Stockholm School of Economics | 10 November 2014

Diversity effects onsustainable group performance

Jesper BernhardssonM.Sc. Student in International Business

10/11/2014 2

Agenda

A. Definitions

B. Research

C. Evaluation and reflections

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What is group diversity?

• Demographic variables• Age, gender, ethnicity, educational level etc.

• Functional backgrounds• E.g. Engineering, business

• Surface-/deep level diversity• Age, gender vs. ability, opinion, personality

A

B

C

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Why is diversity important for companies?

• Underutilized source of competitive

advantage

• Optimal group design• 1/3 >1 female execs in companies (Allbright, 2014)

• Strong relationships between diversity and

group performance, both positive and

negativeA

B

C

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Group performance

Hackman & Katz (2010)

1. Accomplishing group tasks

2. Strengthening group capabilities

3. Fostering well-being of group members

A

B

C

Is diversity always good?

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Groups have different objectives

• Production

• Service

• Decision-making

• Leadership

• Change

• Discovery

• Learning

Hackman & Katz (2010)

A

B

C

Some task types gain more than others from diversity

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Homogeneity vs. heterogeneity

“The implication would seem to be that

homogeneous groups should be created in

certain contexts, and diverse groups created

in others.”

BUT diverse groups always posses more

knowledge.

Hackman & Katz (2010)

A

B

C

Diversity research

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Decision-making

Williams & O’Reilly (1998)

• Problem-solving ability

• Creativity

A

B

C

Decision-making quality can be vastly improved by design aimed to make group capabilities broader

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Networks and bonds

• Internal density group cohesion• Instrumental and expressive ties

• Complex problem-solving gains from

diversity

• External network range

Balkundi & Harrison (2006); Sparrowe et al. (2001); Reagans, Zuckerman & McEvily (2004)

A

B

C

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Groupthink

“A mode of thinking that people engage in when they are deeply

involved in a cohesive in-group, when the members’ strivings for

unanimity override their motivation to realistically appraise

alternative courses of action.”

Janis (1982)

A

B

C

Too strong cohesion can make a high performing group commit errors it would not otherwise make.

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Building consensus

Knight et al. (1982); Harrison & Klein (2007)

• Group viability

• Polarization

• Sub-group formation

A

B

C

Sometimes diversity leads group members to become more polarized rather than more moderate in their opinions.

Some practical implications

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Translating theory into practise – caveats

“So many contingencies [have been] identified and documented

that conceptual models become inelegant and practical advice

impossible.”

Hackman & Katz (2010)

A

B

C

Contradictory results and ambiguous relationships makes theory unwieldy for implementation.

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Some personal takeaways

• Trade-offs exist between group

efficiency effectiveness goals

• Diversity can have both positive and

negative impacts on group

performance

• Diversity a source of competitive

advantage A

B

C

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Some managerial implications

• Create mechanisms that allow

members to participate in knowledge

exchange

• Remove frictions that limit

information-sharing• (e.g. social hierarchy, seniority, pride)

• Challenge managers to design groups

according to task.

A

B

C

Q&A