Leadership of Cultural Diversity:

The impact of leadership

Leiderschap van Culturele Diversiteit:

De impact van leiderschap

Doctoral dissertation

for the purpose of being admitted to the degree of Doctor at

Erasmus University Rotterdam

on the authority of the

Rector Magnificus

Prof.dr. H.A.P. Pols

and in accordance with the decision of the Doctorate Board.

The public defence ceremony shall take place on

Thursday, 25 February 2016, at 15:30 hrs

Kerstin Katja Raithel

born in Stollberg, Germany

Doctoral Committee

Promotor:
Prof.dr. D. L. van Knippenberg

Co-promotor:
Dr. D. A. Stam

Other members:
Prof.dr. D. van Dierendonck
Prof.dr. S. R. Giessner
Prof.dr. E. Kearney

I
 Acknowledgement

First and foremost I would like to express my deeply-felt thanks to my Ph.D. ad-

visors, for supporting me during this journey. I am extremely grateful to my main super-

visor Prof. D. L. van Knippenberg whose joy and enthusiasm for his research was conta-

gious and extremely motivational for me. His selfless time and care were sometimes all

that kept me going. I could not have imagined having a better advisor and mentor for my

Ph.D. study. Also, I would like to say a very big thank you to my co-supervisor D. A.

Stam. I appreciate all his contributions of time and ideas to make my Ph.D. experience

enjoyable. I am grateful for the opportunity to learn from his knowledge and experience.

Both, have provided invaluable perspectives on my research and methodological

approach in general. Words cannot express how thankful I am for the constant feedback

and thoughtful guidance. It has been a privilege to work with both and the patience with

me were always appreciated. I never would have been able to get this far without the

warm encouragement and support. Thanks for believing in me.

For this dissertation I would also like to thank the members of my defense com-

mittee, for their time and insightful questions. Special thanks also goes out to everybody

who participated in this study.

Finally, I would like to thank my family for all their love and unconditional en-

couragement. My parents have been so supportive and I would not have been able to

complete a Ph.D. without them. The moral and technical support and the amazing chances

they have given me over the years make me very grateful.

I am indebted to all my friends for never letting me doubt myself and for remind-

ing me there is a world outside of my Ph.D. Special thanks to the Anguiano’s, whose

faithful support during all stages of this Ph.D. is so appreciated. Thank you.

II
Table of content

Chapter 1: Introduction & Thesis Overview ..................................................................... 7

Introduction ............................................................................................................................ 7

Cultural Diversity................................................................................................................... 8

Thesis overview ................................................................................................................... 12

Chapter 2: Business Case - Diversity Management at a Multinational Company .......... 14

Introduction .......................................................................................................................... 14

The Company and its Diversity Management ..................................................................... 15

Action Field Gender Diversity ............................................................................................. 18

Action Field Age Diversity .................................................................................................. 21

Action Field Cultural Diversity ........................................................................................... 22

Discussion and conclusion ................................................................................................... 25

Chapter 3: Cultural team diversity and group performance: The moderating effect of leader
cultural background and tenure ....................................................................................... 29
Abstract ................................................................................................................................ 29

Introduction .......................................................................................................................... 29

Theoretical Background and Hypotheses ............................................................................ 32

Leader Cultural Background and Team Cultural Diversity ............................................. 32

Leader Team Tenure and Team Cultural Diversity ......................................................... 35

Leader Tenure Moderates Leader Cultural Background Effects ..................................... 36

Method ................................................................................................................................. 37

Sample and Procedure...................................................................................................... 38

Measures .......................................................................................................................... 39

Results .................................................................................................................................. 40

Test of Hypotheses ........................................................................................................... 40

3
 Discussion ............................................................................................................................ 42

Theoretical Implications and Future Directions .............................................................. 42

Implications for Practice .................................................................................................. 44

Limitations ....................................................................................................................... 45

In Conclusion ....................................................................................................................... 45

Chapter 4: Cultural Dissimilarity and Psychological Safety: The Moderating Role of Leader
Interactional Fairness and Leader Group Prototypicality ............................................... 53
Abstract ................................................................................................................................ 53

Introduction .......................................................................................................................... 54

Theoretical Background and Hypotheses ............................................................................ 56

Cultural Dissimilarity and Psychological Safety ............................................................. 56

Leader Interpersonal Fairness and Cultural Dissimilarity ............................................... 59

Leader Group Prototypicality and Cultural Dissimilarity ................................................ 61

Method ................................................................................................................................. 63

Sample and Procedure...................................................................................................... 63

Measures .............................................................................................................................. 65

Results .................................................................................................................................. 66

Hypothesis testing ............................................................................................................ 67

Discussion ............................................................................................................................ 68

Theoretical Implications and Future Directions .............................................................. 68

Implications for Practice .................................................................................................. 69

Limitations ....................................................................................................................... 70

In Conclusion ....................................................................................................................... 71

Chapter 5: General Discussion........................................................................................ 76

Summary of the Main Findings ........................................................................................... 77

Theoretical implications................................................................................................... 78

4
 Practical Implications....................................................................................................... 79

Conclusion ........................................................................................................................... 80

References ............................................................................................................................ 81

5
Table of tables

Table 1: Descriptive statistics, and Intercorrelations for Study Variablesa ............................. 47

Table 2: Results of Hierarchical Regression Analysis ............................................................. 48
Table 3: Descriptive statistics and Intercorrelations for Study Variablesa, .............................. 74
Table 4: Interaction effects on psychological safety................................................................ 75

Table of figures

Figure 1: The interaction between team cultural diversity and leader cultural background ... 49
Figure 2: The interaction between team cultural diversity and leader tenure .......................... 50
Figure 3a: Interaction between team cultural diversity and leader cultural background for
leaders with low tenure ............................................................................................................ 51
Figure 3b: Interaction between team cultural diversity and leader cultural background for
leaders with high tenure ........................................................................................................... 52
Figure 5: The interaction between cultural dissimilarity (CD) and interpersonal fairness ...... 72
Figure 6: The interaction between cultural dissimilarity (CD) and leader group prototypicality
.................................................................................................................................................. 73

6
Chapter 1: Introduction & Thesis Overview

Introduction

Multinational companies more than ever face rapid and drastic changes in society which

also affect the economic and social environment. Furthermore these processes encompasses

the company itself, the community of staff members and customers. As parameters, global

megatrends dictate the direction of company development. These megatrends include globali-

zation and internationalization, the transformation in demographics and the value system, the

societal challenge of the advancement of minority groups in executive positions, and establish-

ing flexibility in working environments.

An enhanced leadership culture is one of the key instruments for coping with these

challenges over the long term, because leaders have the ability to directly influence team mem-

bers (van Knippenberg, van Ginkel, & Homan, 2013; cf. Hackman, 2002; Kozlowski & Bell,

2003). Yet, to be able to manage diverse teams in the best way and increase team performance

leaders require a good understanding of the causes of attitudes and behaviors of individuals

and teams.

Through globalization and internationalization organizations are becoming more and

more diverse especially in terms of cultural background. Cultural diversity, therefore, is a crit-

ical factor to investigate and the core of the current dissertation. Culturally diverse teams have

the potential to bring benefits to the organization, caused by the expectation that different back-

grounds may foster higher levels of performance (Ilgen et al., 2005). Culturally team diversity

in organizations results in broader knowledge, expertise, and diverse perspectives that may lead

to more creative and innovative strategies to problems, higher-quality decisions, and overall

performance on sophisticated, knowledge-intensive tasks (Williams & O’Reilly, 1998).

Even though the organization may benefit from team diversity, 50 years of diversity

7
research shows that team diversity may be associated with conflict and non-optimal team per-

formance (Williams & O’Reilly, 1998; van Knippenberg & Schippers, 2007). Team diversity

in that sense can be beneficial and detrimental to the organization at the same time (Milliken

& Martins, 1996), and a key question for management is how to manage team diversity in the

best way. Therefore, defining what kind of leader characteristics drives team performance and

which leadership characteristics foster the positive outcomes of diversity in cultural diverse

teams is more and more crucial for organizations. Thus the research question of this dissertation

is:

How can leadership leverage the potential of cultural diversity in organizations?

Cultural Diversity

Cultural diversity is particular pertinent to organizations which are having and doing

business in a competitive international business environment (Jackson & Alvarez, 1992). Com-

panies have access to a pool of local and foreign workers, who bring different expertise, beliefs

and knowledge to the team (Cox & Blake, 1991; Kirkman & Shapiro, 1997), because with

acceleration globalization cultural diversity in teams is constantly rising as well (Staples,

2007). The term cultural diversity in this dissertation refers to diversity in nationality. The na-

tional origin is characterized by the institutional setting of the individual’s home in which they

lived mostly in their formative years (f. Hambrick et al., 1998). Therefore nationality is an

essential and central component of individuals’ identity and describes the diversification based

on country and origin, which tends to be a high salient characteristic compared to other de-

mographics (Hambrick et al., 1998). Add to the above that research found that national culture

has solid impact on feelings, acting of leaders and strategic thinking (Geletkanycz, 1997;

Schneider and DeMeyer, 1991) cultural diversity is clearly a critical factor for organizations to

8
understand and master.

Unfortunately prior research has also shown that (cultural) diversity often has negative

and undermining effects on performance of individuals and teams in organizations (Williams

& O’Reilly, 1998; van Knippenberg & Schippers, 2007). Thus, in order to leverage the poten-

tial of cultural diversity it must be handled. We investigate two important instances of negative

effects of cultural diversity and discuss how these can be managed. First, in chapter 3, we take

a team level perspective and investigate how variation in nationality in teams (i.e. cultural di-

versity of teams) negatively affects team performance. Then, in chapter 4 we take an individual

level perspective and investigate how cultural differences between individuals and their fellow

team members (i.e. cultural dissimilarity) may negatively impact feelings of psychological

safety of these individuals.

In order to manage cultural diversity we emphasize the role of leadership. Leadership

is characterized as a mechanism of giving advice or impacting decisions made by the team, as

well as engaging team members to accomplish their goals (Yukl, 2006). Inspiration, as well as

motivation and enthusiasm is crucial for success. Therefore, gaining a better understanding of

which leadership characteristics will expand and strengthen these elements that create a spirit

of shared commitment, use abilities to generate enthusiasm and confidence as well as inspire

their team members is a key.

Managers act against the background of their company’s organization, which in turn is

determined by structure, strategy and culture factors. Alignment of these factors against each

other and a good balance between these three parameters is decisive for the success of the

organization. Therefore, leaders are faced to balance company and team objectives as well as

lead individuals who are diverse in several aspects e.g. working styles, educational and cultural

background. Both, leaders and team members have to deal with increasing complexity and fast

changing day-to-day business. Consequently there is a stronger need of effective management

9
of individuals, in order to align actions. Thus, team performance is contingent upon efficient

leadership. Especially in view of the notion that leadership is the most flexible influence that

organizations can bring to bear in their attempts to manage team (cultural) diversity (van Knip-

penberg, van Ginkel, & Homan, 2013; cf. Hackman, 2002; Kozlowski & Bell, 2003).

Furthermore, it is arguable that leadership is one of the most important elements of the

team’s success in organizations. Therefore a profound apprehension of which leadership char-

acteristics are beneficial to teams, especially in cultural diverse ones is needed. Particularly,

we propose that certain leadership characteristics, like leader cultural background and tenure

(Chapter 3) and leader interpersonal fairness and leader group prototypicality (Chapter 4) can

be a driver in positive or negative team outcomes of cultural diverse teams. We specifically

argue that the outcome of cultural diverse teams on team performance is more positive with a

leader who is non-native to the host country than with a local leader, and that this effect would

mainly be observed for leaders with shorter tenure with the team. Stronger cultural expertise in

leading teams in a cultural diverse environment, as well as working with partners in growth

markets across locations and borders is decisive.

With new market challenges and globalization comes an unprecedented societal cultural

diversity – with opportunities and risks for every organization that operates in these societies.

Employees who deal with the development of innovations, products and markets, should be as

multifaceted as the future markets of the specific international target groups on which products

and services focus. This presents multinational organizations its leadership with challenges,

but also conceals great opportunities because diversity among the workforce, taking action is

the foundation of a global, targeted, and market-specific development of the future. This im-

plies that leaders will satisfy new demands for multilingualism and intercultural competence

(Bartlett and Ghoshal, 2003). In particular, their pronounced ability to integrate and adapt to

other cultures, organizations, rules, ideologies, and specialized topics will be required.

10
 As a key skill of the leadership culture, change management takes on a new meaning

because change will be a continuous companion of economic activity. Talent management will

take new forms because potential labor markets and required skills are changing considerably.

Accordingly, diversity of the workforce is becoming a strategic priority for most multinational

organization. Leaders and their various teams may occasionally need more time to find a solu-

tion due to the identification and evaluation of any conflicting aspects, this development in

corporate and leadership culture will be a critical competitive advantage in the future. Moreo-

ver fostering diverse talents requires a special openness, the ability to integrate, as well as lead-

ing employees with different social and cultural backgrounds– completely new demands for

many executives.

Therefore we examined that certain leader characteristics play an important role in un-

derstanding the leadership process of cultural diverse teams and gives a better understanding

on diversity and leadership. We draw on the social identity perspective and identified both

leader interpersonal fairness and leader group prototypicality as such attenuating influences on

cultural diverse teams. It is arguable that leadership as one of the most crucial determinant of

team success or failure. Thus, we investigate in these components to gain a better understanding

to which extend leaders are drivers in managing diverse teams.

A key success factor for multinational organizations is the desire to successfully

lead a company into the future, as well as to preserve and expand the high level of appeal both

locally and on the international labor market. While further developing and adapting strengths,

it is necessary to build leaders’ technical quality combined with behavioral values. Leadership

behavior secure success of team and company performance especially when parameters and

requirements change in the future. Moreover, it is crucial for leaders to have strong abilities,

which take into account the transformation in a certain industry and expectations of employees.

Furthermore leaders need shape a culture that calls for and permits a high diversity of ideas,

11
viewpoints, interpretations, and solutions. This is a foundation for being able to exploit re-

sources, in particular in a diverse workforce. An effective leadership of cultural diversity may

make the people taking action more successful and satisfied over the long term, it will foster

diversity and versatility, will accelerate the sustainable implementation of innovative ideas and

plans, and thus play a major role for a multinational company.

Thesis overview

In addition to the current introductory chapter, this dissertation consists of one business

case, two empirical chapters and a final chapter where I summarize the findings and present

general conclusions of the present research.

In order to benefit from team diversity, organizations have to actively manage diversity,

which organizations often do by implementing a diversity management concept which is pre-

sented in chapter two as a best practice business case of a multinational company. The goals of

this chapter is to provide an overview of those areas of diversity management most in need of

research and to describe comprehensively the context of the empirical chapters.

Chapter three investigates in leadership and cultural diversity in teams. Little is known

about the influence of team leaders (see e.g., van Dijk, van Engen, & van Knippenberg, 2012),

but considering the large impact leaders have on team members’ performance and attitude lead-

ership may play a crucial role in leveraging the effects of cultural diversity in multinational

organizations. Specifically we look at the impact of team leader cultural background and leader

tenure on team performance in this chapter. We specifically argue that foreign leaders (as op-

posed to local leaders) are better positioned to lead culturally diverse teams because of their

cross-cultural experiences. At the same time we argue that leader tenure can also provide cross-

cultural experiences that can help local leaders bridge the gap with foreign leaders in terms of

12
effectively managing cultural diversity. Chapter three adds to the understanding of leadership

of diversity by focusing on leader’s diversity attributes, but also adds to the understanding that

diverse teams need time to learn to make use of their team diversity (Earley & Mosakowski,

2000).

Chapter four takes an individual level perspective on the issues concerned with cultural

diversity. It specifically deals with the perceived psychological safety of team members in cul-

tural diverse teams. Taking a relational demography perspective which suggests that more dis-

similar members’ are particularly at risk in terms of lower levels of psychological safety, we

studied to which extent leader characteristics may reduce these negative effects of cultural dis-

similarity on team members’ psychological safety. Specifically we argue that leader interac-

tional fairness and leader prototypicality may diminish the negative relation between cultural

dissimilarity and psychological safety because they communicate to the individual that (s)he is

valued as a group member. This contributes to the literature on leading diversity research, the

crucial moderating influence of leadership on the relation between cultural dissimilarity and

psychological safety and demonstrates the importance of an appreciation of individual differ-

ences (as opposed to only team diversity) for leadership of cultural diversity.

The final chapter includes an overview of the findings of the empirical chapters and

contributions of the dissertation. In addition, we discuss future research opportunities.

13
Chapter 2: Business Case - Diversity Management at a Multinational Com-

pany

The purpose of this chapter is to provide the context of the research on leadership and

cultural diversity in this dissertation. Specifically we describe how a multinational company

that we investigate in later chapters deals with diversity. In the last decades various develop-

ments on national and international levels have led to the fact that the topic ‘diversity’, both

from a moral as well as from an economic perspective has become indispensable. In the future

Human Resource Management (HRM) of a multinational company will mainly be influenced

by the progressive globalization, demographic patterns and by various political and legal

frameworks. The following chapter describes significant demographic changes, as well as legal

and economic developments which shows various perspectives and approaches for diversity

management in an international organization.

Introduction

The following chapter illustrates the development of diversity management with its main action

fields and its starting points for strategy implementation, by looking at the best practices of

diversity management measures of the focal company of this dissertation, which is a globally

active aviation group comprising of more than 500 subsidiaries and affiliates. We do so with

two goals in mind. First, investigating the current practices of the company provides us with

important insights into what areas of diversity management deserve more research attention to

help the company improve its diversity management. As such this chapter drives the focus of

later chapters. Second, the current chapter provides an overview of the company and its prac-

tices and as such describes comprehensively the context of further research.

14
 The Company and its Diversity Management

Air transportation connects people around the globe and enables the positive exchange

of goods, ideas and cultures. While the core business remains air travel, the organization has

created a network of globally positioned segments rooted in numerous aspects of the aviation

industry. Other key segments are international scheduled freight transport, aircraft mainte-

nance, repair and overhaul services, information technology services and worldwide airline

catering. Around 120,000 people are employed worldwide with about 150 different nationali-

ties based in 84 countries. With around 50,000 employees working outside of the headquartered

country, the organization can be defined as a global player doing business around the world.

Especially global acting companies to which a diverse workforce comes naturally know best

about challenges in international markets and special needs of the customers worldwide. Ex-

amples for globalization within the economic sector are international production, capital flow

with no regards to borders and new communication tools. Globalization requires more cooper-

ation among people from diverse cultural backgrounds and experiences. The worldwide com-

petition is high and therefore an organization requires diversity to be more creative, innovative

and efficient.

Therefore the organization regards diversity management as a chance and as a business

must to use the benefits of diversity. Diversity also supports in defining the wishes of interna-

tional customers in the best way, because their needs are reflected in a diverse workforce of a

multinational company. Diversity in the workplace has the potential to bring lots of advantages

to an organization, like creativity, high performance and innovation by creating competitive

advantages (William & O'Reilly, 1998). But benefiting and managing diversity in an effective

way is challenging. Thus the company has to contribute a lot. Therefore it is essential that

diversity management is included in the corporate culture and in the human resource structure.

15
Corporate HRM is managed centrally. To secure high quality and modern exposures within

each area of human resources businesses, a variety of divisions belong to the organizational

chart of the central function. Due to the complexity of the company, local human resource

departments are implemented, which have their own responsibilities and ways of implementing

strategies on a decentral basis in alignment with the company strategy.

Trends like demographic change, globalization and individualization inspire the mar-

kets of most multinational companies and present new challenges. The international position-

ing of a company verifies awareness towards necessary adaptions in order to stay competitive.

Political and economic actions have influences on the decision of a company to produce abroad.

A multinational company has to demonstrate the ability to adapt to such changes by positioning

its business segments in the most important markets. The ability to operate not only interna-

tionally but also profitably can be connected to the decentralized organization of the presented

company structure. Each segment knows its competitors and the current development best and

can adjust its activities to market challenges in the most efficient way. These trends also show

that it is necessary to have a holistic design and initiatives in all areas of diversity management

to use all these returns on investments.

These facts, changing society and economy illustrate the need of diversity management

as knowledge bearer and as a competitive factor in a multinational organization Future com-

petitiveness of a global player will depend on the design of the corporate company culture and

the products, which have to meet the requirements of the markets and the society around the

world. A global acting company in the service industry is characterized by the diversity of its

groups of customers. In the following best practices and a variety of established diversity meas-

urements in order to strengthen the company culture of diversity will be described. Diversity

16
is perceived as a chance to fulfil the variegated customer needs at an optimal level and moreo-

ver attract new customers, as well as to implement a long term strategy and produce an added

value to the company. Thus below action fields were established:

 Equality and sponsorship of gender diversity

 Openness to culture diversity and global engagement

 Appreciation of age diversity and sexual orientation

 Integration of disabled employees.

The company designed a holistic diversity concept which fosters the attraction, recruit-

ment and retention of employees. Reinforcement of creativity and innovation is another goal

of the company’s diversity management. The aim of establishing a diversity management strat-

egy is to install a long term strategy in order to produce a proactive human resources manage-

ment based on general diversity management agreements. To manage all diversity topics across

the company a department within the central function of the human resources management

department was introduced, which follows the following principles:

 Create sensitivity for managers and committees in regards to diversity topics

 Proactive diversity management to go hand in hand with the company strategy

 Strengthen visibility of the diverse workforce and give exposure to diverse talents

 Spread diversity philosophy across all business segments, functions and departments,

as well as involve every employee and manager

With the implementation of the overall diversity management strategy the same dimen-

sion in every country was established, whereby the focal points could differ from region to

region to adjust the conditions there. For example one of the focal points in the United States

is the promotion of ethnic minorities. In Asia the main area is women’s empowerment and to

17
transfer managerial responsibility to local managers. In South Africa there is a focus on in-

creasing cultural diversity balance and also to support disabled people in the workforce. In

Europe the first focus is more on gender diversity in management positions followed by cultural

and demographic diversity. Every employee makes an important contribution to the company’s

success. Therefore integrating them is a key aim of the human resources policy, which is an-

chored in the diversity strategy.

Due to the fact that the company is headquartered in Europe, the corporate measures

are based on European trends and regulations. Diversity management in Europe is supported

by law, due to the Equal Treatment Directive, which is an act of the European Union (Federal

Anti- Discrimination Agency, 2000). The European Union members made the anti-discrimina-

tion rules to their national goal. The aim of the law is to support the prevention of discrimina-

tion by gender, culture, age, ethnical background, religion, disability etc. Although diversity

management illustrates an economic concept first and foremost, the equality act law gives

many organizations a cause to establish a diversity management strategy in order to meet the

goals of the law by this. Next to the political law there exist also corporate policy guidelines

like employment agreements to ensure fairness and equality at the workplace. Germany is a

country with a drastic aging population as well as on of the countries in Europe with the largest

shares of workers with a foreign nationality across Europe. Therefore Germany plays particular

attention in this chapter. Hereafter the main action fields of a multinational company are pre-

sented as best practice examples.

Action Field Gender Diversity

Gender diversity stands for equal opportunities of women and men at the workplace.

49.6 percent of the world population are women (Population Reference Bureau, 2015). But by

18
looking at the world labor market this result is not reflected in many countries around the world.

Gender gaps persist even in some of the most developed countries (Population Reference Bu-

reau, 2015). For example in Europe just 8.4 percent of women belong to the Board of Manage-

ment (Heidrick and Struggles, 2007). In Germany 46 percent of the employees are female (The

Federal Employment Agency, 2012). 20 percent of them are in the position with managerial

responsibility (Hoppenstedt Analyse, 2012). But just 3.4 percent women in Germany belong to

the management board (FiDAR e.V., 2012) although 50 percent of the graduates are female

(Population Reference Bureau, 2015). In addition most of the women between the age of 25

and 35 in Germany leave the labor market to focus on the family live, because the compatibility

of family and career has a lot of barriers (The Federal Employment Agency, 2011). Studies

have shown that companies profit from gender balance in the workforce and also in manage-

ment positions. One proof for this hypothesis could be the “women matter” study (Devillard,

S., Graven, W., Lawson, E., Paradise, R. & Sancier- Sultan, S., 2012) which reveal that women

in leadership positions contribute to better results of the company’s economic success. Further-

more the implementations of an efficient leadership mix may increase the overall company

performance (McKinsey, 2007; Daily and Dalton, 2003b; Population Reference Bureau, 2015;

Carter et al. 2003). To really make use of the full potential of resources available, a high rep-

resentation of women throughout the value chain may be beneficial in order to bring different

views and ideas to the table (Fondas and Sassalos, 2000) and furthermore broaden their network

to Stakeholders (Campbell and Minguez-Vera, 2008).

Therefore one main focus of diversity management lies on the action field gender di-

versity. Furthermore one core theme within this action field is to increase the proportion of

women in general, specifically in executive positions. The goal is to fill the gender gap and to

eliminate the barriers in the women’s career path. In order to increase the percentage of females

19
in management positions targets with a certain proportion of percentage of women in manage-

ment positions throughout the organization within five years were set. In addition to that plenty

of measures were introduced to improve gender balance. For example development programs

especially for women who aspire a management position were designed and implemented.

Furthermore future female potentials will be trained in topics like networking competencies,

self-management and career aspiration trainings. Special function capability building programs

complete the concept of fostering women in leadership positions, which take local needs and

requirements into account. A further example to support the implementation of gender diversity

is the concept of mentoring, which was identified as a success factor for career development

throughout the company. Generally successful mentorship relations are started either in the

scope of a formal company program or through an individual‘s own initiative reaching out to

someone they see as a valuable guide to provide feedback and advice. The formal mentorship

program offers female employees of the next generation a special development program, which

broaden the horizon and knowledge through insights in different functions and businesses

across the globe. Mentors from varies business segments and functions act as a sparring partner.

A further component of the gender diversity action field is the offer of family-friendly

programs, which leads to rising stock prices, on average by 0.5 percent (Preecea & Filbeckb,

1999). The compatibility of family and work can be supported by e.g. offering part time jobs,

job sharing, home office and childcare facilities. Through these measures the company will not

lose the qualified women just because of the family planning. In addition to that, the company

has more employer attractiveness and will get more applicants for vacancies and enables the

firm to attract the best employees available on the market. Another opportunity to charm the

labor force is to retrieve retired employees. They have a high expertise and experience which

is essential for the company and furthermore train the next generation. The company also sup-

ports the concept leading in part-time by offering this possibility it enables future potentials a

20
better work life balance which leads to higher engagement and flexibility in times with high

workload (Kohn and Breising, 1999).

Action Field Age Diversity

Organizations also face challenges of the demographic changes like shortage of skilled

labor e.g. in Europe (European Parliament 2015). One aspect of this effect is the continuous

decline of professionals. Consequently organizations cannot be competitive. Particularly in the

so called MINT-subjects (mathematics, informatics, natural sciences and technics/engineer-

ing), the shortage is very serious. Already today the non-filling of vacant engineering jobs

brought about an economic damage of a seven digit euro amount (Dierig, 2009). Therefore

diversity management is seen as an instrument to counter the shortage of skilled labor (Vedder,

2011). The variety of every employee is seen as a key factor to foster a corporate culture which

invites every gender, age and ethnical/cultural backgrounds. Furthermore through the aging

population it will be more difficult to attract qualified personal in Europe and especially in

Germany. Next to preventive health management at the workplace, which functions as reten-

tion of the employability and performance ability, there is also a need for a work life balance,

lifelong learning as well as individual performance. In addition to this the company pays special

attention to the relationship between younger employees and older ones to use the generation

spanning synergies. These tasks are supported by the diversity management department.

In the struggle to recruit young workers and talent, companies have to adapt to accom-

modate the new generations. Here, with its demand for ‘life while working’ instead of ‘working

to live’ (Generation X) or ‘living to work’ (baby boomers), Generation Y is again considered

the key. More than ever before, the appeal of an employer for this generation of people born

since 1981 depends on such factors as flexible working conditions and career options, a good

21
working environment and an optimum style of leadership, as well as the granting of room for

creativity and the communication of meaningfulness. At the same time, experienced and older

staff members will be increasingly recognized as a valuable resource. Therefore, to facilitate

suitable and attractive employment for all staff members, qualifications, models and forms of

work that are based on phase of life are needed.

Action Field Cultural Diversity

As a global player a cultural diverse workforce and cross-cultural teams is one success

factor of achieving targets within the organization and has forced companies to develop ser-

vices worldwide. Globalization goes along with the intensification of the competitive context

between the countries, regions and the companies and facilities an increasingly interconnected

world. It also offers the chance to live in a world where cultural and regional borders are elim-

inated, but also requires profound knowledge of foreign cultures. Due to globalization the

workforce gets more cultural heterogeneous which may facilitate diverse knowledge and per-

spectives as well as new ways of solving problems. The economic interrelations lead to the fact

that managers have to act on international terrain. Managerial decisions just can be accom-

plished with an excellent knowledge of global management, international relations, and cul-

tural values in combination with the social competency to act around the world (Bartlett &

Ghoshbal, 2003). Thus, cultural diversity also ensures a better understanding of local markets

and enables multinational companies to get closer to customers and partners in the markets

they serve, ultimately ensuring competitive advantage.

Concerning to cultural diversity of the workforce there is a high potential to use this

diverse knowledge for economic success. Especially in the field of international cooperation

where it is essential to ensure the access to new markets and to develop target-group-specific

22
products on a worldwide basis. Therefore the work environment and the sales markets are turn-

ing to more internationality. To get to know and to deal with political backgrounds and cultural

values local employees are required especially in the new and emerging markets. A cultural

heterogeneous workforce may increase productivity (Herring, 2009).

To benefit from cultural diversity the top priority has to be respect and appreciation for

other cultures and religions, which means more than merely tolerating diversity. Appreciation

means understanding and acceptation. With this in mind there is an international orientated

corporate culture that needs to be established because cultural diversity not only affects busi-

ness management but also diversity policies and multinational companies. The corporate cul-

ture should contribute to the commitment of employees to their company and to their goals. A

common model and understanding of leadership will give orientation, but should not lead to

deracination of cultures. As mentioned previously companies may benefit from cultural diver-

sity, which has to be shaped and used by diversity management in order to diminish negative

effects which may occur and cannot be ignored (Ely and Thomas, 2001). Multinational com-

panies are forced to be innovative and better than the competition. Therefore new and emerging

markets are entered in order to offer products abroad, addresses new customers regionally and

internationally to increase the market shares and recruit high potentials to be also successful

tomorrow, multinational companies need diversity.

Diversity means different points of views, more competencies in international markets,

a sense of a diverse group of customers as well as a scope for employees. Cultural diversity

balance is one of the main focus areas worldwide, because employees and customer across the

globe are culturally diverse. Multinational companies are acting globally and the world should

be represented in the workforce of these companies in order to drive the business successfully.

Thus cultural diversity in this context is used as a competitive edge. Employees should reflected

23
in their wide variety of experiences, skills and perspectives the diversity of the customers, sup-

pliers, investors and the overall environment. In regards to the globalization, international

growth and needs in the international markets “cultural diversity” advances to the focal point.

To meet these requirements the company has to show this diversity in its different way of

working and thinking, in its social competencies, in its professional expertise and in their meth-

odological competences. Simultaneously multiculturalism and openness are the characteristics

to raise even more the attractiveness of a company as an employer. The so called “Generation

X” and “Generation Y” are already stamped by the improved opportunities to collect experi-

ences abroad. In addition to that they were able to build contacts in other countries. These

experiences are leading to the strengthened wish of younger employees to work in a multicul-

tural environment and team.

As a first step to foster mutual understanding between the different cultures and make

use of intercultural competencies plenty of events and workshops were designed in order to

understand different cultures, customs and religions of employees who are coming from other

countries. These ‘awareness days, culture dialogues and cultural diversity at work’ initiatives,

point out the benefits of cross-cultural teams and explain how to manage this effectively. The

development of intercultural competency is supported by individual personal development ac-

tions. Example given, international short term assignments are part of all graduate program

across the group. The career development within the company is facilitated by expatriation and

impartation. Insights into different cultures advances cross cultural collaboration, increases

transparency and enthusiasm to live diversity as well as reduces prejudices.

24
 Discussion and conclusion

A strategic approach of cultural diversity management has to be implemented in order

to understand that cultural diversity is an asset. The main aim of managing cultural diversity is

to decrease intercultural conflicts and increase intercultural synergies. For successful Diversity

Management, clarity on aspiration and business case, holistic set of tailored measures and ex-

ecution as a transformational journey are key. Different arguments can support the business

case for diversity e.g. win the war for talent, improve performance and organizational health,

as well as increase customer proximity. Furthermore, successful diversity management requires

a good understanding of hidden orthodoxies preventing change, which needs to be analyzed

across management levels, regions and business units.

Leveraging diversity and fostering inclusion are beneficial for multinational companies,

and all stakeholders. As highlighted above addressing diversity successfully will lead to in-

creased effectiveness of the organization as a global organization and sustainable gain in cor-

porate reputation. In addition, diversity supports long-term business principles, that lead to a

world-class reputation as a fair partner in the field of diversity, where unique potential of each

employee is recognized, and changing needs of customers are immediately responded. The

main business goal is to maintain a workforce that reflects marketplace and fosters inclusion

of different cultural backgrounds and perspectives. Therefore the main actions fields described

above were established in order to meet business objectives. This helps to address diversity and

to increase the effectiveness of a global organization as the company fosters customer orienta-

tion and relationship cultural differences and knowledge has to be leveraged worldwide, as

well as openness to change has to be increased. Furthermore the establishment of the main

focus areas the maximum use of talent as a global company harness the full potential of the

workforce and enriches the professional expertise and personal skills of the employees as well

25
as broaden the access to labor markets which improves employer image, attract and retain best

talent.

To have a workforce that reflects the marketplaces thus maximizing the understanding

of and responsiveness to the changing needs of the customers is beneficial for the organization.

The goal is to have a culture that fosters the inclusion of different backgrounds and perspec-

tives, thus making the most of the unique potential of each of the employees. Additionally,

diversity supports the strategic approach of people management across the organization. An

open-minded culture will connect and unite the workforce globally and will provide additional

credibility to the employer brand. Valuing the differences of employees will lead to increased

loyalty and commitment. Moreover, focusing on the individual results of each employee will

enhance the consistency of performance management and broaden the potential pipeline.

Therefore a group-wide framework as described above was established, which ensures the ef-

fectiveness and consistency of diversity standards for all Group companies.

The approach consists of action steps, guiding principles, and fundamentals. The action

fields build the fundamentals form for leveraging diversity and fostering inclusion. They are

important prerequisites for achieving the goals in the action fields. They show that the multi-

national company will not tolerate discrimination or harassment in the workplace based on

criteria such as age, disability, ethnic origin, gender, race, religion or sexual orientation. The

company fosters a learning culture in which feedback from all stakeholders is encouraged and

appreciated and focuses on performance and potential of employees as the only criteria for

professional development. The diversity measures set operative objectives and define action

plans for the organizations and local management.

The diversity network is facilitated on a Group-level and provides supportive tools for

the other Group Companies that coordinate their activities globally or regionally. Thus, guiding

principles require a global approach in a world-wide organization like the one we conducted

26
the survey. However, regional and local contexts with regard to diversity should be taken into

account. To initiate and drive a long-term organizational and cultural process, open communi-

cation, commitment and involvement of all managers and employees is required. Together with

local human resources functions, line managers are responsible to integrate an open mind-set

in everyday business activities. According to the group diversity framework, the responsibility

for initiating and driving the strategic change process lies within our operating entitles. Their

strategies and action plans will support the group diversity goals and shall be aligned through

a commonly defined process and key action fields mentioned above. In order to ensure sustain-

ability and ultimately increase business success, specific key areas are likely to be involved in

the change process. human resource functions will be the driving forces in this process, aligned

with and supported by communication functions. Over time, the business units will reap bene-

fits from diversity in the action fields of products and markets. The success of the implemen-

tation of diversity depends on the ability to acknowledge local context factors as well as global

linkages. In order to ensure sustainability and ultimately increase business success, Human

Resource functions will be the driving forces, aligned with and supported by communication

functions, and key areas.

In the past years various developments on national and international level influenced

the topic of diversity management, both from a moral as well as from an economic point of

view. Human Resource Management will be shaped especially by the progressive globaliza-

tion, demographic patterns and of various political and legal framework. The right balance

between homogeneity and heterogeneity relates to the inner and external diversity. The imple-

mented measures of diversity management in regards to the challenges which are arising espe-

cially in the fields of gender, age and cultural diversity need to be continuously addressed and

further analyzed in order to be prepared for fast changing business needs.

27
 A final conclusion from this context chapter pertains to the areas of diversity manage-

ment that would benefit the company mostly. First, given the impact of globalization on a mul-

tinational company’s workforce, the fact that cultural diversity is a prime drive of so many

business units across the globe, and the fact that the company has less measures and manage-

ment practices in place to deal with a culturally diverse workforce, cultural diversity seems a

primary diversity dimension to investigate further. As a consequence the next two chapters

investigate cultural differences on the group level (team cultural diversity) and the individual

level (cultural dissimilarity). Second, the measures and management practices implemented by

the company, like workshops, and events, focus on individual employees and creating aware-

ness and tolerance for cultural diversity. However, more structural measures that influence di-

versity management are lacking. Moreover, a focus on and appreciation of cultural diversity

and leveraging the potential of cultural diversity seems underdeveloped. As a consequence we

focus on the influence of a structural factor, leadership, and how it can leverage the positive

side of diversity.

28
Chapter 3: Cultural team diversity and group performance: The moderat-

ing effect of leader cultural background and tenure

Abstract

By bringing team members with different cultural backgrounds together, the team can

benefit from this diversity and reach high levels of performance. While the argument for the

benefits of diversity might be intuitively tempting, the benefits in diversity are not easily

achieved. Diversity research has not paid attention to the role of leader demographic back-

ground in this respect. We argue that this is a nontrivial oversight because the potential positive

and negative outcomes of cultural diversity are influence by team leader cultural background

and tenure. Specifically, we predicted that the influence of team nationality diversity (a form

of cultural diversity) on team performance is more positive with a leader who is non-native to

the host country than with a local leader, and that this effect would mainly be observed for

leaders with shorter tenure with the team. Results from a survey of N = 66 teams (N = 336

individuals) from a multinational organization support these hypotheses, and inform our dis-

cussion of some of the ways forward in the study and management of culturally diverse teams.

Introduction

In the course of globalization and opening up new markets it is easy to recognize that

the workforce of multinational organizations is becoming more diverse in terms of cultural

background. With growing internationalization and shift of businesses to new markets organi-

zations employ local and foreign workers as well as managers. Therefore cultural differences

in a team are becoming increasingly significant. In that sense multinational organizations are

forced to meet and manage the different needs of a diverse workforce. By having team mem-

bers with different backgrounds together, the team can benefit from this diversity and reach

29
levels of performance that are superior to those of individuals and less diverse teams (Ilgen,

Hollenbeck, Johnson, & Jundt, 2005). Nevertheless, 50 years of diversity research shows that

cross-cultural cooperation involves the danger of misunderstandings (Earley & Gibson, 2002)

and intergroup biases that disrupt team performance (Kooij-de Bode, van Knippenberg, & van

Ginkel, 2008, Williams & O’Reilly, 1998). Cultural background diversity may thus have pos-

itive as well as negative impacts on team performance (Nederveen Pieterse, van Knippenberg,

& van Dierendonck, 2013; van Knippenberg, De Dreu, & Homan, 2004). The benefits of cul-

tural diversity emerge when team members are encouraged to capitalie on their cross-cultural

learning opportunities (Ely & Thomas, 2001), while negative outcomes appear when intergroup

biases and interpersonal tensions stand in the way of effective collaboration (van Knippenberg

& Schippers, 2007; Williams & O’Reilly, 1998).

This realization that cultural diversity is a “double-edged sword” (Milliken & Martins,

1996) in its relationship with team performance puts a premium on understanding the contin-

gencies of the effects of cultural diversity on team performance (van Knippenberg & Schippers,

2007). In the present study, we contribute to the study of such contingencies by studying the

influence of one factor that is particularly tied in with team cultural diversity – team leader

cultural background. Team diversity research has paid notoriously little attention to the influ-

ence of team leaders (see e.g., van Dijk, van Engen, & van Knippenberg, 2012), and we do not

mean to suggest in any way that the influence of team leadership should be reduced to leader

cultural background. Because responses to culturally dissimilar others play such a central role

in accounts of the effects of team cultural diversity (e.g., Nederveen Pieterse et al., 2013), how-

ever, leader cultural background is an obvious and potentially important starting point for the

study of leadership of culturally diverse teams. It is worth research attention in its own right,

especially in view of the notion that leadership is the most flexible influence that organizations

30
can bring to bear in their attempts to manage team (cultural) diversity (van Knippenberg, van

Ginkel, & Homan, 2013; cf. Hackman, 2002; Kozlowski & Bell, 2003).

Attempts to understand how team cultural diversity affects team performance would

naturally arrive at the question how leader cultural background fits into this. Even in truly in-

ternational business with company presence in multiple countries around the world, the typical

situation is that the host culture/nationality in any given country is most strongly represented

in team composition (e.g., Tröster & van Knippenberg, 2012). The most basic way to think of

leader cultural background is thus in terms of whether the leader is “local” – from the host

country, and typically sharing the cultural background of the majority of members in most if

not all teams within that country – or “foreign” – from another country than the host country,

and thus holding a minority group background from the perspective of the members of most if

not all teams within that country.

We propose that foreign leaders as compared with local leaders are by virtue of their

personal cross-cultural situation more attuned to cultural differences within the team and the

difficulties, complexities and opportunities associated with these differences. Subsequently,

they are better positioned to deal with the challenges of leading a cultural diverse team – team

cultural diversity is more positively related to team performance with a foreign than with a

local leader. Are the teams of local leaders destined to underperform then? We do not believe

so and argue that in the same way that cross-cultural experiences position leaders well to lead

culturally diverse teams, over time – with greater leader team tenure – leaders may learn about

working with cultural diversity and become better positioned to lead a diverse team regardless

of their cultural background (cf. Harrison, Price, & Bell, 1998); team cultural diversity is more

positively related to team performance with higher team leader tenure. Given the processes

behind the above two effects are both related to experiences and learning to lead culturally

diverse teams, in combination, this implies a three-way interactive influence: the leadership

31
advantage of foreign leaders in terms of leading culturally diverse teams to performance is

primarily observed with shorter leader tenure.

Our study contributes to an understanding of team cultural diversity effects in interna-

tional business (i.e., where cultural diversity is typically introduced in the form of nationality

diversity) by developing and testing theory about the influence of team leader cultural back-

ground – a factor that is inherently tied in with the very notion of cultural diversity. It thus also

has the potential to add to our understanding of leadership of diversity more generally by show-

ing that the leader’s own standing on the diversity attribute of interest matters. Moreover, our

focus on leader team tenure is not only important in developing our analysis of the reasons

when and why foreign leaders may have an advantage over local leaders, but also adds to the

evidence that diverse teams need time to learn to work with their diversity (Earley & Mosa-

kowski, 2000) and that this notion extends to the role of team leaders.

Theoretical Background and Hypotheses

Leader Cultural Background and Team Cultural Diversity

In the specific context of our empirical study, we use the term cultural diversity as it is

often applied in business to refer to diversity in nationality. Nationality diversity inevitably

implies cultural diversity in that people are influenced by their national culture, but conceptu-

ally we should recognize that cultural diversity has a broader meaning to also include within-

nationality cultural differences between different ethnic groups (e.g., Ely & Thomas, 2001).

Drawing on this broader literature on cultural diversity (i.e., encompassing nationality diversity

as well as within-nationality ethnic diversity), it is safe to conclude that there is strong and

robust evidence of cultural diversity’s capacity to affect team performance both positively and

negatively. A concise summary of this evidence can be found in the most comprehensive meta-

32
analysis of the team diversity-team performance relationship to date (van Dijk et al., 2012).

This analysis shows that observed effects of cultural diversity range from negative to positive

and have significant heterogeneity, putting a premium on the identification of moderators in

the relationship between cultural diversity and team performance. This emphasis on moderat-

ing influences is consistent with research in the diversity-performance relationship more

broadly, which has highlighted the contingent nature of diversity effects (van Knippenberg &

Schippers, 2007). This research also provides a clear account of why positive and negative

effects occur, and thus a solid basis to develop moderator analyses (van Knippenberg et al.,

2004).

Negative diversity effects are attributed to social categorization processes and associ-

ated similarity/attraction processes (Williams & O’Reilly, 1998). People tend to make distinc-

tions between ingroup members similar to self and outgroup members dissimilar to self. Such

“us-them” distinctions may invite intergroup biases favoring ingroup, which express them-

selves in more tense interpersonal relationships with dissimilar others, lower willingness to

communicate and collaborate with dissimilar others, and lower cohesiveness of and identifica-

tion with diverse teams. In short, such biases may disrupt team performance. Positive diversity

effects, on the other hand, are attributed to the informational diversity associated with dissim-

ilarities between people: people with different backgrounds know different things, have differ-

ent perspectives and experiences, etc., that all may add to the pool of task-relevant information

available to the team (Williams & O’Reilly, 1998). By drawing on this informational resource

provided by diversity, more diverse teams may outperform more homogeneous teams.

Both perspectives would clearly apply to cultural diversity. Cultural differences are a

well-known source of negative stereotypes and intergroup biases (Williams & O’Reilly, 1998).

At the same time, especially in the context of international business cultural diversity may be

33
associated with valuable differences in knowledge, experience, and perspectives that may ben-

efit team performance. The challenge for multinational organizations is thus clearly there to

manage the double-edged sword of team cultural diversity (Earley & Gibson, 2002), and the

role of team leadership in this respect is an obvious one to consider.

A focus on leader local or foreign cultural background follows readily in that respect.

The amount of foreign leaders in multinational organizations is growing on a steady basis (Sta-

ples, 2007). This leads to the question whether being a foreign versus a local leader is a factor

in team leaders’ ability to effectively lead diverse teams – or to cast the question differently,

whether team leader foreign versus local background may play a moderating role in the rela-

tionship between team cultural diversity and team performance.

Foreigner leaders as compared with local leaders should have the advantage of being

more attuned to the cultural diverse context as a result of their own experiences as a foreigner

in the host country. They will have more cross-cultural interactions than local leaders (i.e., in

the sense that the host culture more or less by definition is the majority) and thus more

knowledge of the experience of being culturally dissimilar within the host country and with

host country responses to cultural dissimilarity than local leaders. As a result, foreign leaders

of culturally diverse teams may better understand the needs and experiences of team members

with foreign cultural backgrounds – even when not the same as their own – than local leaders.

At the same time, they will also having ample experience interacting with host culture mem-

bers, and particularly from the perspective of a culturally dissimilar person may have learned

about host culture reactions to cultural dissimilarity. These experiences may position foreign

leaders better than local leaders to guide team interaction both in interacting with local mem-

bers and in interacting with foreign members in the culturally diverse team context than local

leaders who will not only, all other things being equal, have less experience with culturally

dissimilar others and thus be less attuned to the cross-cultural setting as a result. Foreign leaders

34
may thus by virtue of their host country experience to be more aware of cross-cultural compe-

tencies (Bird et al., 2010) that result in higher leadership effectiveness and better global lead-

ership skills (Jokinen, 2005).

These skills speak to both sides of the double edged sword of (cultural) diversity. They

may be important in defusing intercultural tensions between team members that may disrupt

team performance in diverse teams and as such may diminish the potentially negative effects

of cultural diversity. At the same time, by virtue of a greater awareness of the different per-

spectives associated with cultural differences, they may also be instrumental in focusing the

team on the learning opportunities and informational benefits that cultural diversity may intro-

duce (cf. van Knippenberg et al., 2013), and thus stimulate the team to benefit from its cultural

diversity. Therefore, we predict:

Hypothesis 1: Team cultural diversity is more positively related to team performance

with a foreign team leader than with a local team leader.

Leader Team Tenure and Team Cultural Diversity

An important implication of the logic underlying Hypothesis 1 about the advantage that

foreign leaders may have over local leaders through their greater cross-cultural experience

within the host country is that if local leaders also gain cross-cultural experiences they may

subsequently “catch up” with foreign leaders and the “foreign advantage” may disappear. The

most obvious source of cross-cultural experience for local leaders is the experience of working

with a culturally diverse team for a substantial amount of time. In other words, the analysis

underlying Hypothesis 1 suggests that leader team tenure would also play a moderating role.

35
The notion that over time people may learn to better deal with (cultural) diversity is consistent

with other theory in diversity research Harrison et al., (1998). Argued that while initial re-

sponses to cultural differences may be based on cultural stereotypes and biases that can stand

in the way of effective communication and collaboration, over time individuals may learn to

look beyond the differences that are the basis for their stereotyped perceptions and learn to

more effectively work together (cf. Chatman & Flynn, 2001; Earley & Mosakowski, 2000),

Hambrick et al. (1998) likewise noted that with higher tenure teams may form more trust and

understanding for differences in values and beliefs within the team and have better cooperation

and performance as a result. In other words time may diminish the negative effects of cultural

diversity and enhance the positive effects.

Leader team tenure may thus both have the advantage of greater learning from experience

for the team leader and the advantage of greater learning for team members. Team leader’s and

team members’ learning to deal with diversity likely goes hand in hand to mutually influence

each other (van Knippenberg et al., 2013). Leader tenure with the team may thus be associated

with a greater ability to prevent potential disruptive effects of cultural diversity and to stimulate

potential synergetic performance benefits. Or put differently:

Hypothesis 2: Team cultural diversity is more positively related to team performance the

higher leader tenure is.

Leader Tenure Moderates Leader Cultural Background Effects

The analysis underlying Hypothesis 2 does not only suggest that culturally diverse

teams benefit from leaders with longer tenure with their team, it also implies that the advantage

of foreign over local leaders posited in Hypothesis 1 would primarily obtain for leaders with

36
shorter tenure – a three-way interaction of cultural diversity, leader cultural background, and

leader tenure.

Foreign leaders in the early phases of tenure with the team have the advantage of greater

and more salient experiences with cross-cultural interaction within the host country context

than local leaders. As a result, foreign leaders in a sense stand less to gain in this respect through

extended experience – longer tenure – with their team than local leaders. Put differently,

through experience working with their team, local leaders can “catch up” with foreign leaders

in terms of being attuned to and experienced with working in a cross-cultural context. The

consequence of this is that culturally diverse teams can perform more effectively independent

of the cultural background of their leader with longer tenure, whereas foreign leaders have an

advantage over local leaders of culturally diverse teams with shorter tenure:

Hypothesis 3: The moderating effect of leader cultural background in the relationship of

cultural diversity and performance is stronger with lower leader tenure.

Method

Our empirical work is based on a survey drawn from a globally active European avia-

tion group comprising more than 500 subsidiaries and affiliates worldwide. The company in

the aviation sector operates in five business areas: passenger transportation; logistics; Mainte-

nance, Repair and Overhaul (MRO); catering; and IT services. Global partnerships and bilateral

joint ventures strengthen their business model internationally and enable the company to par-

ticipate in global growth beyond their home markets. The firm employs people from about 150

countries and is represented in almost every county worldwide through their service businesses,

especially in Asia and South America through increasing opportunities through global growth

37
in fleet numbers. A combination of hub-based and point-to-point products creates omnidirec-

tional service offer from all home markets.

The airline industry is subjected to a lot of fluctuations in dynamic times and changing

markets. Business processes, coordination at interfaces, and the decision-making per se are

getting faster and more complex. Therefore creating effective teams with strong cultural ex-

pertise in working with partners in growth markets at short will be important in relation to

international competition. As a result knowing how to manage diverse teams in an effective

way is a key success factor to the organization.

Sample and Procedure

To request participation in our survey, we gave company-wide presentations to execu-

tives to describe the study and its benefits. The initiative was also posted at the intranet and

was explained by managers in their global group calls.

Surveys were sent to 68 teams, including all 68 managers and all 277 team members

based at 37 different departments in 19 countries. Teams were working in all kind of profes-

sional groups, such as in ground operations, sales, product and marketing, and human re-

sources. In total, we got responses from 66 teams (97 percent). From these teams we got re-

sponses from all 336 employees (66 managers and 270 team members) of these teams (i.e., the

response rate of the 66 participating teams was 100 %). Participants had 27 different national-

ities and 175 of the respondents were male and 161 female. On average the age of the partici-

pants was 40.28 (SD = 9.89) ranging from 21 years to 64 years. Mean job tenure was 13.07

years (SD = 9.56) with the minimum of 1 year and the maximum of 42 years. All team members

and their leaders had full-time jobs. Average team size was 4.20 (range 2 to 10). The average

of the period the team members and leaders were working together was 6.73 year (SD = 6.01)

with a range from 1 year to 36 years.

38
 Paper-based and online surveys in English and German were distributed to managers

and team members who were invited to fill out the questionnaire. The survey was anonymous.

Team members were requested to enter their demographic details on which team diversity var-

iables were based. Team leaders were asked to fill out a separate questionnaire on which to

evaluate team performance. Twenty-one, twelve, and nine percent of respondents were based

in the United States, Russia, and Germany, respectively. Six percent were based in India and

Indonesia. Three percent were located in Hungary, Greece, South Africa, Spain, Israel, Equa-

torial Guinea, United Kingdom, Nigeria, Vietnam, Eritrea, Lebanon, and Belgium.

Measures

Team Performance. In order to measure team performance we used a questionnaire

with 9 items based on Hackman (1987). The scale for team performance focus consists seven

items plus two items about the overall performance. The questions captured the conception of

team effectiveness as being able to meet task challenges, completing work on time, being able

to generally perform well, and effort of the teams. Sample questions are ”The team often fails

to fulfil their tasks on time” and “This team is good in coming up with ways to complete their

tasks”. The response scale that ranged from 1 (“strongly disagree) to 5 (“strongly agree”). Re-

liability of this scale was good; Cronbach’s α = .746.

Leader Team Tenure. Survey participants were asked to state the length of working in

the team with the present team composition including the team leader, stated in years and

month.

Team Cultural Diversity. Participants were asked to indicate their cultural background.

The diversity literature advices the Blau’s index of heterogeneity (Blau, 1977) for calculation

diversity of categorical variables (Harrison & Klein, 2007): 1- ∑ (Pi) ², where Pi is the propor-

tion of a team’s members in the ith category. Sixty-six percent of the teams were homogeneous,

39
9% were half from one culture and half from another, 3% had two team members from one

culture, one from another, and one member from yet another, whereas 22% were completely

heterogeneous.

Leader Cultural Background. In order to capture leader cultural background we used

a dummy variable that indicates whether the leader’s nationality is the same as the host coun-

try’s (1 = a local leader) or if the manager comes from another country as the team is based (0

= a foreign leader).

Controls. Because team size ranged from 2 to 10 team members team size was explored

as one of the control variables. We also controlled for host country using three dummies rep-

resenting the three countries with the largest representation with the survey – the USA, Russia,

and Germany.

Results

Means, standard deviations, and correlations between the variables used for this study

are shown in Table 1.

Test of Hypotheses

Regression analysis were used to test the hypotheses using standardized variables (Ai-

ken & West, 1991). In the first step the regression model included the control variables. In the

second step we entered leader cultural background and centralized scores for leader tenure and

team cultural diversity. The second step had a significant added value over step 1. The effect

of team cultural diversity was a statistically significant. In the third step we added the interac-

40
tions between leader cultural background and team cultural diversity, leader cultural back-

ground and leader tenure, as well the interaction between team cultural diversity and leader

tenure.

While the interaction between leader tenure and leader cultural background was not a

significant predictor, the interaction between leader cultural background and team cultural di-

versity was significant as was the interaction between leader tenure and team cultural diversity

(see Table 2). To understand the nature of the interaction between leader cultural background

and team cultural diversity we performed simple slopes analysis (Aiken & West, 1991). Cul-

tural diversity was positively related to team performance when the leader was foreign, b = .62,

t = 3.04, p < .01, whereas cultural diversity and team performance were unrelated when the

leader was local, b = .08, t = .83, ns. (see Figure 1), thus supporting Hypothesis 1. To under-

stand the nature of the interaction between leader tenure and team cultural diversity we per-

formed simple slopes analysis (Aiken & West, 1991). Cultural diversity was positively related

to team performance when the leader had high tenure, b = .34, t = 2.34, p = .02, whereas cultural

diversity and team performance were unrelated when the leader had low tenure, b = .10, t =

.87, ns. (see Figure 2).

In a final step the three-way interaction term of leader cultural background and team

cultural diversity and leader tenure was inserted. As expected (Hypothesis 3) the interaction

was significant (see Table 2). To establish the nature of this interaction, we conducted simple

slope analysis (Preacher et al., 2006). Cultural diversity was positively related to performance

when the leader was local and had worked in the team a long time, b = .42, t = 3.27, p < .01 as

well as when the leader was foreign and had worked in the team only shortly, b = .41, t = 2.84,

p < .001. However, cultural diversity and performance were unrelated when the leader was

local and had worked in the team only shortly, b = -.00, t = .06, ns. (see Figure 3a and 3b). This

pattern of results is in line with Hypothesis 3.

41
 Discussion

Attempts to understand the contingencies of the effects of team cultural diversity on

team performance would naturally arrive at the consideration of the cultural background of

team leaders. We propose that in international business foreign leaders have an advantage over

local leaders through their greater awareness of and experience with the challenges of cross-

cultural collaboration within the host culture – an advantage that would mainly hold with

shorter tenure because with longer tenure local leaders may develop the cross-cultural aspects

of their leadership through experience with their team. Our empirical analysis confirmed the

two-way and three-way interaction hypotheses derived from this analysis to underscore the

joint role of leader cultural background and leader team tenure in the performance effects of

team cultural diversity.

Theoretical Implications and Future Directions

Our analysis revolves around the notion that leadership of culturally diverse teams’

benefits from an awareness with and experience with the challenges of cross-cultural team-

work. Findings for the separate and joint effects of leader cultural background and leader team

tenure corroborate this analysis. One way to develop these insights further is to link them to

the recently proposed notion of diversity mindsets. Diversity mindsets were proposed by van

van Knippenberg et al. (2013) to capture an understanding of the team and teamwork (i.e., team

cognition; Salas & Fiore, 2004) that understands team diversity as an informational resource

to benefit from through a process of information exchange and integration. An interesting and

relevant question is whether the effects of leader cultural background and leader team tenure

can be understood through such diversity mindsets: do the initial advantage of foreign over

42
local leaders, and the “equalizing” effect of team tenure draw their influence from their rela-

tionships with diversity mindsets? Whereas clearly this is a question for future research to ad-

dress, there seems to be a clear case that the awareness of and experience with cross-cultural

challenges that we see as a key factor underlying the effects of both leader background and

leader tenure could result in the development of effective diversity mindsets. Indeed, this no-

tion resonates well with van Knippenberg et al. (2013) emphasis on the importance of learning

from experience in the development of diversity mindsets.

Future research would also do well to explore the international business context as a

potential boundary condition or moderating influence for the observed effects. In international

business the challenges of cross-cultural collaboration are inevitably more salient than in com-

panies operating only at a national or more local level, and the potential benefits of nationality

diversity when working in an international context will also be more readily apparent. This

may mean that it is more salient to leaders and team members that mastering cross-cultural

challenges is important than in national contexts. The consequence of this may be that leaders

and team members are more attuned to learning to work effectively cross-culturally, and that

it therefore presumably is also easier for leaders to guide teams in constructive ways to work

with their cultural diversity (cf. van Knippenberg et al., 2013). In national context where cul-

tural diversity may take the form of within-nationality ethnic-cultural diversity more than na-

tionality diversity, the awareness of the benefits and challenges of cultural diversity may be

lower, and as a result the focus on learning from cross-cultural experiences to master the chal-

lenges and reap the benefits of cultural diversity may also be lower. Future research could

therefore meaningfully explore whether the current findings perhaps extend only in weaker

form to national contexts, and whether additional influences are required to gain the same fa-

vorable effects of cultural diversity.

43
 In a sense related to the previous observation is the fact that evidence of the positive

effects of tenure/time for team diversity is mixed: some studies find the positive influence pro-

posed by Harrison et al. (1998) that we build on in the present study, but others find no influ-

ence of tenure/time or even negative effects (for a review, see van Knippenberg & Schippers,

2007). A moderating influence here (cf. van Knippenberg et al.’s, 2004, account of these time

effects) could be the extent to which the context predisposes individuals – leaders and team

members alike – to learn to work effectively cross-culturally, like we argue the international

business context would be likely to do (and possibly more likely than many national contexts).

Here too then lies a valuable challenge for future research to explore the boundary conditions

of the tenure effects observed here.

The notion underlying our analysis of leader cultural background and tenure effects is

that of the advantage of cross-cultural experience and awareness. A clear and potentially im-

portant implication of our analysis thus is that other ways in which leaders may gain such

awareness and experience – time abroad, early cross-cultural work experience, leadership de-

velopment programs targeted at building such awareness and experience – may have similar

positive influences on leadership of culturally diverse teams. Importantly these may also reduce

the “foreign advantage”. Exploring these possibilities in future research would not only ad-

vance our understanding of these processes but also yield highly actionable knowledge for

leadership selection and development.

Implications for Practice

Two obvious and straightforward implications for international business from the cur-

rent findings are that in meeting the challenges of cultural diversity, companies operating in-

ternationally may benefit from “foreign” leaders and extended team tenure (i.e., displaying

some patience for teams to develop to a point of effective collaboration and being restrained in

44
making frequent changes to teams and working with ad hoc teams). More tentatively, we may

also propose that should future research be able to establish more firmly that the current effects

can be attributed to experiential learning (cf. the notion of diversity mindset development),

leadership training and development efforts may focus on creating and guiding such opportu-

nities for experiential learning. Also, future research may explore the extent to which such

cross-cultural insights can also be transferred from foreign to local leaders by engaging foreign

leaders as experts-by-experience to develop local leaders understanding of the cross-cultural

challenges faced by diverse teams and their leaders.

Limitations

No study is without limitations, and the current study is no exception. A first and obvi-

ous limitation is that the current study is cross-sectional and cannot speak to matters of causality

– field experimental evidence would be needed to address this issue. A second limitation is that

our conceptual analysis understands the effects of leader cultural background and leader tenure

through their presumed linkages with awareness of and experience with cross-cultural chal-

lenge while we did not actually measure this awareness or experience. The conclusion thus has

to be that our findings are consistent with an interpretation in terms of this awareness and ex-

perience, but do not establish this linkage directly. Future research assessing such psychologi-

cal and behavioral correlates of leader background and tenure would thus be important to de-

velop more robust evidence for these conceptual notions.

In Conclusion

Cultural diversity poses a challenge because it can both be a disruptive influence and

an influence to the good. The current study adds to our understanding of the contingences of

45
these positive and negative influences by introducing a focus on team leader characteristics in

terms of cultural background and tenure – characteristics that presumably speak to the im-

portance of cross-cultural awareness and experience. Whereas clearly the current study cannot

say the final word on these issues, it should provide a good jumping-off point for the further

development of this analysis that also has the advantage of yielding highly actionable

knowledge.

46
Table 1: Descriptive statistics, and Intercorrelations for Study Variablesa

Variables Mean SD 1 2 3 4 5 6 7 8

1. Team Performance 4.05 0.52 -

2. Size 4.09 1.96 .01 -

3. Dummy variable a 0.09 0.29 -.32** -.01 -

4. Dummy variable b 0.23 0.42 .08 .03* -.17 -

5. Dummy variable c 0.12 0.33 .15 .03 -.12 -.20 -

6. Leader Cultural Background 0.56 0.50 -.18 .09 .28* -.17 .05 -

7. Team Cultural Diversity 0.19 0.28 .35* .14 -.21 -.44 -.25* -.027* -

8. Leader Tenure 5.27 4.07 .07 .22 -.14 .13 .19 .15 .00 -
a
N = 66 teams
*
p < .05
**
p < .01

47
Table 2: Results of Hierarchical Regression Analysis
Step 1 Step 2 Step 3 Step 4
variables b ß t p b ß t p b ß t p b ß t p
Team Size -.00 -.01 -.10 .91 -.029 -.11 -.84 .40 -.03 -.13 -.99 .33 -.043 -.16 -1.27 .21
Dummy variable (a) -.54 -.30 -2.42 .02 -.31 -.18 -1.39 .17 -.37 -.20 -1.73 .09 -.40 -.22 -1.92 .06
Dummy variable (b) .08 .06 .47 .64 .20 .16 1.20 .24 .17 .14 1.08 .28 .21 .17 1.42 .16
Dummy variable (c) .19 .12 .99 .32 .40 .25 2.01 .05 .49 .31 2.61 .01 .53 .34 2.94 .00
Leader Cultural Background (LCB) -.00 -.00 -.03 .97 -.05 -.05 -.40 .69 -.07 -.07 -.59 .56
Leader Team Tenure (LTT) .02 .04 .33 .74 -.40 -.07 -.41 .68 -.02 -.04 -.22 .82
Team Cultural Diversity (TCD) .21 .40 3.04 .00 .39 .75 4.25 .00 .36 .70 4.12 .00
LCB X TCD -.34 -.46 -2.77 .01 -.36 -.48 -3.00 .00
LCB X LTT .13 .20 1.09 .28 .15 .22 1.25 .21
LTT X TCD .19 .29 2.42 .02 .05 .08 .54 .59
TCD X LTT X LCB .37 .34 2.48 .016
R2/ R2adjusted .12/.06 .25/.16 .38/.26 .44/.33

48
Figure 1: The interaction between team cultural diversity and leader cultural background

49
Figure 2: The interaction between team cultural diversity and leader tenure

50
Figure 3a: Interaction between team cultural diversity and leader cultural background for lead-
ers with high tenure

51
Figure 4b: Interaction between team cultural diversity and leader cultural background for lead-
ers with low tenure

52
Chapter 4: Cultural Dissimilarity and Psychological Safety: The Moderat-

ing Role of Leader Interactional Fairness and Leader Group Prototypical-

ity

Abstract

Culturally diverse teams are typically characterized by some members being more cul-

turally dissimilar to the team than others. Research in relational demography suggests that those

more dissimilar members’ are particularly at risk in terms of lower levels of psychological

safety – arguably reflecting their social integration and their propensity to fully engage behav-

iorally with the team. We examined to which extent leader characteristics may attenuate the

potentially negative effect of cultural dissimilarity on team members’ psychological safety.

Taking a social identity perspective, we identify both leader interpersonal fairness and leader

group prototypicality as such attenuating influences. In a study of N = 270 individuals nested

in N = 66 teams, we found that cultural dissimilarity was neither negatively nor positively

related to psychological safety, and that the relationship between cultural dissimilarity and psy-

chological safety is positively impacted by higher leader interpersonal fairness and higher

leader group prototypicality.

53
 Introduction

The workforce of multinational companies is constantly becoming more diverse (Fuller-

ton & Toossi, 2001) and will continue to grow (Buttner, Lowe, & Billings-Harris, 2009).

Driven by globalization, team cultural diversity and its potential benefits have become increas-

ingly important for multinational companies (Earley & Gibson, 2002). Team cultural diversity

also poses a challenge, however, in terms of creating a setting with high psychological safety

for all members. Typically, some members of culturally (nationally) diverse teams are more

culturally dissimilar to the rest of the team than others, and research in relational demography

(Chattopadhyay, Tluchowska, & George, 2004b; Guillaume et al., 2012) suggests that this

greater dissimilarity may be associated with lower levels of psychological safety – the percep-

tion that one can freely and without social repercussions speak one’s mind and contribute to

the team as one believes is best (Edmondson, 1999). Because psychological safety can be taken

to reflect members’ social integration within the team and their propensity to fully engage be-

haviorally with the team in terms of contributing without self-censorship, the fact that culturally

dissimilar members’ psychological safety may be at risk thus arguably is a key issue in bene-

fiting from the team’s full range of cultural diversity in its opportunities to learn, be innovative,

and make high-quality decisions (cf. Earley & Gibson, 2002). In other words, one of the key

factors that allows for the beneficial effects of cultural differences to materialize, psychological

safety, is itself undermined by cultural dissimilarity. Finding ways to diminish the negative

relation between cultural dissimilarity and psychological safety is therefore a priority in re-

search on cultural diversity.

In managing teams, and thus also in the challenge of cultural dissimilarity and psycho-

logical safety, leadership is probably the most direct and most flexible influence organizations

can bring to bear (cf. Tröster & van Knippenberg, 2012; van Knippenberg, van Ginkel, &

54
Homan, 2013). Accordingly, in the present study we ask the question how team leadership may

attenuate the potentially negative impact of cultural dissimilarity on member psychological

safety. To do so, we work from a social identity perspective (Ashforth & Mael, 1989; Tajfel &

Turner, 1986). Research in relational demography – the psychology of demographic dissimi-

larity in organizations – has advanced a social identity perspective to understand that (cultural)

dissimilarity may reduce indicators of psychological and social integration in teams because

they reduce the sense that one has a shared social identity with the rest of the team (Chat-

tophadyay et al., 2004). Building from this analysis to maintain conceptual coherence in our

analysis of the role of leadership in this respect, we identify leader interpersonal fairness (Tyler

& Blader, 2000) and leader group prototypicality (Hogg, 2001) as influences that may attenuate

the social identity concerns invited by cultural dissimilarity and thus reduce its negative impact

on psychological safety.

Leader interpersonal fairness, we propose, communicates equality, respect, and inclusion

in the team and consequently diminishes the negative effects of cultural dissimilarity on psy-

chological safety. Leader prototypically suggests that leaders are to be trusted due to their rep-

resentativeness of the team’s identity and thus also diminishes the negative effects of cultural

dissimilarity on psychological safety.

The challenges of benefiting from team cultural diversity rather than suffering its poten-

tially disruptive consequences have long been recognized (van Knippenberg & Schippers,

2007; Williams & O’Reilly, 1998). There is also growing recognition of the fact that these

challenges concern some team members – the more culturally dissimilar ones – more than oth-

ers (Guillaume et al., 2012). The present study adds to our understanding of this latter phenom-

enon by asking the conceptually as well as practically relevant question how leadership (and

especially those elements of leadership pertaining to social identity) may impact these pro-

cesses – an issue that has so far been largely unexplored (Tröster & van Knippenberg, 2012)

55
even when there is a clear argument that leadership may be a particularly relevant influence

here in terms of managing the challenges of cultural dissimilarity in teams. In doing so, this

study thus hopes to contribute to a more programmatic effort to develop our understanding of

leadership and cultural dissimilarity.

Theoretical Background and Hypotheses

Cultural Dissimilarity and Psychological Safety

In a work environment that is perceived as psychologically safe, employees can openly

share information, freely discuss concerns and doubts as well as value each other’s competen-

cies (Edmondson, 1999). Psychological safety implies that employees feel free to take inter-

personal risks and show the true self without being afraid of negative consequences and that

team members or managers will not embarrass or abuse them (Roussin & Weber, 2012; Kahn,

1990). Workplace environments which are psychologically safe are characterized by high trust,

which strengthen employees in the belief of having the freedom to ask questions, receive and

get feedback, and in which individual’s feel self-reliant to present their thoughts and are not

afraid of failure or do not fear any negative impacts (King et al., 2005). Moreover, dialogue on

dealing with errors is crucial for organizational success and shared reflection is an element of

a culture of trust and respect for each other. Vice versa this means that members within teams

of little psychological safety keep quiet and do not express any suggestions and doubts, because

they are afraid to speak up and even feel restricted to ask for feedback or support (Kark &

Carmeli, 2009).

Psychological safety is important in organizations because it can be seen as a key driver

of behaviors that are beneficial for core processes in today’s organizations – learning, problem-

56
solving, decision making, and creativity and innovation (Edmondson, 1999). This may be es-

pecially true in multinational organizations where an international work environment is asking

for the ability to learn across cultural differences, deal with ambiguity, and adaptively solve

problems. These are all aspects that benefit from psychologically safe teams where members

feel they can share their doubts, express their opinion freely, share knowledge in order to learn

from each other, and ask for each other’s support. People in teams also have a tendency towards

“self-censorship”, however, keeping knowledge to themselves (Stasser & Titus, 1987), being

hesitant to voice disagreement with emerging consensus in the team (van Ginkel & van Knip-

penberg, 2008), and being reluctant to admit ignorance or ask for support (Lee, 1997). Con-

veying willingness to change and maintain creativity during constant transformation is another

key element multinational companies are asking for. Psychological safety stimulates this pro-

cess and motivates employees to confident problem solving (Schein & Bennis, 1965). Moreo-

ver it is a catalyst for individual outcomes desired by a multinational company such as engage-

ment, creativity, loyalty and encouraging learning behaviors (Carmeli et al., 2009; Kark &

Carmeli, 2009).

Especially in a team where some members are more culturally dissimilar to the rest of

the team than others, differences in cultural background may impact organizational experiences

and individual actions (King et al., 2005; McKay et al., 2007; Simons, Friedman, Liu, &

McLean Parks, 2007). Psychological safety may counteract some potential negative effects of

cultural diverse teams (Gibson & Gibbs, 2006). Yet, even when the team is experienced as a

safe environment by some, it may not be experienced that way by others, and minorities in

particular are at risk in this respect (McKay et al., 2007). In multinational teams, a focus on

cultural (national) dissimilarity and psychological safety thus concerns a real challenge to mul-

tinational organizations.

57
 Research in relational demography (i.e., demographic dissimilarity) has shown that a so-

cial identity perspective provides a useful lens to understand why cultural dissimilarity may

negatively affect psychological safety (cf. Chattopadhyay, 1999; Chattophadyay, Tluchowksa,

& George, 2004; Tsui, Egan, & O’Reilly, 1992). Social identity theory (Hogg & Terry, 2000;

Tajfel & Turner, 1986) describes how people distinguish similar, in-group, others from dissim-

ilar, out-group, others, and display intergroup biases along those lines. Others seen as in-group

are more liked and trusted than others seen as out-group, and invite more communication and

cooperation (Brewer, 1979; Tajfel & Turner, 1986). Such processes are particularly likely to

occur for dissimilarities that are readily visible and associated with stereotypic beliefs that ren-

der them subjectively meaningful (Turner et al., 1987). Cultural differences in that sense are

particularly likely to invite such intergroup biases (e.g., Harrison, Price, & Bell, 1998). Because

culture is a salient feature, social categorization based on this feature is obvious component to

distinguish people from others (Chatman et al., 1998; Chattopadhyay, George, & Lawrence,

2004; Tsui et al., 1992).

In culturally diverse teams, intergroup biases invited by cultural differences may pose a

challenge to the potential benefits of cultural diversity (van Knippenberg, De Dreu, & Homan,

2004). Lower trust inspired by cultural differences may set the stage for lower psychological

safety, and experiences with others’ dissimilarity-inspired lack of openness to one’s contribu-

tions may reinforce lower psychological safety – ideas and suggestions of culturally dissimilar

others may not arouse attention or taken seriously. This lower psychological safety is likely to

not be an experience equally shared by all team members, however. In multinational teams,

there typically is a majority culture: The host culture, the culture of the country in which the

team is located, is typically where the majority of team members originate (e.g., Tröster & van

Knippenberg, 2012). Team members that belong to the majority thus experience less cultural

dissimilarity to the team than team members with a minority cultural background. This not only

58
means that the more dissimilar members are more likely to experience lower psychological

safety by virtue of their dissimilarity per se – minority status also tends to make such dissimi-

larity more salient to both minority and majority (McKay et al., 2007), rendering cultural mi-

norities even more likely targets of intergroup biased experiences that put psychological safety

under pressure (cf. Avery & McKay, 2010). In short, greater cultural dissimilarity is likely to

be associated with lower psychological safety, and this is a relationship expressed at the level

of the individual team member, not an experience “homogeneously” shared by majority and

minority members alike.

Hypothesis 1: Cultural dissimilarity is negatively related to psychological safety.

This notion of a negative relationship between cultural dissimilarity and psychological

safety begs the question which influences may attenuate or ideally eliminate this negative re-

lationship to make the team a psychologically safe environment for all members regardless of

their cultural background. In the present study we address this issue from the perspective of

leadership. Leadership arguably is the most flexible and direct influence organizations can

bring to bear on team management, and should therefore also be of particular interest in man-

aging diverse teams (cf. van Knippenberg, van Ginkel, & Homan, 2013). In this respect, a

social identity analysis of leadership influences points to two aspects of leadership that would

have independent influences on addressing the situation of culturally dissimilar team members

– leader interpersonal fairness and leader group prototypicality.

Leader Interpersonal Fairness and Cultural Dissimilarity

Leader interpersonal fairness refers to the perceived fairness of interpersonal treatment,

and is understood to capture the extent to which the leader treats subordinates with dignity and

59
respect (Colquitt, 2001; Greenberg, 1993; cf. interactional fairness; Bies & Moag, 1986). In-

terpersonal fairness is one aspect of justice that is positioned as complementary to and different

from the other types of fairness: distributive, procedural, and informational fairness (Colquitt,

2001). Contrary to these types of judgments of formal procedure, interpersonal fairness focuses

on the nature of interpersonal treatment (Rupp & Cropanzano, 2002). This fairness of interper-

sonal treatment in particular has been linked to social identity dynamics (Tyler & Blader, 2000

– note that Tyler and Blader discussed interpersonal fairness as one of the two elements of

procedural fairness – more formal aspects of treatment being the other – but that their analysis

is consistent with our current focus on interpersonal fairness).

Tyler and Blader outline how interpersonal fairness conveys to individuals that they are

a respected member of the team, and thus speaks to a core concerns from a social identity

perspective – do I truly belong here and am I truly accepted as a group member? We propose

that these considerations directly speak to the issue of psychological safety – are my contribu-

tions appreciated and respected? Absent such indications of inclusion in the team conveyed by

leader interpersonal fairness individuals may thus experience lower psychological safety. This

is consistent with evidence that individuals who feel treated fairly have more trust in their

leader (Ambrose & Schminke, 2003) and are more open to receive constructive feedback

(Leung, Wang, & Smith, 2001). It is also consistent with the finding that fair treatment fosters

better communication between team members (Bond et al., 2004; Sias & Jablin, 1995). Most

directly, it follows evidence that the feeling of being respected feeds not only into the percep-

tion of being accepted as a team member but also into the perception that one’s contributions

are valued by other team members (cf. Ellemers, Sleebos, Stam, & De Gilder, 2013).

We propose that leader interpersonal fairness therefore is of particular importance to cul-

turally dissimilar team members. More culturally similar members are more likely to see their

group belongingness confirmed by their similarity to a majority of the team (i.e., the basic tenet

60
of the social identity approach to relational demography) than more dissimilar members. In that

sense, their group belongingness is more secured and thus less of a concern for which interper-

sonal fairness would make a difference. For culturally more dissimilar members in contrast,

their sense of inclusion in the team and their associated psychological safety is much more on

the line. We propose that leader interpersonal fairness and its message that one is a valued

group member and contributor despite one’s cultural background therefore is particularly im-

portant in influencing the psychological safety of more dissimilar members – or conversely

put, that interpersonal fairness is important in attenuating the negative influence of dissimilarity

on psychological safety.

Hypothesis 2: Leader interpersonal fairness reduces the negative effect of cultural dis-

similarity to other team members on psychological safety.

Leader Group Prototypicality and Cultural Dissimilarity

Leader group prototypicality refers to the extent to which the leader is perceived to be

representative of the group identity (Hogg, 2001). The concept derives from the more general

notion of group prototypes – mental representations of social categories that capture the ideal-

type of the category – those attributes that characterize the group and distinguish the group

from other groups (Turner, Hogg, Oakes, Reicher & Wetherell, 1987). For social groups, group

prototypes also capture what is group-normative – group values, beliefs, and attitudes, and their

implications for what would be deemed appropriate and inappropriate behavior. Group mem-

bers that are perceived to resemble the group prototype thus gain influence from this associa-

tion because they are perceived as representing what the group stands for in terms of values,

beliefs, attitudes, and behavior. Moreover, the group prototype also captures group interests,

ambitions, and goals, and more group prototypical individuals are thus perceived to have the

61
group’s best interest more in mind. Applied to the leadership role, this means that leaders have

a stronger basis for leadership effectiveness the more they are perceived to be group prototyp-

ical (Hogg, 2001; van Knippenberg & Hogg, 2003; van Knippenberg, 2011).

An important element of the effects of leader group prototypicality is that it results in

trust in the leader – specifically the leader’s best intentions for the group (Giessner & van

Knippenberg, 2008; van Knippenberg & Hogg, 2003). Trust in the leader can be seen as an

important precursor to psychological safety, because leaders in particular play a key role in

establishing psychological safety – or the absence thereof (Edmondson, 1999; Nembhard &

Edmondson, 2006). That is, to the extent that one feels psychologically safe with the leader, it

is also more likely that one would feel psychologically safe in the team because the leader is

such a central person in the team. As for the leader interpersonal fairness, here too we may

propose that this linkage of leader group prototypicality and psychological safety will be more

important for more culturally dissimilar team members. The more individuals are culturally

dissimilar to the team, the more their psychological safety is on the line and not addressed by

cultural similarity-based connectedness to other team members and the more they may be sen-

sitive to other sources of psychological safety, like leader prototypicality. Accordingly, leader

group prototypicality is an influence attenuating negative impacts of cultural dissimilarity on

psychological safety.

Hypothesis 3: Leader group prototypicality reduces the negative effect of cultural dis-

similarity to other team members on psychological safety.

62
 Method

We conducted this study in one of the five business areas (passenger transportation; lo-

gistics; Maintenance, Repair and Overhaul (MRO); catering; and IT services) of a large multi-

national aviation group containing more than 500 subsidiaries and affiliates globally headquar-

tered in Europe. The company employs over 120,000 employees in over 150 countries. As one

of the world’s biggest aviation group, the aims is to strengthen its position as first choice for

customers, employees, investors and partners. Therefore global partnerships with other airlines

may intensify the completeness set of joint ventures in big non-home markets.

A variety of functional competences are needed in an industry which is regulated by a

lot of changes in dynamic times and a competitive market. Therefore a clear sense of interna-

tionalization and the markets in which the business unit operates is crucial. Knowledge and

understanding of appropriate practices and procedures with respect to the customers, suppliers,

competitors and the regulatory environment will be important. Building high performing teams

with robust cultural expertise in working with diverse stakeholders globally will be relevant in

relation to international competition. As a result knowing how leadership impacts the experi-

ence of culturally-nationality dissimilar team members arguably speaks to a key success factor

to the organization.

Sample and Procedure

The sample for this study is drawn from the same 68 teams as the sample for Chapter 2,

and overlaps in the measurement of cultural/national background on which both the cultural

diversity measure in Chapter 2 and the cultural dissimilarity in this chapter is based. It does not

overlap in any other of the substantive variables. Even so, in our analysis, we control for the

leader characteristics that are the focus of the study to establish that the current hypothesis tests

63
are independent of the influences observed at the team level of analysis in Chapter 2.

We received responses from 66 different teams (97 percent). The survey was sent to 68

teams, including 68 managers and 270 team members based at 37 different departments in 19

countries. From all 336 employees (66 managers and 270 team members) of these teams (i.e.,

the response rate of the 66 participating teams was 100 %) returned the survey. Respondents

had 27 different nationalities and 175 of the respondents were male and 161 female. The em-

ployees were on average 40.28 years old (SD = 9.89) ranging from 21 years to 64 years. Mean

job tenure was 13.07 years (SD = 9.56) with the minimum of 1 year and the maximum of 42

years. All team members and their leaders were full-time employed. Average team size was

4.20 (range 2 to 10). The average of the period the team members and leaders were working

together was 6.73 year (SD = 6.01) with a range from 1 year to 36 years.

To foster participation in our survey, we held company-wide presentations to managers

to define the study and its benefits. The initiative was also published at the intranet and was

promoted by executives in their global group calls to bring together a great mixture of nation-

alities across the group. We collected data from teams who were employed in various profes-

sional groups, like in ground operations, sales, product and marketing, and human resources.

Managers and employees received a paper-based or online survey in English and German based

on their local IT set-up. The survey was conducted, according to data privacy regulations, anon-

ymous. Survey respondents were requested to indicate their demographic details on which team

diversity variables were shown. Twenty-one, twelve, and nine percent of respondents were

based in the United States, Russia, and Germany, respectively. Six percent were based in India

and Indonesia. Three percent were located in Hungary, Greece, South Africa, Spain, Israel,

Equatorial Guinea, United Kingdom, Nigeria, Vietnam, Eritrea, Lebanon, and Belgium.

64
 Measures

Cultural dissimilarity. Relational demography indicates the difference between a team

member and all other individuals in the team. In this survey we computed the cultural dissim-

ilarity based on the cultural background (nationality) of respondents. We examined differences

among all the cultural backgrounds in the team. We calculated cultural dissimilarity scores as

the difference between team members by using the following formula (Tsui et al., 1992): the

square root of the counted number of team members with a different nationality in a team,

divided by the total number of respondents in a team size. The larger number of the relational

measure meant that the team member is more nationally dissimilar to the other team members

in the team. The scores ranged from 0 to 0.95, with a mean of 0.26.

Psychological safety. We used the survey scales from Edmondson (1999) to assess psy-

chological safety with seven items on a 1 (strongly disagree) to 5 (strongly agree) response

scale. Items were e.g. “If you make a mistake on this team, it is often held against you” (reverse

score) or “It is safe to take a risk on this team”.

Leader group prototypicality. Participants responded to the six items: “My team leader

is a good example of the kind of people that are members of my team.”; “My team leader

represents what is characteristic about the team,” and “My team leader has a lot in

common with the members of the team”; “My team leader is very similar to the members of

my team”; “My team leader resembles the members of my team” and “My team leader embod-

ies the norms and values of my team”. The items are based on the works of Platow and van

Knippenberg (2001) and van Knippenberg (2005). Leader prototypicality was measured on a

1 (strongly disagree) to 5 (strongly agree) scale.

Leader interpersonal fairness. The term interpersonal fairness was introduced by

Colquitt (2001) based on items from Bies and Moag (1986) and describes to which extend of

65
dignity and respect individuals are treated. The items were: “Has (he/she) treated you in a polite

manner?”: Has (he/she) treated you with dignity?”; Has (he/she) treated you with respect?” and

“Has (he/she) refrained from improper remarks or comments?”. Interpersonal fairness was as-

sessed on a response scale ranging from 1 (strongly disagree) to 5 (strongly agree).

Controls. To capture leader cultural background we applied a dummy variable that im-

plies whether the manager’s cultural background is the same as the host country’s (1 = a local

leader) or if the leader’s origin is from another country as the team is based (0 = a foreign

leader). Because tenure of the leader might affect ratings, because team members become more

self-assured as they know their manager better (cf. Vecchio & Bullis, 2001), we included leader

team tenure. Therefore survey participants indicated the length of working in the team with the

present team composition. We also controlled for team size, because it ranged from 2 to 10

team members in one team. In addition we used dichotomous dummy variables and controlled

for host country using the three countries with the largest representation with the survey – the

USA, Russia, and Germany. Finally, we asked team member to state if they are from the host

county (0 = local team member) or not (1 = foreign team member).

Results

To avoid overestimation, the effects of relational demography research suggest to use

the nested data structure (Sacco, Scheu, Ryan, & Schmitt, 2003). Our theory nests team mem-

bers’ cultural dissimilarity, perceptions of leader interpersonal fairness and leader group pro-

totypicality, and psychological safety within cultural diverse teams. Therefore we performed

multilevel analysis to account for the hierarchical structure of our data set (Snijders & Bosker,

1999). We used the Mixed Models command in SPSS 22.0 to fit linear mixed models with

fixed effects. Table 1 shows descriptive statistics of all variables.

66
Hypothesis testing

The results of the hypothesis tests are shown in table 4, including estimates, standard

errors of estimates, t-values, and p-values, as well as descriptive statistics in table 3. It appears

that cultural dissimilarity has neither a positive nor a negative effect on psychological safety

that is statistically significant. However, the interaction effect of leader interactional fairness

and cultural dissimilarity on psychological safety is significant (B=.20, p<.01). Using HLM

probing (Preacher et al, 2006) we found that the relation between cultural dissimilarity and

psychological safety becomes more positive the higher the score of leader interactional fair-

ness. The relation is significant and negative if leader interactional fairness scores lower than

2.1 standard deviations below the mean, is non-significant if leader interactional fairness scores

between -2.1 and +1.7 standard deviations from the mean, but the relation becomes positive

and significant when leader interactional fairness scores more than 1.7 standard deviations

above the mean. Figure 5 shows the interaction effect comprehensively.

The interaction effect of leader prototypicality and cultural dissimilarity on psycholog-

ical safety is significant (B=.31 , p<.01). Using HLM probing (Preacher et al, 2006) we found

that the relation between cultural dissimilarity and psychological safety becomes more positive

the higher the score of leader prototypicality. The relation is significant and negative if leader

prototypicality scores lower than 1.08 standard deviations below the mean, is non-significant

if leader prototypicality scores between -1.08 and +.87 standard deviations from the mean, but

the relation becomes positive and significant when leader prototypicality scores more than .87

standard deviations above the mean. Figure 6 shows the interaction effect comprehensively.

Concluding we did not find support for Hypothesis 1 stating that cultural dissimilarity

has a negative effect on psychological safety. However, in line with our Hypothesis 2 we can

conclude that interpersonal fairness positively moderates the effect of cultural dissimilarity on

67
psychological safety. Furthermore we found support for our Hypothesis 3. Prototypicality pos-

itively moderates the effect of cultural dissimilarity on psychological safety. All in all we do

not find support for our hypothesis that cultural dissimilarity is negatively related to psycho-

logical safety (Hypothesis 1) but we find support for the idea that psychological safety is mod-

erated by interpersonal fairness (Hypothesis 2) and leader group prototypically (Hypothesis 3).

Discussion

In multinational organizations, team cultural (national) diversity presents a challenging

promise. Psychological safety might be the key psychological variable in meeting this chal-

lenge and realizing the promise of cultural diversity. A social identity analysis of cultural dis-

similarity in teams suggests that the psychological safety of especially those members that are

most dissimilar to the team in cultural background is on the line, and in the present study we

considered the role of leadership in addressing this issue. We predicted and found that the re-

lationship between cultural dissimilarity and psychological safety becomes more positive with

higher leader interpersonal fairness and higher leader group prototypicality.

Theoretical Implications and Future Directions

Our study contributes to the further development of the social identity perspective in

relational demography (e.g., Chattopadhyay et al., 2004) by outlining how this social identity

analysis can be extended to incorporate leadership. At the same time, we should note that the

effects of leadership are not of the greatest size (although they are statistically significant and,

we believe, practically relevant). Rather than discard the focus on leadership as yielding to

small effects, we would argue that the issue perhaps is that the current focus on leader inter-

personal fairness and leader group prototypicality speaks to psychological safety vis-à-vis the

68
leader more than to psychological safety within the team as a whole. Even when psychological

safety vis-à-vis the leader arguably is more important than vis-à-vis any other individual mem-

ber of the team (cf. Edmondson, 1999), psychological safety vis-à-vis the team at large clearly

is a substantive issue. Therefore, the most important extension of the current leadership analy-

sis arguably is an analysis that would take on how leadership may also build psychological

safety vis-à-vis fellow team members. In this respect, there may be promise in van Knippenberg

et al.’s (2013) conceptual analysis of the role of leadership in building diversity mindsets (men-

tal representations of team diversity) that guide teams to benefit from their diversity. Van Knip-

penberg et al. argue that leadership to build such mindsets would guide teams to learn from and

create synergy in interaction with dissimilar others. Arguably, such leadership would also in-

vite psychological safety vis-à-vis the team to complement the current analysis of what might

be primarily about psychological safety vis-à-vis the leader.

The other main line of research to extend and develop the current analysis would be to

study how leadership that safeguards the psychological safety of culturally dissimilar team

members would through this influence on psychological safety affect behavioral outcomes.

Following the logic outlined in the current analysis it would make sense to study how (leader-

ship) influences that are associated especially with psychological safety for culturally more

dissimilar team members can bring about positive behavioral effects in terms of culturally dis-

similar members’ contributions to team process and performance as well as in terms of im-

portant individual outcomes like better social integration into the team for culturally dissimilar

members.

Implications for Practice

As our discussion of theoretical implications, we would be careful not to reach too bold

conclusions about application given that our findings are based on a single study. Even so, it is

69
noteworthy that interpersonal fairness can be trained in leadership development (Greenberg,

2002). The ability to convey one’s group prototypicality presumably can also be developed,

but here research and practice are clearly more underdeveloped as to how to accomplish this

(van Knippenberg, 2011).

That said, however, we would also expect (as outlined above) that such leadership ef-

forts need to be complemented by efforts to build psychological safety vis-à-vis the team. Con-

clusions regarding implications for practice would to some extent have to await research spe-

cific to cultural diversity but Garvin, Edmondson, & Gino (2008) note ways in which leaders

can achieve this more generally. Several of the building blocks for application thus are already

there, even when we would favor awaiting the results of more direct tests of these ideas until

we would confidently advice follow up in practice.

Limitations

Our study has limitations, which we need to note. First, the current study is cross-sec-

tional and cannot speak to matters of causality. Therefore, even though our theory strongly

favors the causal chain we described and tested in the current study, additional (field) experi-

mental evidence would be necessary to address this issue. The second limitation of our study

refers to our research setting as well. Data from a single multinational company was collected.

Although we believe this company to be quite representative of other multinational companies,

to advance generalizability and robustness of our conclusions, different industries, locations

and team compositions should be researched. Third, we studied cultural dissimilarity as one

salient component of relational demography. We did so based on the premise that especially

cultural dissimilarity is highly salient and relevant in the context we described: multinational

70
firms. However other components such as gender or age could be further potential salient de-

mographic attributes to which our findings might pertain. Future research may further research

these components.

In Conclusion

Given that the workforce in multinational companies is increasingly becoming more

diverse, with having team members in minorities and majorities, companies could benefit from

this diverse workforce. Especially in the context of multinational companies knowledge from

employees with a different cultural background is essential for this complex environment. The

current study underlines the importance of leadership and its impact on psychological safety

even when it also holds a clear invitation to develop this analysis further.

71
Figure 5: The interaction between cultural dissimilarity (CD) and interpersonal fairness

72
Figure 6: The interaction between cultural dissimilarity (CD) and leader group prototypicality

73
Table 3: Descriptive statistics and Intercorrelations for Study Variablesa,
Variables Mean SD 1 2 3 4 5 6 7 8 9 10 11
1. Dummy variable a 0.09 0.29 -
2. Dummy variable b 0.30 0.46 -0.20** -
3. Dummy variable c 0.13 0.33 -0.12 -.248** -
4. Size 5.03 0.33 -0.06 0.41** -0.09 -
5. Cultural dissimilarity (CD) 0.26 2.27 -0.25** -0.08 -0.30** 0.14* -
6. Host 0.19 0.33 -0.08 -0.19** -0.18** -0.14* 0.73** -
7. Psychological Safety 3.53 0.39 -0.01 0.01 0.10 0.03 -0.05 -0.10 -
8. Leader Cultural Background 0.58 0.77 0.27** -0.15* 0.01 0.04 -0.34** -0.24** 0.04 -
9. Leader Tenure 5.70 0.49 -0.12* -0.04 0.22* 0.26** 0.01 -0.09 0.13* 0.28** -
10. Interpersonal Fairness 3.75 4.32 0.23** 0.04 0.08 0.06 -0.52** -0.41** 0.25** 0.57** 0.14* -
11. Leader Group Prototypicality 3.41 0.33 -0.02 0.06 -0.21** -0.13* 0.01 0.02 0.07 .010 -0.00 .072 -
a
N = 270 employees
*
p < .05
**
p < .01

74
Table 4: Interaction effects on psychological safety
Variables Coefficients Standard error t p-value
Control variables
Size 0.03 0.11 0.24 0.95
Leader tenure 0.00 0.11 0.01 1.00
Dummy variable a -0.30 0.12 -0.26 0.91
Dummy variable b 0.74 0.11 0.68 0.65
Dummy variable c 0.12 0.10 1.12 0.95
Host 0.12 0.08 1.45 0.65
Leader Cultural Diversity 0.02 0.11 0.14 0.90
Main effects
Cultural Dissimilarity (CD) 0.04 0.13 0.29 0.91
Fairness 0.16 0.06 2.51 0.02
Leader group prototypicality (LGP) 0.02 0.51 0.32 0.75

CD X Fairness 0.20* 0.70 2.87 0.01

CD X (LGP) 0.31** 0.06 5.34 0.00

a
N = 270 employees
*
p < .05
**
p < .01
Note: Standardized coefficients are reported

75
Chapter 5: General Discussion

Present-day organizations make increasingly use of team-based structures (DeShon;

Kozlowski; Schmidt; Milner, & Wichman, 2004; Ilgen, 1999; LePine, 2003). Therefore, deter-

mining what drives team performance and how to lead a diverse team in the best way is more

and more important for organizations. An important reason to do so is the assumption that

cultural diverse teams have the potential to bring benefits to the organization, caused by the

expectation that different backgrounds may foster higher levels of performance (Ilgen et al.,

2005). Cultural diversity in teams is very relevant in this respect because of the fact that through

globalization and internationalization organizations are becoming more and more diverse es-

pecially in terms of cultural background, which leads to a higher rate of local and foreign em-

ployees as well as managers who are employed by the company. Furthermore certain leadership

characteristics may impact cultural diverse teams and individual behaviors and attribute to dif-

ferent extents depending if the team member belongs to a minority or majority group. The

present dissertation, thus, focused on uncovering the leadership characteristics and leader di-

versity attributes that may support team performance and individual behaviors. In the following

chapter I will briefly outline the main findings of the dissertation.

76
 Summary of the Main Findings

The first empirical study (Chapter 3) examined the hypothesis that team cultural diver-

sity is more positively related to team performance with a foreign team leader than with a local

team leader. I also examined the hypothesis that the relationship of cultural diversity is more

positively related to team performance with higher leader tenure. Based on leadership and

diversity research we further add to the understanding that team leader characteristics in terms

of cultural background and tenure can influence team performance negatively and positively.

As predicted we found that the relationship of cultural team diversity to team performance was

moderated by both leader cultural background and tenure. Team performance was found to be

higher with a foreign leader than with a local leader for cultural diverse teams. Furthermore,

for local team leaders we found a positive relationship on team performance, when the leader

has a high team tenure, whereas low tenure for local leaders was unrelated to team performance

of cultural diverse teams.

The second study (Chapter 4) focused on the moderating role of leader interactional

fairness and leader group prototypicality on cultural dissimilarity and psychological safety in

cultural diverse teams. Research in relational demography and leadership has shown that leader

characteristics should help teams not only to diminish the negative effects of cultural dissimi-

larity, but also to benefit from it. We expected that cultural dissimilarity was negatively related

to psychological safety. We suggested that certain leadership characteristics reduces the nega-

tive effect of cultural dissimilarity of other team members on psychological safety. We found

support for our predictions, which we tested in our study with 66 teams in a multinational

company and used leader interactional fairness and leader group prototypicality as moderators.

We identified both leader interactional fairness and leader group prototypicality as attenuating

77
influences especially for those members that are more dissimilar to the team in cultural back-

ground, in line with the social identity perspective. Furthermore, we found that cultural dissim-

ilarity was negatively related to psychological safety, and that higher leader interactional fair-

ness and higher leader group prototypicality was able to counteract the negative effects of re-

lational demography.

Theoretical implications

In the following I will concentrate on the joint contributions of our findings in order to

understand how to manage a cultural diverse team in the best way.

Past leadership research has examined that leadership plays an important role in man-

aging team diversity (Homan & Jehn, 2010; van Knippenberg, van Ginkel, & Homan, 2013;

cf. Hackman, 2002; Kozlowski & Bell, 2003). However, theoretical work in team diversity has

paid minor attention to the influence of team leaders (see e.g., van Dijk, van Engen, & van

Knippenberg, 2012). Therefore, our empirical work adds to our understanding of leadership of

diversity more generally.

Second, the results of our empirical studies in chapter 3 and 4 emphasize the crucial

role of leadership in cultural diverse workforce settings. We found that certain leader charac-

teristics and attributes such as leader cultural background, tenure play an essential role for team

performance. Moreover that leader fairness and leader group prototypicality influence psycho-

logical safety in cultural diverse teams. In line with research on the crucial role of leadership

styles in diverse teams (Kearney & Gebert, 2009), our research is an important addition to our

knowledge by asking the question how team leadership may attenuate the potentially negative

impact of cultural dissimilarity. Furthermore, that the relationship between leadership and team

performance in cultural diverse teams is influenced by leader cultural background and leader

tenure.

78
 Finally, the results of our empirical work proceed within the frame of an organizational

setting in a multinational company. Therefore our findings demonstrates that leadership of cul-

tural diverse teams matters for the organization, moreover that diversity and leadership are

crucial variables for team performance and behaviors.

Practical Implications

Our results propose that leader fairness and leader group prototycicality impacts psy-

chological safety in cultural diverse teams, especially dissimilar members because individuals

have a tendency to categorize and their group belongingness is less secured. Thus, leaders and

team members need to be aware of that fact and adapt their behaviors and apply their leadership

characteristics respectively.

Diversity management has been added as a substance action field in the daily business

of multinational organizations, because team diversity – especial cultural diversity is a fact of

the workforce in an international environment. This study has illustrated that employees work-

ing in a multinational company with a cultural diverse workforce face various cultural chal-

lenges in the workplace, which have to be managed in the best way and it is important to re-

member the significant business benefits of cultural diversity. In that sense, it might be advis-

able for organizations to hire leaders with certain leadership characteristics or develop them in

order to attenuate the negative influence of cultural dissimilarity and minimize issues. Further-

more cultural diversity needs a global mindset to understand, know how to act in a global mar-

ket and to recognize differences as well as to understand them as a benefit. For increasing the

positive outcomes of cultural diversity it may be valuable to establish such a culture as a mul-

tinational company. Moreover, organizations may be well advised to offer their managers and

employees’ targeted development plans in order to build up these skills.

79
 Our study showed that diversity management helps to establish a meritocracy including

focusing on international leaders or other underrepresented groups in order to increase the

sourcing talent pool by widening the pool for selection. To benefit from a diverse workforce

companies have to establish but also manage diversity – otherwise it can harm performance by

creating division. Our study showed that team performance is increasing especially with a for-

eign leader and high leader tenure. This shows that foreign leaders foster competencies to de-

velop business which may be needed especially in foreign markets e.g. driving diversity. Lead-

ership has to demonstrate the capacity to interact appropriately in variety of business and social

situations. Furthermore adopt behaviors and business approaches and professional habits from

different people and cultures or adapts to them as well as knows how diverse people will re-

spond to own actions. To lead a cultural diverse team requires to study diverse people and

cultures to find ways to blend in, seeks out other views as well as to reverse decisions inappro-

priate for the local market, culture or the business.

Conclusion

As cultural diversity in organizations is a reality and through globalization is constantly

increasing, our study on how to manage cultural diversity effectively and of what impacts team

performance adds to the literature. Even though diversity research illustrates that the positive

outcomes of cultural diversity are not easily achieved, very little is known about leadership of

cultural diverse teams. The present dissertation tests hypotheses about the role of leadership

and shows that to diminish the negative effects of cultural diversity in teams we need to take

certain leadership characteristics and demographics into account.

80
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Summary (English)

The aim of this dissertation is to understand how to manage cultural diverse teams in

the best way and increase team performance in multinational organizations. Therefore, defining

what kind of leader characteristics drives team performance and what leadership characteristics

foster the positive outcomes of diversity in cultural diverse teams is the focus of the current

dissertation. Despite the fact that some important research in leadership and cultural diversity

in teams has been done, little is known about the influence of team leaders.

Through globalization and internationalization organizations are becoming more and

more diverse especially in terms of cultural background. Cultural diversity, therefore, is a crit-

ical factor for multinational organizations. Thus, we highlight the current key diversity initia-

tives in such a company, including several action fields of diversity management.

The two empirical chapters in the dissertation adds to the understanding of leadership

of cultural diversity. We investigate in instances of negative effects of cultural diversity and

discuss how these can be managed. Firstly, we take a team level perspective and focus on how

variation in nationality in teams (i.e. cultural diversity of teams) negatively affects team per-

formance. Specifically we look at the impact of team leader cultural background and leader

tenure on team performance. Furthermore we take an individual level perspective and investi-

gate how cultural differences between individuals and their fellow team members (i.e. cultural

dissimilarity) may negatively impact feelings of psychological safety of these individuals. It

specifically deals with the perceived psychological safety of team members in cultural diverse

teams. In some the dissertation outlines the importance of effective leadership of cultural di-

versity and point to beneficial implications for diversity management within multinational or-

ganizations.

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Summary (Dutch)

Deze dissertatie heeft als doel inzicht te krijgen cultureel diverse team het best kunnen

worden gemanaged en de prestaties van teams in multinational organisaties kunnen worden

verbeteren. Daarom is het definiëren van de kenmerken van leiderschapdie team prestaties

versterken en de positieve resultaten van cultureel diverse teams bevorderen de focus van dit

proefschrift. Ondanks het feit dat er belangrijk onderzoek in leiderschap en culturele diversiteit

in teams is gedaan, is er weinig bekend over de invloed van de teamleiders.

Door globalisering en internationalisering worden organisaties steeds meer divers,

vooral met betrekking tot de culturele achtergrond. Culturele diversiteit is daarom een kritische

factor voor multinationale organisaties wat de reden is waarom we aandacht besteden aan de

actuele initiatieven rond diversiteit in zulke organisaties, inclusieve verschillende

actiegebieden van diversiteitsmanagement. De twee empirische hoofdstukken in het

proefschrift dragen bij aan het begrip van leiding van culturele diversiteit. We onderzoeken

gevallen van negatieve effecten van culturele diversiteit en bespreken hoe deze kunnen worden

gemanaged. Ten eerste nemen we het perspectief van een team en focuseren ons op hoe variatie

in nationaliteit in teams (dwz. culturele diversiteit van teams) een negatieve invloed hebben op

de prestaties van het team. We kijken hier naar de impact van de culturele achtergrond van de

teamleider en hoe lang de leider in dienst is op prestaties van het team. Daarnaast nemen we

op een individueel perspectief en onderzoeken hoe culturele verschillen tussen individuen en

hun collega-teamleden (dwz. culturele ongelijkheid) een negatieve invloed kunnen hebben op

het gevoel van psychologische zekerheid van personen. Het gaat dan in het bijzonder om de

waargenomen psychologische zekerheid van de teamleden in cultureel diverse teams.

Samengevat schetst het proefschrift het belang van het effectief leiden van culturele diversiteit

en wijst op het gunstige resultaat van diversiteitsmanagement in multinationale organisaties.

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About the author

Katja Raithel graduated with a M.Sc. degree in Sport Science at the German Sport Uni-

versity Cologne in 2010. She also holds a postgraduate master degree in Global Management

from the Antwerp Management School, University of Antwerp. During her studies on the topic

of Healthcare & Social Psychology, Katja took on a degree candidate position at an interna-

tional company in the department of Human Resources. Thereafter, she started her professional

career working in the airline industry and started her Ph.D. dissertation supervised by Prof. D.

L. van Knippenberg, focusing on leadership and cultural diversity. She is particularly interested

in understanding how leadership in the organizational environment can impact the outcomes

of cultural diversity. After several years in the airline industry, Katja started working as a Key

Account Manager for Diversity & Talent Management at an international company in the in-

surance industry. Katja is a frequent guest lecturer on the topics of leadership, diversity and

tourism management at several universities and organizations.

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