Cultural diversity in new venture founding teams and accelerators’ selection decisions

We used a cross-country sample of more than 9,000 startup ventures from over 100 countries to examine the relationship between the cultural diversity in the founding team and the likelihood of admission into impact-oriented acceleration programs. Building on signaling theory, we hypothesized that the formation of multi-cultural founding teams sends a signal from the applicants to the decision-makers of social impact accelerators. The results confirm this hypothesis, showing that cultural diversity has a positive and statistically significant association with the likelihood of being admitted. This finding is robust across several specifications and accounts for the potential endogeneity of cultural diversity. In further analysis, we examined whether and how cultural diversity interacts with other signals concerning the human capital and demographical characteristics of the founding team. We found that these signals not only have an individual effect on the admission likelihood, but their interaction effects are also statistically significant.