Diversity and Inequality in Management Teams: A Review and Integration of Research on Vertical and Horizontal Member Differences

Abstract

The promise and perils of heterogeneity in team member characteristics has been and continues to be one of the central questions in research on management teams. We review the literature on member heterogeneity within management teams, with a focus on summarizing and integrating research on both horizontal member differences (i.e., diversity) and vertical member differences (i.e., inequality)—two streams of research that have been largely separate in past research. We find that the overwhelming majority of research on management team heterogeneity has focused on horizontal differences, though there are few clear and consistent themes in empirical findings within either stream. We also find that horizontal and vertical differences are inter-related, such that the effects of diversity can depend critically on the degree of inequality within a team, and vice versa. Moreover, we find that our ability to clearly account for the effects of vertical and horizontal differences in management teams has been limited by a confusion of definitions and conceptualizations that hamper our ability to compare theoretical arguments and empirical findings across studies. We organize various conceptualizations of heterogeneity into six types based on whether a given conceptualization is concerned with horizontal or vertical differences (diversity or inequality) and whether it is focused on the differentiation, dispersion, or concentration of member differences. The result is a framework with three types of diversity (separation, variety, and skew) and three types of inequality (stratification, steepness, and centralization). Finally, we summarize different approaches to operationalizing each of these types. The conclusions and recommendations of this review can help to bring clarity and focus to research on member heterogeneity within management teams, or groups and teams of any sort.