Heterogeneity and team performance: Evaluating the effect of cultural diversity in the world’s top soccer league

This paper uses data from the UEFA Champions League (2003-2012) to study the impact of diversity on team performance. Results indicate that more heterogeneous teams outperform less diverse sides; a one-standard deviation increase in cultural diversity (measured by linguistic distance) can double a team's goal differential over the course of the tournament. One threat to our conclusions is that certain teams have greater resources to search the world for talent. We address this issue by controlling for players' transfer values, quality ratings, and exploiting exogenous variation in diversity generated by differences in the non-European player quotas of national soccer leagues.