The primary purpose of this study is to investigate the influence of racial and gender diversity on group process and problem solving in an academic setting. The importance of this dynamic is its value in preparing students for the workplace. The supposition is if a group is homogeneous, commitment and performance is improved. Data for the study was collected from upper-level undergraduate male and female students, registered in two sixteen week business courses taught by one instructor, at a large university in a metropolitan city in the northeastern United States. There were five racially mixed groups of seven members in each of the four sections of the two courses. During this period, group members met frequently for class projects, including a series of case analyses. Only balanced heterogeneous groups significantly enhanced their groups' performance on complicated problem-solving tasks over time. They exceeded the performance of all homogeneous groups, except that of the black American female homogeneous groups. Ultimately, the academic grades of the balanced heterogeneous groups as well as their individual members were in the upper half of all grades issued.