We seek to understand the underlying components of team knowledge diversity and how these components shape teams’ invention performances. Team knowledge diversity has generally been conceptualized in two distinct ways relating to either team members’ concentrations across categories or the similarity of team members’ category profiles. Individually, these portrayals do not capture the differential impact that individual team members can have on a team’s diversity and that where team members’ categories overlap is just as critical as the degree of overlap. Modified versions of these portrayals must be considered in tandem to understand team diversity fully. Hence, we develop a novel conceptualization of how team category diversity emerges from two components: one related to the concentration across categories as well as team members (Team Compactness) and another related to the category overlap within a team accounting for which categories in which this overlap occurs (Member Similarity). Portraying team diversity in this way enables us to generate insights into the relationship between team knowledge diversity and invention performance. We predict that Team Compactness is negatively associated with invention performance, while Member Similarity is positively associated with invention performance. We find support for our hypotheses in a dataset of granted US patents.
