The influence of workplace diversity on group performance facilitated by workplace conflict and transformational leadership

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The influence of workplace diversity on group performance facilitated by

workplace conflict and transformational leadership.

Dragos Ciobanu – 10876723

Master’s Thesis

Graduate School of Communication

Master’s programme Communication Science

Thesis Supervisor – dr. P.G.A van der Rijt

University of Amsterdam

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performance and the moderating effects of transformational leadership on the above mentioned relationship. The data for the study were collected through the means of an online survey distributed among various interest groups of a social networking website (N=103). One of the more interesting findings was the fact that neither visible nor underlying diversity have been found to be significantly linked to relational and task conflict. This contradicts the mainstream suggestions of much research done in the 1990’s which support the claim that diversity has a direct influence over intragroup conflict. This finding implies that diversity might be a construct that is malleable, and especially the attitude towards and understanding of diversity by members of the society is subject to change across time. Moreover, transformational leadership has been found to moderate the relationship between relational conflict and performance and task conflict and performance by reducing the negative effects of conflict and increasing performance. Future research should focus on redefining what diversity as a concept means in the contemporary workplace of the 21st_{Century. Moreover, studying diversity as a subjective}

construct rather than an objective one, this meaning studying individuals according to the diversity groups they think they belong to rather than placing them in predefined diversity categories.

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2 Introduction

A vast amount of changes have impacted the traditional “workplace” in the last couple of decades. Organizations continuously try to implement new approaches towards “working” in order to both offer more satisfaction to their employees and achieve organizational goals with more efficiency. Taking into account the relatively fast pace of globalization patterns , work place diversity has become an issue that many managers need to take into account in order to develop powerful teams within organizations. The liberation of trade, the possibility of travel and immigration have led to the situation where people of different cultures, nationalities and

backgrounds end up working together in teams and groups in order to achieve common goals. Globalization however is not the only reason why diverse organizational groups have started to become a more common factor. The contemporary information society is highly dependent on knowledge-based organizations which currently find themselves at the heart of the global economy. In this sense, a diverse workplace is not only a consequence but to a certain degree a demand for a well-functioning team. Several authors imply that teams that are more diverse in terms of functional backgrounds, experience and/or educational background are more likely to offer higher levels of performance and better organizational output than non-diverse groups (Bassett-Jones, 2005; Iles & Hayers, 1997). Diversity has also been found to enhance the output of organizational groups in terms of turnover and performance through its impact on cognitive and communication practices (Milliken & Martins, 1996).

It would seem clear then that in order to achieve better organizational goals managers should strive toward creating heterogeneous teams with diverse backgrounds, knowledge and experience. The paradox of diversity management indicates that fundamentally diverse groups can be a source of innovative and creative ideas and offer the organization a competitive edge (Bassett-Jones, 2005; Richard, 2000) as much as they can be the cause of conflict,

competitiveness, absenteeism, low morale and other deteriorating dynamics (Van Knippenberg & Schippers 2007; Williams & O’Reilly, 1998).

Several scholars support the information decision approach which implies that if diversity in an organization is managed appropriately, it may lead to higher commitment, better

organizational performance, enhanced creativity and innovation (Cox & Blake, 1991; Richard & Shelor, 2002). The supporters of the value in diversity theory or information-decision paradigm believe that a heterogeneous group is more likely to offer broader perspectives and opinions

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3 based on different backgrounds and areas of expertise which ultimately lead to higher quality decisions (Cox, 1994; McLeod et al., 1996). “Problem-solving” is one of the 6 areas that stand to benefit from a managed diversity program (Cox, 1991). Cox (1991) argues that a well-managed diversity system within an organization can have a positive impact on: “cost”,

“resource acquisition”, “marketing”, “creativity”, “problem solving” and “organizational flexibility”. Research dating back to the 1960’s attempts to prove that heterogeneous teams are able to come up with higher quality solutions. According to Hoffman & Maier (1961) 65% of the heterogeneous teams that participated in their research produced high quality solutions, while only 21% of the homogeneous groups could offer the same results. The study assessed the ability of the work groups to offer new, modified, or integrative approaches to the problems discussed. Moreover, the study measured diversity in both gender and personality measures. In a much more recent study that attempted to research the impact of ethnic diversity on firm performance, Richard (2000) has analyzed the cultural composition of the workforce of approximately 100 banks located in the United States of America. The study analyzed the relationship between cultural diversity, business strategy and firm performance which was measured in three ways: productivity, return on equity and market performance. The results indicate that cultural diversity, within the proper context, positively impacts an organization’s competitive advantage (Richard, 2000).

The advocates of the social identity theory argue that diversity is likely to have a negative impact on cohesiveness, decrease communication and create in-groups and out-groups (Ely & Thomas, 2001; Ibaarra, 1993). According to the social identity theory, being a part of a group or collective, creates a sentiment and also a psychological state of identification with the group at hand (Richard & Shelor, 2002). Group cohesion, group conformism and out-group prejudice are distinct behaviors generated by the psychological processes associated with social identity (Tajfel, 1982). These and other cognitive biases may lead to distrust and poor quality of work (Williams & O’Reilly, 1997). Heterogeneous groups are thus believed to be more susceptible to process and performance loss, less positive attitudes and less frequent

communication (Riordan & Shore, 1997). It is important to mention that an extended number of articles published in the last two decades of the 20th_{century (Zenger & Lawrence, 1989; Linville}

& Jones, 1980; Triandis et al., 1993;) focus mostly on the effects of age, gender, and ethnic diversity on group outcomes. Thus, most of the support of the social identity theory is based on visible, demographic attributes of diversity. Regarding this, Pelled (1996) mention that these specific (visual) attributes of diversity have a bigger potential to cause categorization than less visible diversity traits (functional background, experience, background). Visible diversity

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4 attributes are therefore more likely to cause relational conflicts in workgroups and thus lead to group outcomes of lower quality.

As much as diversity is a multifaceted concept, so are its effects on organizational

outcomes such as performance. Research proves that heterogeneous groups are more prone to experience conflict, less social integration and problematic patterns of communication in

comparison to more homogeneous groups (Knight et al., 1999; O’Reilly et al., 1989). Even though it is likely for heterogeneous groups to experience more conflict, Bassett-Jones (2005) argues that diversity in groups damages cohesiveness which is known to be a catalyst of ‘group-think’. Therefore, Bassett-Jones (2005) suggests that when managed properly, conflicts experienced by a diverse group will lead to improved, creative problem-solving and decision-making. Moore (1999) argues that neither types of diversity are entirely responsible for negative or positive organizational outcomes. The author implies that different patterns of diversity represent managerial challenges for organizations. The quantifiable outcomes thus, depend on the way institutions deal with these challenges (Moore, 1999). It is rather usual that scholars would defend a specific paradigm with their research, and in line with this argument, a vast amount of studies have either focused on proving the prevalence of the social identity theory or the information-decision paradigm. However, following some of the more recent work done in the field, it has been established that low or high levels of diversity cannot automatically ensure high or low performance levels. It has been noted by both supporters of the social identity theory (Roberge & Van Dick, 2010) and the information-decision theory (Moore, 1999) that more indicative to performance than diversity itself are the conditions through which and the mechanisms through which diversity may lead to better or poorer output. A well-managed diversity program is thus believed to be a serious premise that can lead a diverse team to increased productivity within an organization (Moore, 1999).

Following this line of reasoning, and keeping in mind the idea that diversity can’t be considered solely responsible for better or worse work group performance, contemporary organizations but also communication scholars need to establish which variables are able to moderate the relationship between a diverse work group and a better overall group

performance. Much of the leadership literature implies that the contemporary work place is an entity characterized by knowledge sharing, fast reproduction of information and innovation. Avolio & Bass (2004) propose that new types of leadership are crucial for the well-being of contemporary organizations which deal with issues such as diversity. Transformational leadership is a type of management which is believed to have the potential to hinder possible

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5 negative outcomes such as conflicts creating an emotional relationship between leader and followers based on inspirational motivation, intellectual stimulation and individualized consideration (Kearney & Gebert, 2009). It is assumed that managers that use a

transformational style of leadership bolster team performance by aligning the objectives and values of team members and by promoting collective optimism and efficacy (Avolio et al., 2009). Resulting from the above line of reasoning, this study will attempt to answer the following

Research Question:

RQ: What is the effect of transformational leadership on the relationship between workgroup diversity and group performance?

Diversity

Workplace diversity has become an increasingly important topic in both academic and managerial fields. It is not entirely surprising, taking into account the vast amount of changes that have impacted the corporate workplace in the last couple of decades. McMahon (2010) mentions the dissemination of the Soviet block and the normalization of China’s relations with the West which has facilitated the emergence of new Asian markets as some of the forces that have created new, bidirectional flows of goods and services between parts of the world that were not collaborating before. Fostered by the rise of the internet, the exponential speed of technology development and undoubtedly an abundance of other factors, the contemporary corporate workplace is a space where diversity is regarded as a key notion.

In order to operationalize the concept of diversity it is important to note that it is a multifaceted construct. That is why there is no one ubiquitously accepted definition for the concept of diversity. A very generalist explanation of the term would imply any difference between individuals based on any set of attributes that would create the impression that one is different from the self (Jackson, 1992). The above mentioned characteristics may refer to informational/functional backgrounds, demographic or personality related differences but also other traits such as religious beliefs, sexual orientation, personal values and other categories that vary from one individual to another. However, the definition mentioned above relates to diversity being viewed as an individual trait. In the context of workgroup/professional team research, it is important to define diversity as a concept that implies a group dynamic (Roberge & Van Dick, 2010). A definition that incorporates the group dimension in the concept of diversity is “…the collective amount of differences between the members of a social unit” (Harrison & Sin, 2006, p.196). This study, similarly to most literature that researches diversity highlights two

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6 major categories that it can be divided in. The first type of diversity regards those categories that are immediately recognizable. Age, gender, ethnic background and sometimes religion can be recognized by simply analyzing someone’s appearance, thus referred to as “visible”, “surface” or “cultural” diversity categories. The second type of diversity refers to more personal

characteristics that are acquired by individuals such as education, technical abilities, functional background, functional background, experience and is usually termed as “deep-level”,

“underlying” or “informational” diversity (Pelled, Eisenhardt & Xin, 1999; Knight et al., 1999; Harrison, Price & Bell, 1998). To sum up, “visual” diversity refers to the traits that individuals are born with and are in essence, impossible to modify. The “underlying” categories of diversity encompass those traits that people can acquire and can thus be subject to change. This study has adopted the above mentioned two-sided approach towards diversity.

Group performance

The concept of group performance is a central notion in most research that regards work group diversity. After all, one of the most important managerial implications of diversity research is to offer a clear answer as to whether a diverse workforce has the potential to improve the overall output of an organization, or on the contrary hinder it. The idea that apart from the legal and ethical point of view, diversity can have an actual impact on a wide range of organizational outcomes has been widely discussed (Moore, 1999). Cox (1991) brings forward the suggestion that a well-managed diversity program can positively influence both tangible (costs, resource acquisition) and intangible (problem solving, creativity) measures of organizational

effectiveness. The case study of Robinson & Dechant (1997) makes a compelling argument that organizations that put effort into accommodating and accepting dimensions of diversity in their work groups look at a higher possibility of saving costs, drawing a suitable range of capable employees and experiencing business growth.

The literature that supports a bilateral division (visible/underlying) of diversity usually implies that different types of diversity can lead to diverse organizational processes. Results of a variety of studies are often contradictory and only little research has actually managed to settle a direct relationship between the diverse composition of work groups and its overall

organizational performance. The research carried out by Richard, Murthi and Ismail (2007) has depicted a positive relationship between ethnic diversity and long term firm performance. A vast majority of studies imply that the diversity of a workgroup can affect the performance of the said group only if mediated or moderated by certain dimensions. In a study that has observed approximately 100 US banks, Richard (2000) has failed to find a direct relationship between

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7 cultural diversity and the overall group performance. Additionally, a wide amount of scholars believe that intragroup conflict, and the way it is managed are responsible for the way diversity can influence overall performance (Cox, 1991; Pelled, Eisenhardt and Xin, 1999). According to Jehn & Neale (1999), (different types of) diversity lead to (different types of) conflicts within a work group. Thus, the authors argue that the success of a work group depends on the way the disagreements within the group are managed (Jehn & Neale, 1999). Finally, in their meta-analytic review of studies published between 1985 and 2006, Horwitz & Horwitz (2007) have deducted that bio-demographic diversity is not significantly related to team performance. The analysis of diversity related literature has overwhelmingly indicated that neither types of diversity have a direct influence over the overall performance of a work group. A big part of diversity literature that is rooted in the information-decision theory defends the idea that a diverse

workgroup is more likely to produce higher quality ideas and come up with more innovative and creative solutions to problems. However, most authors believe that while diversity can increase innovation and creativity it still can’t be directly responsible for better group performance (Cox, 1991; Moore, 1999; Bassett-Jones, 2005). In this sense, this study accepts the vastly

demonstrated hypothesis that neither visual nor underlying diversity have a direct influence over the overall performance of work groups.

Conflict

As mentioned in the above paragraphs, group diversity can lead to both higher quality of decisions, more creativity and innovation and it has also been found to raise the possibility of tension and conflicts (Garcia-Prieto, Bellard & Schneider, 2003). As stated in the former paragraph, a vast amount of literature does not support the claim that diversity is directly responsible for a groups’ performance. Subsequently, much of the diversity related research has focused on finding the indirect effects through which diversity influences performance. One of the most important and intensively studied factors that play a role in the relationship between diversity and performance is conflict (Jehn & Neale, 1999). It is safe to assume that conflict is a part of a number of organizational episodes such as interpersonal, intergroup or intragroup relations. Workplace conflict is usually categorized in two groups: relational conflicts and task conflicts.

A relational conflict is a disagreement that originates from interpersonal incompatibilities. It has been established that “visible” diversity is more likely to lead to relational conflicts that emerge from stereotyping or negative affective processes (Garcia-Prieto, Bellard & Schneider, 2003). Categorization is a general tendency for individuals to align each other into social

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8 categories, often based on demographic attributes (Pelled, Eisenhardt & Xin, 1999). It could be argued that in an environment that is characterized by an abundancy of information,

categorization is a useful tool that helps individuals simplify and control their surroundings (Zimbardo & Leippe, 1991).However, according to the social identity theory, members of a team or work group strive to settle favorable relationships and positive social identity by showing preference to members of a similar social category. This type of behavior which is often coupled with actions of discriminatory and self-segregation nature can unsettle group interaction (Jehn, Northcraft & Neale, 1999). Even though conflict can arise from various types of diversity, Pelled, Eisenhardt & Xin (1999) mention that impermeable attributes of diversity are most likely to drive intercategory clashes. Permeability refers to how solid or how susceptible to change a specific attribute is. It is for instance rather difficult or even impossible for someone to change their race, gender or age. With regard to functional diversity, employees can require a change of

department or can convert to a different area of expertise should they feel the need. The differences of bio-demographic nature are much more difficult to conceal and avoid (Pelled, Eisenhardt & Xin, 1999). High levels of visual diversity can therefore offer a basis on which conflicts of personal nature can occur. The review put together by Lau & Murnighan (1998) brings forth the concept of group faultlines. This notion refers to a groups “potential for the formation of subgroups and the acceleration of subgroup conflict” (Lau & Murnighan, 1998, 336). According to this review, demographic faultlines are most likely to affect a group at the earliest stages of its formation. When subgroups are likely to be formed because of high diversity levels, relational conflict becomes more prevalent (Lau & Murnighan, 1998). Similarly, Pelled, Eisenhardt & Xin (1999) have established that such attributes of visual diversity as ethnicity and age will increase the possibility of relational conflicts within workgroups. Because bio-demographic characteristic of diversity are difficult or in certain cases impossible to change, people find it difficult to identify with those who are fundamentally different from them. This offers a platform on which emotional conflicts can occur more frequently. The literature regarding workplace conflict leads to the following hypotheses:

H1: “Visible” diversity has a significant positive effect on the amount of relational conflicts in the work place.

Relational conflict which originates in a group’s bio-demographic attributes of diversity has the potential to harm the cognitive task performance of workgroups. Pelled, Eisenhardt & Xin (1999) offer a number of reasons as to why this outcome is to be expected. First, the anxiety caused by emotional conflicts may cause certain cognitive interferences and impede group

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9 members from taking certain valuable information in consideration when dealing with cognitive tasks. Second, group members may ignore their colleague’s valuable opinions or information that could be useful because of the hostility that characterizes relational conflicts. Finally, a group that engages in emotional conflicts is prone to consume time and energy on issues that are not related to work such as accusing other members of the group or defending themselves (Pelled, Eisenhardt & Xin, 1999). In addition, Jehn’s (1994) study on student groups

successfully demonstrated a negative association between intragroup emotional conflict and the quality of work group decisions. Similarly, Eisenhardt, Kahwajy and Burgeois (1997) have established that emotional conflict compromised team process and firm performance. The above literature has led to the appropriation of the following hypotheses:

H2: Relational conflicts have a significant, negative effect over work group performance. H3: Relational conflicts mediate the relationship between “visible” diversity and group performance.

Jehn and Mannix (2001) describe a task related conflict as a disagreement regarding ideas and opinions that refer to the task of the group. The “underlying” types of diversity

(experience, functional background, education) are expected to enhance task-oriented conflict. When the underlying diversity of a group is high it means that different members of said group have shaped their professional knowledge, values and beliefs in specific contexts. Pelled, Eisenhardt & Xin (1999) mention that a group that is highly diverse will hold a wide amount of beliefs about a certain number of knowledge fields. These divergent beliefs will thus influence the perceptions that group members have about the tasks they are required to perform.

Eisenhardt, Kahwajy and Burgeois (1997, p. 48) mention that executives “who have grown up in sales and marketing typically see opportunities and issues from vantage points that differ from those who have primarily engineering experience”. Therefore, if the members of a work group differ highly with respect to an informational diversity attribute then their diverse viewpoints could lead to conflicting opinions about task related issues (Pelled, Eisenhardt & Xin, 1999). Upon investigating 45 teams from the electronics division of three major corporations, Pelled, Eisenhardt & Xin (1999) were able to conclude that the diversity among underlying, job-related cues had a positive, significant effect on the task-related conflicts in the groups. Similarly, Jehn, Northcraft & Neale (1999) have reached the same findings while studying the employees of a company activating in the household moving industry. According to this line of thought it is expected that a group that is mostly diverse in underlying characteristics that are highly

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job-10 related such as experience and functional or educational background will experience more task-related conflicts.

H4: “Underlying” diversity has a significant positive effect on the amount of task-related conflicts in the workplace.

The task conflict caused by a group’s underlying diversity, can in turn affect the performance of the group. Being exposed to diverse points of view motivates group members to tackle

problems and issues with more accuracy, look for new data and as a result develop a better understanding of problems and possible solutions (Janis, 1989). In a laboratory study, Hoffman & Maier (1961) have established that groups with divergent opinions produced better solutions to standardized problems. In their study of 45 teams from the electronics divisions of three major corporations, Pelled, Eisenhardt & Xin (1999) have found a significant, positive relationship between the amount of task conflict and the overall performance of the studied teams. Jehn (1994) has also confirmed this finding by studying a sample of student groups and the influence of task conflict on group performance on a class project. Thus,

H5: Task related conflict has a significant, positive effect on group performance. H6: Task-related conflicts mediate the relationship between “underlying” diversity and group performance

Transformational Leadership

It is already clear that the contemporary, corporate workplace is a location which

requires an abundant amount of managerial attention and leadership in order to channel all the possible challenges such as conflict towards a satisfactory output. It appears that managerial approaches can be considered a rather important variable when discussing the interrelationship between diversity and conflict, and the direction in which this dynamic may lead. Authors tend to agree that performance cannot solely depend on diversity (Cox, 1991; Moore, 1999; Kearney & Gebert, 2009). The performance of a group can be explained by some of the processes, such as conflict, that diversity creates and the way in which managers deal with these processes (Knight et al., 1999). Much of the leadership and managerial knowledge and literature is the product of the 20th_{century top-down, bureaucratic models (Uhl-Bien et al., 2007). These types}

of models have been created and are fit for an economy that is based on physical production. In the 21st_{century, knowledge is a core commodity and fast reproduction of information and}

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11 of management that transcends simple rational and social exchange processes and is based on creating an emotional relationship between leader and followers (Kearney & Gebert, 2009). A transformational leader is concerned with becoming a role model and strives to offer inspiration, motivation and intellectual stimulation to their followers (Avolio & Bass, 2004). It is assumed that managers that use a transformational style of leadership bolster team performance by aligning the objectives and values of team members and by promoting collective optimism and efficacy (Bass & Riggio, 2006).

As much of the research based on the information-decision paradigm has established,

heterogeneous teams have the tendency to experience more conflict (Jehn, Northcraft & Neale, 1999), because of decreased liking between members of the group, hindered cohesiveness and communication practices. Miliken et al. (2003) believes that these processes have the potential to negatively affect team output. Upon studying the relationship between work group diversity and group creativity, Shin & Zhou (2007) have established that “leadership is a key aspect of the context that affects team creativity”. Consequently, Judge & Bono (2000) believe that transformational leadership has the capacity to enhance team outputs by raising the levels of motivation and team identification by “increasing the intrinsic valence of team goal

accomplishment, communicating visions, and emphasizing collective outcomes.” Finally, Shin & Zhou (2007) theorize that highly heterogeneous groups can feel reluctant to share their ideas, knowledge, and skills and engage in constructive debating based on lack of identification with their colleagues. This, in turn may lead to the emergence of faultlines and conflicts between the members of the team (Lau & Murninghan, 2005). Based on inspirational motivation, intellectual stimulation and individualized consideration, transformational leadership is believed to reduce the negative effects of diversity on team creativity and performance related processes (Shin & Zhou, 2007). The above mentioned arguments lead to the following hypotheses:

H7: Transformational leadership will moderate the effect of task-related conflicts on group performance.

H8: Transformational leadership will moderate the effect of relational conflicts on group performance.

The above mentioned hypotheses and theories can be summarized in the following conceptual model:

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12 Method

Sample and procedure.

The study was conducted for a total of 3 weeks in May, 2015, using a cross-sectional, online questionnaire provided by www.qualtrics.com. To be included in the sample, respondents had to be at least 18 years of age, able to respond to an English-language, online

questionnaire, and be officially employed at the time of taking the survey. For practical reasons non-random sampling procedures were used, namely: convenience sampling and snowball sampling. Respondents were recruited mostly through accessing Facebook groups based in the Netherlands. The groups were selected such as to offer a diverse sample of respondents. Groups that offer apartment listings, job offers, exchange of products and services in the biggest cities of the Netherlands were used.

In total, 220 questionnaires were started out of which 103 were successfully completed, constituting a 46.8% response rate. This rate is considered satisfactory, given the fact that the survey was rather long and included multiple measurements. Out of the entire number of respondents, 42 (40.8%) were male and 61 (58.7%) were female with the mean age of the sample 25.3 years (SD = 3.3). A large majority of the respondents held educational degrees. Out of the entire sample 52 persons (50.5%) have obtained a Bachelor’s Degree, 28 (27.2%)

Unerlying Diversity Visual Diversity Relational Conflict Task Conflict Performance Transformational Leadership

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13 have obtained a Master’s Degree and 18 (17.5%) have completed secondary education.

Furthermore, respondents had an average work experience of 3.5 years (SD = 3.2). Finally, the number of team members showed great differences, ranging from 2 to 170 members (M = 11.2,

SD = 19.05). 83% of the respondents worked in a team consisting of ten or less members. A

team size of 6 members appeared most frequently in the sample (16.5%). Measures

Diversity (visual & underlying)

For the present research, two types of diversity have been examined, bio-demographic diversity, consisting of gender, age and ethnicity and informational diversity consisting of functional background, educational background and work experience. In order to quantify the level of diversity on each of the mentioned attributes, a set of questions was compiled which would measure the work group demographics of each respondent. For instance, the respondent was first asked to provide the number of people (including himself) working together in a work group. Then, the respondent would have to classify the amount of his co-workers according to age, gender, ethnicity, educational background, functional background and work experience (see Appendix A for list of questions). These numbers were then used in order to calculate Blau’s index for each diversity category. Blau’s index is a quantitative measure that reflects how many different types (gender, age, etc.) there are in a dataset, and simultaneously takes into account how evenly the basic entities (such as individuals) are distributed among those types. Blau’s index is calculated using the formula: B = 1 - ∑𝑘𝑖=1𝑝𝑖2 where k denotes the number of categories and 𝑝𝑖 denotes the proportion of the ith category.Blau’s index offers a figure between “0” and “1” with 0 = “no diversity” and 1 = “absolute diversity”. Blau’s index was calculated for each of the diversity traits used in the study. In order to obtain a variable that describes visual diversity, an arithmetic mean of Blau’s indices for gender, age and ethnicity was calculated. Respectively, in order to obtain a variable for underlying diversity, the arithmetic mean of Blau’s indices for educational background, functional background and work experiences was

calculated.

Intragroup Conflict

Conflict was assessed with the scale developed by Jehn (1995) focusing on measuring

the amount and type of conflict in work units. Eight items measured the presence of conflict on a six-point Likert type scale ranging from 1 = “None” and 6 = “A lot”. Items such as “How much tension is there among members in your team?” have been used” (see Appendix A for full

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14 scale). The reliability of the scale was good, with the coefficient alpha for the scale of intragroup conflict α = .90 (see Appendix B for reliability table).

Group Performance

The variable group performance was assessed using the Team Performance Scale developed by Thompson et al. (2009). An 18 item scale, consisting of items such as: “All the team members make an effort to participate in discussions”, “Team members share and receive criticism without making it personal” (see Appendix A for full scale). All items were scored on a six-point Likert scale ranging from 1 (Never) to 6 (Always). This scale proved to be reliable with

α = .94 (see Appendix B for reliability table). Transformational Leadership

The level of transformational leadership was measured with the Multifactor Leadership Questionnaire, originally developed by Bas (1985). The MLQ is made up of questions that measure followers' perceptions of a leader's behavior for each of the seven factors in the transformational leadership model. This 12-item scale was scored on a six-point rating scale ranging from 1 (Not at all) to 6 (Always). Items such as “The team manager helps others find meaning in their work” have been used (see Appendix A for full scale). The reliability of the scale was good with α = .93 (see Appendix B for reliability table).

Analysis

To examine the indirect effects of diversity on group performance via its direct effects on work related conflict, hierarchical multiple regression analyses were performed. By comparing the regression coefficients of the direct effects of diversity on group performance with the regression coefficients of the effects of diversity on group performance while controlling for conflict, the mediating effect was determined. To examine the hypotheses relating to the moderating role of transformational leadership on the organizational group conflict and group performance, an additional set of hierarchical multiple regression analyses were performed. The potential moderating effect of transformational leadership was tested by computing interaction terms between conflict and transformational leadership. The results of these analyses are presented in the next section.

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15 Results

1. Mediation analysis: Visual Diversity  Relational Conflict  Performance By conducting a mediation analysis using the model number 4 of the process macro tool offered as an SPSS extension by Andrew Hayes it was possible to test H1: “Visual diversity has

a positive significant influence on relational conflicts in the workplace” and H3: “Relational conflicts mediate the relationship between visual diversity and performance in the work place”.

Visual diversity has been used as an independent variable, performance has been used as an outcome variable and relational conflict has been used as a mediator. As a first step, process has established a direct relationship between the independent variable (visual diversity) and the mediating variable (relational conflict). The regression has proved an insignificant, positive relationship between visual diversity and relational conflict with F (1,101) = 2.05, p > 0.05. Visual diversity, b* = 0.78, t = 1.43, p > 0.05, 95% has a weak association with performance. This disproves H1 which states that visual diversity has a positive, significant impact on relational conflicts in the workplace (see SPSS output in Appendix C). In order to approve or disprove the mediation effect, it is necessary to analyse the bootstrap intervals of the indirect effects. In this case, the bootstrap interval (LLCI = -.5677, ULCI = .0420) contains “0”, meaning that relational conflict does not mediate the relationship between visual diversity and

performance in the workplace (see SPSS output in Appendix C). H3 is thus, disconfirmed. 2. Mediation analysis: Underlying Diversity  Task Conflict  Performance

Second, the mediation relationship between underlying diversity, task conflict and performance has been examined. Again, by conducting a mediation analysis it was possible to test H4: “Underlying diversity has a positive significant influence on task conflicts in the workplace” and H6: “Task conflicts mediate the relationship between underlying diversity and performance in

the work place”. In order to test this hypothesis, the model number 4 of the process macro tool

offered as an SPSS extension by Andrew Hayes has been used. Underlying diversity has been used as an independent variable, performance has been used as an outcome variable and task conflict has been used as a mediator. As a first step, process has established a direct

relationship between the independent variable (underlying diversity) and the mediating variable (task conflict). The regression has proved an insignificant, negative relationship between visual diversity and relational conflict with F (1,101) = 0.06, p > 0.05. Underlying diversity, b* = -0.12, t = -0.25, p > 0.05, 95% has a weak association with performance (see SPSS output in Appendix D). This disproves H2 which states that underlying diversity has a positive, significant impact on

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16 task conflicts in the workplace. In order to approve or disprove the mediation effect, it is

necessary to analyse the bootstrap intervals of the indirect effects. In this case, the bootstrap interval (LLCI = -.1213, ULCI = .2291) contains “0”, meaning that task conflict does not mediate the relationship between underlying diversity and performance in the workplace (see SPSS output in Appendix D). H4 is thus, disconfirmed.

3. Moderation analysis:

To test the hypothesis that transformational leadership moderates the relationship between relational conflict and performance in the workplace, the following steps have been

implemented. First, a simple linear regression was conducted in order to test the relationship between relational conflict and performance. Relational conflict has been used as an

independent variable and performance as dependent. The regression has proved a significant, negative relationship with F (1,101) = 5.25, p = 0.02. The strength of the prediction is quite small with only 5% of the variation in performance can be predicted on the basis of relational conflict (R2_{=.05). This proves H2 which states that relational conflict has a significant, negative influence}

on the performance of a work group. Relational conflict, b* = -0.2, t = -2.30, p = 0.02, 95% has a moderately strong association with performance (see SPSS output in Appendix E).

Second, a moderation analysis with the process macro tool (model 1) has been carried out. The moderation analysis showed that there is a significant interaction effect between independent variable relational conflict and moderating variable, transformational leadership, b* = 0.23, t = -2.98, p = 0.003. This means that transformational leadership has a significant, negative

influence on the relationship between relational conflict and performance (see SPSS output in Appendix F). Therefore H7, which states that transformational leadership moderates the relationship between relational conflict and performance in a work group has been confirmed.

4. Moderation analysis:

To test the hypothesis that transformational leadership moderates the relationship between task conflict and performance in the workplace, the following steps have been implemented. First, a simple linear regression was conducted in order to test the relationship between task

Transformational Leadership

Relational Conflict Performance

Transformational Leadership

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17 conflict and performance. Task conflict has been used as an independent variable and

performance as dependent. The regression has proved an insignificant, negative relationship with F (1,101) = 2.00, p > 0.05. The strength of the prediction is small with only 2% of the variation in performance can be predicted on the basis of task conflict (R2_{=.02). This disproves}

H5 which states that task conflict has a significant, positive influence on the performance of a work group. Task conflict, b* = -0.12, t = -1.41, p > 0.05, 95% has a weak association with performance (see SPSS output in Appendix G).

Second, a moderation analysis with the process macro tool (model 1) has been carried out. The moderation analysis showed that there is a significant interaction effect between independent variable task conflict and moderating variable, transformational leadership, b* = -0.15, t = -2.06,

p = 0.04. This means that task leadership has a moderate, negative influence on the

relationship between relational conflict and performance (see SPSS output in Appendix H). Therefore H8, which states that transformational leadership moderates the relationship between task conflict and performance in a work group has been confirmed.

Conclusion and Discussion.

The aim of this research was to establish the relationships between a number of concepts that are considered to be essential parts of a successful and well-functioning contemporary organization. Building on an ample amount of previous literature, it has been concluded that concepts such as diversity, conflict, leadership styles and performance are essential features of a post-industrial and knowledge-based organization. The theoretical background has provided a basis consisting of possible associations between the concepts, yet we believed that a more in-depth analysis of these relationships could offer a valuable amount of insight for both managerial and academic purposes. The following observations will attempt to conclude the findings in regard to the research question: “What is the effect of

managerial/leadership styles on the relationship between workgroup diversity and group performance, mediated by intergroup conflict?”

The first relationship tested during the research suggests that relational conflict mediates the effect of visual diversity (gender, age, and ethnicity) on work group performance. In order to test this claim, the following actions have been taken. First, a regression analysis has been conducted in order to identify the relationship between visual diversity and relational conflict. This test disconfirmed H1, which stated that the more diverse a work group is in terms of visual diversity (gender, age, and ethnicity) the more likely it is for said group to experience conflicts that originate from interpersonal incompatibility. Contrary to the initial expectations, the

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18 regression proved that there is no significant relationship between visual diversity and relational conflict. An explanation for this outcome could be found in Garcia-Prieto, Bellard & Schneider’s (2003) claim that diversity is actually a subjective concept and is experienced in a specific way by each individual. For instance, a person of Moroccan or Indonesian ethnicity that was born and raised in The Netherlands might feel that he or she belongs to the Dutch community even if their origins are not Dutch. Therefore, Garcia-Prieto, Bellard & Schneider (2003) believe that studying diversity by placing people into predefined categories is simply non-objective.

Moreover, it is very important to note that most of the leading research concerning conflict and diversity (Jehn et al., 1999; Knight et al., 1999; Pelled, 1996) has been carried out in the 1990’s and prior to that. Few serious attempts at analysing the link between diversity and conflict have been made since. It is quite likely that in the majority of the developed societies people’s physical or underlying differences have simply become less of a reason for conflict in the last 15-20 years. One more possible reason why this study has failed to find a correlation between visual diversity and relational conflict is the fact that the studied sample was rather young with the mean age of the participants being M = 25.3. In the last couple of decades, immigrating, relocating being an expat and living one’s life in a different place than their place of birth has become rather common. In this sense, visual differences have become more of a norm and tend not to spark conflict as much as they did twenty years ago.

Second, a multiple regression has been performed in order to test H3 which stated that relational conflict mediates the relationship between visual diversity and work group

performance. The tests have demonstrated that relational conflict does not mediate the relationship between visual diversity and work group performance. Again, the argument that most of the studies examining the relationship between these concepts have been carried out in the 1990’s (Amason, 1996; Eisenhardt, Kahwajy & Burgeois, 1997; Pelled, Eisenhardt & Xin, 1999) can be used in this situation. It is quite likely that in 2015 organizations and their managers do not use conflict as a means of creating differences between members of work groups into better output. Managers of most organizations tend to create climates that would avoid direct confrontations and conflicts all together in the workgroups that they manage. Processes like brainstorming, mind mapping, SWOT analyses and other exercises have become much more popular tools that would transform the multitude and diversity of ideas and opinions of the members of a workgroup into better performance.

The second relationship tested during the research states that task conflict mediates the relationship between underlying diversity and work group performance. First, a simple linear regression was performed in order to test H4 which states that underlying diversity has a

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19 significant positive effect on task conflict. The test has disproved this hypothesis. Again, some of the most important reasons for this are considered as in H1, the subjectivity of diversity

categories (Garcia-Prieto, the fact that most of the literature discussing these effects is rather old and very likely irrelevant to present day practices and especially the fact that the concept of diversity has evolved as a social construct in the last two decades and is not the cause of conflict as much as it was twenty or thirty years ago.

In order to test H6 which states that task conflict mediates the relationship between underlying diversity and work group performance a multiple regression has been performed. This test has disproved H6. Again, the studies that confirmed that task conflict does facilitate the relationship between underlying diversity and performance are rather old. Managerial styles and organizational approaches to governing work groups have changed. Since a vast amount of research has proved that certain types of conflict inevitably lead to lower work group

performance, it is understandable that nowadays organizations are interested in alienating conflict from the work place as much as possible. As mentioned above, managers have found new ways of directing the divergent views of employees towards better performance through the means of specific exercises and trainings.

The third relationship examined was the moderation effect of transformational leadership on the relationship between relational conflict and work group performance. First, a simple linear regression was performed in order to establish the relationship between relational conflict and work group performance. The test has confirmed H2, establishing a significant negative

correlation between the two variables. In other words, the more relational conflict a work group experiences, performance of said work group will decrease. These findings are in line with the findings of Pelled, Eisenhardt & Xin (1999) and Jehn (1994). Second, the moderation effect, H7, has been tested by performing a multiple regression. The test has confirmed the hypothesis, proving a significant, negative moderation effect of transformational leadership on the relationship between relational conflict and work group performance. This means that transformational leadership cancels the negative effect of relational conflict on overall group performance. These findings confirm the arguments of Shin & Zhou (2007) who state that transformational leadership can hinder the negative effects of diversity through inspirational motivation, intellectual stimulation and individualized consideration.

The fourth relationship examined was the moderation effect of transformational

leadership on the relationship between task conflict and work group performance. First, a simple linear regression was performed in order to establish the relationship between task conflict and

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20 work group performance. The test has disconfirmed H5, establishing a non-significant, negative correlation between the two variables. Second, the moderation effect, H8, has been tested by performing a multiple regression. The test has confirmed the hypothesis, proving a significant, negative moderation effect of transformational leadership on the relationship between task and work group performance. Again, this finding is supporting the arguments of Shin & Zhou (2007) and specifically that transformational leadership can diminish the negative effects of diversity on overall group performance.

This study contains several limitations that have to be described in more detail. First, because of time constraints, the sample has only amounted to 103 participants. Even though it is a decent amount of respondents to have been recruited in the short time available for data gathering, a more ample sample would have undoubtedly added reliability to the study. Second, the average age of the participants was quite low, only M=25.3 years of age with SD=3.3. This means that most of the respondents were representative of a similar age category. A much more ample age sample would have undoubtedly offered a wider spectrum of opinions

regarding the variables that were investigated. Another important limitation can be found in the fact that diversity has been treated as an objective dimension while Garcia-Prieto, Bellard & Schneider (2003) argue that diversity is subjectively experienced by each individual. Therefore, creating diversity subcategories in which respondents have been placed means objectifying an effect that is subjectively interpreted by said respondents.

Despite the shortcomings and limitations presented before, it can be concluded that this study has broadened both academic and managerial insights of the effects of diversity on work group performance. The lack of relationship between diversity and conflict demonstrates that societal changes influence the way diversity is perceived. If diversity was established as a catalyst for conflict in the 1990’s it might not be the case anymore, simply because societies and communities learn to accept people that are different. As a managerial implication,

transformational leadership has been established as a managerial style that can transform the negative attributes created by diversity into better group performance

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21

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Appendix A Measurement Scales

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Scale 1. Visual Diversity

1. Gender: Please indicate the number of male and female members of your work group including yourself:

a. Male (fill in) b. Female (fill in)

2. Age: How many people including yourself in your work group are aged: a. 18-30 - (fill in)

b. 30-45 – (fill in) c. 45-60 – (fill in) d. Over 60 – (fill in)

3. Ethnicity: Please indicate how many representatives of each of the following areas of the world are in your team including yourself.

a. North America – (Fill in)

b. Central America & Caribbean – (Fill in) c. South America – (Fill in)

d. West Europe – (Fill in)

e. East Europe & Former Soviet Union – (Fill in) f. Africa – (Fill in)

g. Middle East – (Fill in) h. South Asia – (Fill in) i. East Asia – (Fill in) j. Southeast Asia – (Fill in) k. Oceania – (Fill in) Scale 2. Underlying Diversity

1. Education: Indicate the amount of colleagues working in your work group according to their educational degree (including yourself):

a. No education – (Fill in) b. Primary Education – (Fill in) c. Secondary Education – (Fill in)

d. Associate Degree (AA/AS/AAS) – (Fill in) e. Bachelor Degree (BA/BSc/BFA) – (Fill in) f. Master Degree (MA/MSc/MBA/MFA) – (Fill in) g. Doctor Degree (Ph.D./J.D/M.D./DDS) – (Fill in) h. Other – (Fill in)

2. Experience: How many people in your team including yourself have: a. 0-5 years of experience b. 5-10 c. 10-15 d. Over 15 Appendix A Measurement Scales

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26 3. Functional Background: If possible, indicate the amount of people in your work group

including yourself according to their functional background: a. Accounting, Auditing & Finance

b. Administration & Operations c. Architecture & Construction d. Business Development & Strategy e. Climate, environment & Energy f. Education & Training

g. Engineering & Technology h. Health & Social care i. Hospitality & Tourism j. Human Resouces k. IT/Software l. Creative & Design m. Culture & Society n. Legal

o. Marketing, Communication & Sales p. Quality Assurance & Risk

q. Real Estate

r. Science & Biotechnology s. Supply chain & Logistics t. Other.

Scale 3. Relational Conflict:

(Items will be measured on a 6-point Likert scale where 1 = “None” and 6 = “A lot”) 1. How much friction is there among members in your work unit?

2. How much are personality conflicts evident in your work unit? 3. How much tension is there among members in your work unit?

4. How much emotional conflict is there among members in your work unit? Scale 4. Task Conflict:

(Items will be measured on a 6-point Likert scale where 1 = “None” and 6 = “A lot”)

1. How often do people in your work unit disagree about opinions regarding the work being done?

2. How frequently are there conflicts about ideas in your work unit? 3. How much conflict about the work you do is there in your work unit? 4. To what extent are there differences of opinion in your work unit?

Appendix A Measurement Scales. Scale 5. Group Performance:

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27 (Items will be measured on a 6-point Likert scale where 1 = “Never” and 6 = “Always”)

1. All team members make an effort to participate in discussions.

2. When team members have different opinions, each member explains his or her point of view. 3. Team members encourage one another to express their opinions and thoughts.

4. Team members share and receive criticism without making it personal. 5. Different points of view are respected by team members.

6. Often members help a fellow team member to be understood by paraphrasing what he or she is saying.

7. My team uses several techniques for problem solving (such as brainstorming) with each team member presenting his or her best ideas.

8. Team members work to come up with solutions that satisfy all members. 9. All team members consistently pay attention during group discussions.

10. My team actively elicits multiple points of view before deciding on a final answer.

11. Team members listen to each other when someone expresses a concern about individual or team performance.

12. Team members willingly participate in all relevant aspects of the team. 13. Team members resolve differences of opinion by openly speaking their mind.

14. Team members use feedback about individual or team performance to help the team be more effective.

15. Team members seem attentive to what other team members are saying when they speak. 16. My team resolves many conflicts by compromising between team members, with each one giving in a little.

17. Members who have different opinions explain their point of view to the team.

18. Team members are recognized when something they say helps the team reach a good decision.

Appendix A Measurement Scales Scale 6. Transformational Leadership:

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28 (Items will be measured on a 6-point Likert scale where 1 = “Not at all” and 6 = “Always”)

1. The team manager makes the team members feel good to be around him/her. 2. Team members have complete faith in the team manager.

3. Team members are proud to be associated with me.

4. The team manager expresses with a few simple words what the team could and should do. 5. The team manager provides appealing images about what the team can do.

6. The team manager helps others find meaning in their work.

7. The team manager enables others to think about old problems in new ways. 8. The team manager provides others with new ways of looking at puzzling things.

9. The team manager gets team members to rethink ideas that they had never questioned before.

10. The team manager helps others develop themselves.

11. The team manager lets team members know how she/he thinks they are doing. 12. The team manager gives personal attention to others who seem rejected.

Appendix B Scale Reliability Scale 1. Intragroup Conflict:

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29 Reliability Statistics Cronbach's Alpha N of Items .901 8 Item-Total Statistics Scale Mean if Item Deleted Scale Variance if Item Deleted Corrected Item-Total Correlation Cronbach's Alpha if Item Deleted Q20_1 17.74 39.215 .576 .898 Q20_2 17.85 36.067 .746 .883 Q20_3 18.04 37.587 .754 .883 Q20_4 18.27 38.102 .631 .894 Q20_5 17.37 37.784 .714 .886 Q20_6 17.69 37.295 .659 .891 Q20_7 18.11 36.528 .744 .883 Q20_8 17.38 38.591 .695 .888 Appendix B Scale Reliability Scale 2. Group Performance:

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30 Reliability Statistics Cronbach's Alpha N of Items .942 18 Item-Total Statistics Scale Mean if Item Deleted Scale Variance if Item Deleted Corrected Item-Total Correlation Cronbach's Alpha if Item Deleted Q22_1 71.78 189.057 .574 .941 Q22_2 71.59 190.107 .592 .940 Q22_3 71.83 185.296 .645 .939 Q22_4 72.05 182.988 .724 .938 Q22_5 71.67 188.419 .707 .938 Q22_6 72.01 186.637 .613 .940 Q22_7 72.38 177.924 .721 .938 Q22_8 71.98 183.568 .732 .937 Q22_9 71.74 188.411 .643 .939 Q22_10 71.87 185.817 .681 .938 Q22_11 71.56 185.974 .709 .938 Q22_12 71.98 189.980 .599 .940 Q22_13 71.77 187.729 .706 .938 Q22_14 72.12 184.829 .694 .938 Q22_15 71.56 186.817 .719 .938 Q22_16 72.12 187.888 .629 .939 Q22_17 71.68 187.083 .692 .938 Q22_18 71.63 187.078 .683 .938 Appendix B Scale Reliability Scale 3. Transformational Leadership.

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31 Reliability Statistics Cronbach's Alpha N of Items .935 12 Item-Total Statistics Scale Mean if Item Deleted Scale Variance if Item Deleted Corrected Item-Total Correlation Cronbach's Alpha if Item Deleted Q21_1 42.68 123.945 .723 .930 Q21_2 42.75 122.485 .727 .929 Q21_3 42.78 118.999 .804 .926 Q21_4 42.77 129.082 .537 .936 Q21_5 42.93 123.574 .717 .930 Q21_6 43.10 118.657 .789 .927 Q21_7 43.18 121.348 .755 .928 Q21_8 43.18 121.975 .731 .929 Q21_9 43.40 125.909 .646 .932 Q21_10 43.08 118.366 .798 .926 Q21_11 42.86 124.570 .605 .934 Q21_12 43.33 119.812 .720 .930 Appendix C

SPSS Output Mediation Effect.

Run MATRIX procedure:

The influence of workplace diversity on group performance facilitated by workplace conflict and transformational leadership