Friedrich-Alexander-Universität Erlangen-Nürnberg Betriebswirtschaftliches Institut - PDF

Friedrich-Alexander-Universität Erlangen-Nürnberg Betriebswirtschaftliches Institut Lehrstuhl für Betriebswirtschaftslehre, insbesondere Internationales Management Prof. Dr. Dirk Holtbrügge Cultural Antecedents

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Friedrich-Alexander-Universität Erlangen-Nürnberg Betriebswirtschaftliches Institut Lehrstuhl für Betriebswirtschaftslehre, insbesondere Internationales Management Prof. Dr. Dirk Holtbrügge Cultural Antecedents and Performance Consequences of Open Communication and Knowledge Transfer in Multicultural Process- Innovation Teams Jonas F. Puck David Rygl Markus G. Kittler Working Paper 5/2005 Dipl.-Kfm, Jonas F. Puck, Lehrstuhl für Internationales Management, Universität Erlangen-Nürnberg, Lange Gasse 20, Nürnberg, Tel.: (0911) , Dipl.-Kfm. David Rygl, Lehrstuhl für Internationales Management, Universität Erlangen-Nürnberg, Lange Gasse 20, Nürnberg, Tel.: (0911) , Dipl.-Kfm. Markus G. Kittler, Lehrstuhl für Internationales Management, Universität Erlangen- Nürnberg, Lange Gasse 20, Nürnberg, Tel.: (0911) , CULTURAL ANTECEDENTS AND PERFORMANCE CONSEQUENCES OF OPEN COMMUNICATION AND KNOWLEDGE TRANSFER IN MULTICULTURAL PROCESS-INNOVATION TEAMS Jonas F. Puck, David Rygl and Markus G. Kittler University of Erlangen-Nuremberg ABSTRACT Processes in multinational corporations (MNCs) have to be configured with regard to the challenges of a permanently evolving environment. Process-innovation teams are considered to be powerful tools inside organisations to cope with this necessity. Their performance is of major importance for most MNCs. As a response to the increasing internationalization and globalization of markets, these teams show a growing culturally diverse composition. This article focuses on two major processes that are discussed to decide about a positive or a negative performance of a team: intra-team communication style and knowledge transfer. Explicitly, this article a) tests for the influence of cultural diversity on intra-team communication and knowledge transfer, and b) empirically examines the impact of the openness of intra-team communication and knowledge transfer on the performance of multicultural teams. A quantitative empirical survey among 84 team-members of 20 culturally diverse teams within a German sportswear company is used to test the relationships. Findings reveal that national cultural diversity has no significant impact on intra-team communication and knowledge transfer but both of them have significant influences on different measures of performance. CULTURAL ANTECEDENTS AND PERFORMANCE CONSEQUENCES OF OPEN COMMUNICATION AND KNOWLEDGE TRANSFER IN MULTICULTURAL PROCESS-INNOVATION-TEAMS INTRODUCTION Changing economic conditions force organizations to apply new structural forms designed to reduce costs while simultaneously maximizing flexibility and responsiveness to customer demands (see, for example, Bartlett & Ghoshal, 1989 or White & Poynter, 1990). Within these flatter, more decentralized organizations, teams play a major role and are often discussed as critical factors for their success (Govindarajan & Gupta, 2001; Nohria, 1991). In addition, due to the increase in the internationalization of companies and the globalization of markets, worldwide economic and thereby personnel linkages arouse that make the joint work between employees from different cultures and countries necessary (Holtbrügge & Puck, 2003). This article focuses on a special type of teams: process-innovation teams. Process-innovation teams are composed of members with different functional backgrounds and set up to evaluate existing intra-firm processes and to propose solutions for insufficient processes within the company. Their implementation is based on the assumption, that change is achieved largely through the work of teams (West et al., 2004). Thus, in many cases teams constitute the organizing principle in modern innovation activities (Kratzer et al., 2004; Lovelace et al., 2001). While functional diversity in teams is seen as leading towards higher innovativeness on the one hand, process difficulties are frequently mentioned on the other hand (see, for example, Ancona & Caldwell 1992a; Kanter, 1988; Jehn, 1997). Bettenhausen (1991) even concluded in a review that the overall effect of diversity is negative, since the advantages in creativity are often offset by problems creating consensus. Cultural diversity between the members, if existent, additionally increases the managerial complexity within process-innovation teams: A large quantity of both conceptual and empirical studies was conducted, trying to explore the impact of national and/or cultural diversity on team processes and/or performance (e.g., Cox, Lobel, & McLeod, 1991; Distefano & Maznevski, 2000; Earley & Mosakowski, 2000; Elron, 1997; Hambrick, Davison, Snell, & Snow, 1998; Jackson, May, & Whitney, 1995). As positive outcomes of cultural diversity, researchers found and/or proposed, for example, more creative problem solutions (e.g., Jackson et al., 1995; Maznevski, 1994; Simons, Pelled, & Smith, 1999), more and better alternatives to a problem and criteria for evaluating those alternatives (McLeod & Lobel, 1992), accelerated individual and organizational learning processes (e.g., Herriot & Pemberton, 1995) or a better fulfilment of market requirements in heterogeneous markets due to the incorporation of diversity (Holtbrügge, 2001). Overall, the benefits of cultural diversity are mainly attributed to the greater variety of perspectives, skills, values, and attributes in diverse teams compared to homogeneous teams (Maznevski, 1994; McLeod, Lobel, & Cox, 1996). Nevertheless, existing research has also found and/or proposed negative outcomes of cultural diversity. Applying the model of Tuckmann (1965), which divided the team-building process in four phases (forming, storming, norming and performing), culturally diverse teams need longer to get to the performing phase than homogeneous teams (Earley & Mosakowski, 2000). Existent research explains this fact, for example, with process problems, e.g. a more difficult verbal and non-verbal communication between the team-members, a decrease of group cohesion, job satisfaction wane and increasing stress, mistrust and conflicts (e.g., Adler, 2002; O'Reilly, Caldwell, & Barnett, 1989; Phillips, 1994). Among intra-team processes, knowledge transfer and open communication can be seen as critical processes for process-innovation teams, since team-members with different functional backgrounds have to communicate and to transfer knowledge to be productive (see, for example, Lovelace et al., 2001). Anyhow, while the effects of cultural diversity on communication and knowledge transfer in teams have been tested before, they have, to the best knowledge of the authors, never been tested for process-innovation teams. Existent research mainly focuses on student or top management teams as research objects. Since this article focuses on on-going organizational teams with complex and less structured tasks instead of one-time laboratory groups with simple and set tasks (Ancona & Caldwell, 1992b), the results can be expected to contribute to our knowledge of team functioning. In addition, the contrary results of the existent studies show that they can hardly be transferred to other contexts. Thus, this article a) tests for the influence of cultural diversity on intra-team communication and conflict, and b) empirically examines the impact of the openness of intra-team communication and the intensity of knowledge transfer on the performance of multicultural process-innovation teams. A quantitative empirical survey among 84 team-members of 20 culturally diverse process-innovation teams within a German sportswear company is used to test the relationships. The remainder of this article is structured as follows. At first, the task and context of the teams in our study is presented. Next, hypotheses about the influence of cultural diversity on intra-team communication and knowledge transfer, and the impact of knowledge transfer and communication (processes) on performance (output) are developed. This part is followed by the description of the research design and measures. Afterwards, the hypotheses are tested against the empirical data and the results are discussed in comparison with those of other studies. Finally, we present the theoretical and practical implications of our contribution as well as implications for future studies on this topic. CULTURALLY DIVERSE PROCESS-INNOVATION TEAMS When referring to culturally diverse process-innovation teams, at first a definition and description of this phenomenon is necessary. Referring to McGrath (1991: 151), teams in an organizational context can be defined as complex, intact social systems that engage in multiple, concurring projects, while partially nested within, and loosely coupled to, surrounding systems . Thus, teams are multifunctional, contributing to the organization on three levels: (a) to systems in which they are embedded (e.g. a company, a company's sub-division), (b) to their members, and (c) to the group itself as a complex social structure (McGrath, 1991). Furthermore, teams are partially nested and loosely coupled to surrounding systems, meaning that an individual is usually not only member of one but of multiple groups (e.g. family, work, sports, etc.). The process-innovation teams in our study were placed in a large sportswear company located in the south of Germany. The company was founded in 1949, had (by the time of the survey) net sales of about 6.5 billion and a net income of about 310 million, employing about 14,250 workers worldwide. Main products of the company are sport shoes, sport clothes, sport supplies, bags and balls. Due to the high degree of internationalization, the internal company language is English. Overall 20 process-innovation teams with 237 members were implemented to sustain a collaborative, employee-based and permanent process improvement based on a top management decision. The members of the teams had different functional backgrounds but were all on the same hierarchical level and the teams got together about once a month during their working time. All teams had one internal leader who moderated the meetings and was specially trained for this purpose. Besides that, all teams worked absolutely autonomously, receiving no direct orders about the topics they had to discuss or how to discuss them, since top and middle management wanted to enhance the entrepreneurial thinking of the team-members. The ideas and solutions of the teams were categorized into three groups: ideas that affect one department (A-topics), some departments (B-topics) and all departments (C-topics). While middle management was responsible to realize A-topics, top management was responsible for the realization of B- and C-topics. The organizational context of the teams was designed to promote the relevance of the processinnovation teams to the whole company and to enhance the possibilities of relatively autonomous teamwork: all teams had a budget to invite internal and/or external experts to gain deeper insights into the problems they were discussing; the middle management was instructed by the top management to give the team-members enough time for the work in their teams; a steering committee was created at the top hierarchical level to promote the importance of the teams and to allow for a fast realization of their suggestions; and proposed changes were intended to be realized as fast as possible to demonstrate the power of the teams for both teammembers and externals. Since the employee structure of the company is very international, all teams had a strong degree of cultural diversity. We consider teams as culturally diverse when they fit in the above given definition of teams and furthermore are composed of members from different cultures. We define culture according to (Hofstede, 2001: 9) as the collective programming of the mind that distinguishes the members of one group or category of people from another , with programming of the mind combining the values, rituals, heroes and symbols embedded in a culture. This definition is in line with the definition of Adler (2002), explaining culture as a pattern of deep level values and assumptions concerning societal functioning, which is shared by an interacting group of people. RESEARCH FRAMEWORK AND HYPOTHESES Consequences of Cultural Diversity A tremendous amount of studies discussed the influences of cultural diversity on different areas of international management. Starting with Bartlett & Ghoshal (1989), Chevrier (2003), or Kedia & Mukherji (1999) using the angle of multinational enterprise management, to Cateora & Ghauri (2000) or Hamel & Prahalad (1994) taking a global economics perspective, and Cox, Lobel, & McLeod (1991), Distefano & Maznevski (2000) or Ely & Thomas (2001) analyzing cultural influences on individual or team level, to name just a few. Accumulating the results leads to the awareness that major differences exist between work-behaviors of members of different cultures. Anyhow, these differences do not offer a systematic exploration of what happens when members of different cultures interact. From a team perspective, team-members from different cultures remain tied to their culture-specific behaviors and norms to quite some extent which can be assumed to have an effect on the interaction in their work-teams. Adopting this to a group level it can be assumed that each member of a team affects to some extent the cooperation within the team (Earley & Mosakowski, 2000; Kirkman & Shapiro, 2005). As a result, intra-team interactions could either be seriously hampered and negatively affect team processes or teams could benefit from the heterogeneous frames of reference of their members. Implications from theoretical models and empirical studies are twofold and deliver divergent results with regard to the effects of cultural diversity. One the one hand, theoretical models like the similarity-attraction theory (Byrne, 1971) the selection theory of Chatman (1991) or the socialization theory of Van Maanen & Schein (1979) promote that a similarity in values, cognitive schemata, behavior and language are the basis for maintaining effective work environments. On the other hand, diversity theorists (Jackson, 1992; Williams & O Reilly, 1998) or creativity theorists (Oldham & Cummings, 1998) predict positive consequences of diversity. Empirical studies presented diverse results as well: While negative impacts of cultural diversity caused by conflicting behaviors, expectations or values may lead to frustration, fear, and disorientation, and therefore may decrease performance (Settle-Murphy, 1996; Schomer, 2000), positive impacts may be, for example, enhanced creativity or a larger amount of problem solving strategies, and therefore may increase performance (Jackson, May, & Whitney, 1995; Maznevski, 1994). As a consequence of previous results, it may be assumed, that the cultural diversity of teams also has an effect on the team s communication style and knowledge transfer. Taking the special context of the teams in our study into account, we expect a negative influence of a team s cultural diversity on open intra-team communication and intra-team knowledge transfer. This can be proposed for the following reasons: As it takes time and patience to adapt to different communication styles and conditions (Grosse, 2002), team-members might act with restraint and are likely to adopt a wait-and-see policy which leads to less open communication. Since a common language has to be employed as a prerequisite for communication to take place, at least some of the team-members cannot communicate in their native language and have to adjust to the team language. Even though the company language in our sample is English, fluency in this language is not to be expected to be at the same level as the fluency in the individual team-member s native tongue (McDaniel, Samovar, & Porter, 2005). As a consequence, their task-related communication skills as well as their intent to articulate themselves might be reduced. Furthermore, their thoughts about an appropriate intra-team communication and knowledge-transfer may differ due to their cultural background. Thus, we hypothesize the following: Hypothesis 1: A higher degree of cultural diversity within a team leads towards a less open intra-team communication. Hypothesis 2: A higher degree of cultural diversity within a team leads towards a less intense intra-team knowledge transfer. Communication openness and team performance The communication between individuals is one of the main research topics of interpersonal interaction (Brannick, Roach, & Salas, 1993) but not a new one. Half a century ago, Marschak (1955) concluded that the major problem of team work is [to] find the best communication system and the best decision rules. In a recent article on entrepreneurial teams in Germany, Bouncken (2004) also concludes that communication played a dominant role on the cultural diverse team performance. Defining intra-group communication, Thompson and Fox (2001) underline the immanent relevance of open communication for effective teamwork. Following their argumentation, each individual member of the group is in possession of information that can only be used by other persons if they are exchanged in a consistent and coherent way. Thus, missing knowledge about different communication styles impedes effective communication. Communication styles therefore are an important variable in the research on team communication. Empathy and trying to understand one another are critical aspects of a communication that lead to higher effectiveness (Wellins, Byham, & Wilson, 1991). As existent research shows, destructive and trustless communication has a negative impact on team performance (Earley, Mosakowski, 2000; Gladstein, 1984). One possible positive dimension is the openness of communication. Openness is a widely examined phenomenon in organizational research (Burke & Wilcox, 1969; Eisenberg & Witten, 1987; Hill & Baron, 1976; Myers, Knox, Pawlowski, & Ropog, 1999). According to Rogers (1987: 53), research has shown that openness as one of the essentials of an effective organization is positively related with job satisfaction, role clarity, information adequacy, and organizational performance. As a consequence, it may be assumed that communication openness also has a positive effect on performance in a team-context. Amason et al. (1995: 28) confirm this assumption: Effective teams enjoy a culture that allows their members to speak freely and challenge the premise of other members` viewpoints, without the threat of anger, resentment, or retribution. Open communications are central to getting sincere involvement from team-members, which enhances decision quality and reinforces team consensus and acceptance. ( ) Team-members overcome (..) differences by asking one another questions and challenging one another s assumptions. Thus, open communication minimizes the lack of understanding and helps to avoid errors in reasoning and misinterpretations (Lawler, 1992). Following Gudykunst & Nishida (2001), stating that communication is effective to the extent that we are able to minimize misunderstandings communication openness increases the effectiveness of communication and therefore is supposed to have a positive effect on team performance. This leads to the following hypothesis: Hypothesis 3: Open Communication within a multicultural team has a positive impact on its performance. Knowledge transfer and team performance According to current literature, knowledge is not information, nor is it data, but it is comprised of them both (Davenport & Prusak 2000; Spiegler 2000; Tuomi 2000). Data is commonly defined as facts at the atomic level, devoid of both structure and context, or stripped of previously existing structure and context. Information is commonly defined as data endowed with meaningful structures. Knowledge, on the other hand, is information endowed with context. (Ladd & Heminger 2003: 2). One of the p
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