How Team Diversity Affects Innovation

WANG, Mo | GONG, Yaping | CHEUNG, Siu Yin | ZHOU, Le Betty | SHI, Junqi

Functional diversity in work teams should in theory lead to greater innovation as members bring different kinds of experiences to the table, such as marketing, engineering and R&D. But research on the diversity-innovation relationship has been mixed. Some have found team diversity to have a positive impact, others have found a negative or null effect. One team of researchers offer a new take on the topic by showing that mutual trust within the team needs to be factored in, too.

Siu Yin Cheung, Yaping Gong, Mo Wang, Le (Betty) Zhou and Junqi Shi hypothesized that “affect-based trust” – the shared perception of emotional bonds among team members – affects whether members are willing to share knowledge with each other. The sharing of knowledge in turn fuels innovation.

“Functional diversity brings cognitive [knowledge] resources to the team. Affect-based trust in a team motivates members to share knowledge for collective benefits. They jointly influence knowledge sharing and thus team innovation,” they said.

However, the authors considered affect-based trust to be the key moderator in this relationship. This is because higher levels of affect-based trust trigger pro-social motivation (the desire to achieve collective goals) in functionally-diverse teams, and thus a willingness to share knowledge, which benefits innovation.

But low levels impede members from sharing knowledge for various reasons, such as concern that other members with different functional expertise will not understand the knowledge in the focal person’s area, that they will face potential criticism or embarrassment, or that others will free-ride on their work. The reduction in knowledge-sharing subsequently has a negative effect on innovation.

These ideas were tested on 443 employees working in 96 R&D teams in a large IT firm in China. Functional diversity was measured by years of experience in nine functional areas, such as sales and manufacturing, while affect-based trust and knowledge-sharing were assessed through a survey of participants. Three months later, the team leaders answered questions about innovation.

The results supported the idea that affect-based trust moderated the relationship between functional diversity and team innovation, but mostly when trust levels were low, in which case there was a negative effect on knowledge sharing and thus innovation. But at higher levels, there was no significant effect.

“This asymmetrical pattern may be attributable to the human tendency to rely more on negative than positive information in the process of making an overall evaluation. A low level of affect-based trust was sufficient to derail knowledge sharing, whereas a high level was insufficient to motivate co-operative interactions and knowledge sharing among functionally-diverse team members,” the authors said.

The implication for managers is that functional diversity can backfire if affect-based trust in a team is low. On the flip side, if there is trust, managers should leverage that by putting together functionally-diverse teams.

Managers can try to build trust through institutional socialisation experiences. “For example, newcomers who have opportunities to communicate and work closely with the incumbent co-workers, such as through mentoring programmes and/or job rotation programmes, may develop stronger affect-based trust in their peers. Moreover, employees’ trust in their leaders may spill over to their peers,” they concluded.

GONG, Yaping

Fung Term Professor of Management, Head, Chair Professor