Does Employing Skilled Immigrants Enhance Competitive Performance? Evidence from European Football Clubs

We investigate the effect of employing skilled immigrants on the competitive performance of organizations by studying European football (soccer) clubs in Germany, Italy, France, England, and Spain from 1990 to 2020. Microdata from this setting offers unusual transparency about players’ birthplaces and their contributions to organizational performance. Further, country-level rules govern how many immigrant players clubs can deploy. Using changes to these rules as the basis for instrumental variables, we find that the number of immigrant players in the club’s starting lineup has a positive local average treatment effect on the club’s performance. We show that this occurs for two related reasons. First, immigrants exhibit higher individual talent. Second, immigrants play a coordinating role that enables the organization to broaden the variety of on-field strategies and actions it uses to outperform rivals. The latter mechanism is novel to the literature.