Lionel Messi, Mohamed Salah, and Neymar are three of the highest-paid soccer players in the world, according to the latest ranking by Forbes. They also happen to be immigrants playing for European teams.
The diversity of European soccer clubs, where athletes of color account for one-third to one-half of the players, makes the sport an ideal setting to study whether organizations that employ more skilled immigrants outperform their rivals.
That’s exactly the question Wharton management professors Britta Glennon and Exequiel (Zeke) Hernandez answer in their paper published last month by the National Bureau of Economic Research. Their co-authors are Francisco Morales, business professor at Universidad Diego Portales, and Seth Carnahan, strategy professor at Washington University in St. Louis’ Olin School of Business.
The professors analyzed the data from European soccer teams from 1990 to 2020 and found that each additional immigrant player improves a team’s margin of victory by .12.
“That may sound pretty small, but since the average goal difference in a match is less than 1, that’s a pretty substantial increase of 20%,” Glennon said in an interview with Wharton Business Daily on SiriusXM. (Listen to the podcast at the top of this page).
The researchers wanted to understand the reason for the correlation, so they considered two theories. The first is that enhancing the diversity of a team results in better collective performance. The second is that immigrants are simply more talented than their native colleagues.
Based on the study, superior talent wins. The scholars explained that in order to overcome the hardships of the hiring process — including moving from another country — foreign players have to be at the top of their game. They must come from the right-tail of the talent distribution, not unlike the most talented women who overcome gender discrimination to join male-dominated fields.
Glennon pointed out that although the results of the study aren’t generalizable to every industry, there are similarities to the technology sector, where demand for premium talent is high.
“Both technology companies and football clubs are trying to find the best talent in the world,” she said. “Their success is tightly connected to the quality of the human capital in the organization. And in both places, the technical expertise is more important than anything else.”
Diversity and Performance
While the study finds that immigrants improve the performance of an organization, diversity alone does not. It’s well-documented that diverse perspectives can increase innovation and creativity in the workplace, but they can also create conflict. When the researchers looked at diverse soccer teams, they found that immigrant managers were key to unlocking the benefits of having more immigrant players. In fact, teams without immigrant managers experienced a negative association between diversity and performance.
“Countries that have more restrictive immigration [policies] are disadvantaging their own companies, relative to other places.” –Britta Glennon
“Immigrant managers are able to identify with these immigrant players in a way that helps them manage any potential conflict and reap all the benefits of having immigrants from different countries,” Glennon said.
The main takeaway from the study, she said, is that when organizations have greater flexibility to hire skilled immigrants, performance improves. That’s something for policymakers to consider when formulating immigration laws.
“Countries that have more restrictive immigration [policies] are disadvantaging their own companies, relative to other places,” Glennon said.
The study leads to more questions about immigration and diversity in the workplace, including factors beyond superior talent, she added. It’s an area ripe for more research.
“I think we’re able to cleanly identify this initial causal effect, but there’s still a lot of room to understand under what circumstances does the cost of diversity outweigh the benefits,” she said. “What are the other mitigating factors besides immigrant managers? Are there other mechanisms that we’re not thinking about?”
