“The practice of having Ph.D. graduates employed by the university that trained them, commonly called ‘academic inbreeding’ has long been suspected to be damaging to scholarly practices and achievement,” says this report:
But, until recently, precise details regarding the levels of possible damage have not been formally quantified. Progress has been made, however, by a joint Portuguese / US research team which examined the academic inbreeding (AI) and scientific productivity (SP) of 414 academics across 14 higher education institutions in Mexico between 1999 and 2002. Their paper ‘Navel Gazing: Academic Inbreeding and Scientific Productivity’ is published in the journal Management Science, Vol. 56, No. 3, March 2010, pp. 414-429. The investigators registered the peer-review output from university departments specialising in Agrarian Sciences, Health Sciences, Natural Sciences, Social & Admin Sciences, Education & Humanities, and Engineering & Technology – and cross-referred it to the level of endemic AI (as defined above in paragraph one). The results almost completely demonstrated that in all faculties examined, non-inbred output was higher *. (see note )
“… an excessive dependence from inbred talent can easily lead to academic fossilization and knowledge atrophy.”
say the researchers, and, quantifying the damage in percentage terms –
“Our estimates suggest that academically inbred faculty generate on average 15% less peer reviewed publications than their non-inbred counterparts.”
The paper can be read in full here
*  Except, for as yet unexplained reasons, in Education and Humanities. Future research may clarify this apparent anomaly.