduced revenue, higher levels yielded substantial gains. The nonlinear pattern is consistent with conflicts and hunting success working in opposite directions.